Markets Flashcards
Markets - A place where buyers and sellers are brought together, they do not have to physically see each other
A sale of a good or service is offered at a price which must be accepted by the customer.
Markets can be Planned or Free:
>The government plan what markets we need to live day to day e.g schools for education market.
>Free markets are controlled by businesses and customers in terms of forces of ‘supply’ and ‘demand’.
Market Facts
> Markets work best when there is competition between sellers. >Markets fail with prices to high for consumers.
Small businesses which offer unique products are known as niche markets.
Not all markets are government controlled
Market Differentiation
Businesses selling similar or the same products must differentiate themselves in order to receive sales over their rivals.
Can be done in a range of ways:
Price - Can attract more consumers, Can harm potential profits
Products - Adjusted to appeal to a particular target
Market Differentiation
Without it there is a lack of brand identity which can be a major problem trying to penetrate a market. New material is needed to obtain loyal customers. Some people resent blatant ‘copies’ of products.
Niche Market
> Specialist products
Products are relatively scarce or unique
Limited workforce
Difficult market to penetrate based on small customer range
Artisan - locally, skilled made, usually unique.
Market Share and Sales
Value of sales / Total sales value of market X 100 = Market share%
Market share is the number of customers that visit and purchase from a particular business, in relation to the total number of customers who visit that particular type of business. E.g Tesco have a market share of all the customers who visit food retailers.
Targeting a Market
A target market is the market a business wishes to operate in and attempt to dominate, there are several types.
3 Main strategies:
>Mass Marketing (undifferentiated) - Targets the whole market ignoring segment products focus on common customer needs not specialist products.
>Segmented - Target several market segments within the same market. Product specifically designed.
>Concentrated (Niche) - Focussed segment penetration, much smaller segment. Aim to achieve strong market position
Market segmentation
This strategy attempts to break down the whole market into smaller groups that reflects different customers needs and wants.
>Firms can see if their product pre exists and see its suitability.
>Firms can consider wether and untouched market could be addressed through development of a new or amended product.
Advantages of Market segmentation
>By targeting small groups a firm can respond effectively to individual needs putting the consumer at the centre of the market >Focusses where success is achieved >Competitive advantage >More efficient resource management >Take advantage of dynamic market >Better promotion - lower campaign cost
Disadvantages of Market Segmentation
> Implies shorter production runs potentially increasing unit cost.
An imprecise science
More expensive and difficult to produce.
Just because you identify a segment doesn’t mean you can work in it.
Markets are increasingly dynamic
Market segmentation usefulness
> Depends on long term market
Firms must adhere to customer needs and compete against rivals
Benefits against other disadvantages
Complex nature
Business Markets in the UK
UK Markets are dynamic - constantly changing. They’re influenced by many factors.
Ways a company may interact with the customer:
>Deals >Sale >Tailored ads >Security >What others viewed
>Related items >Customer service
Internet Marketing - Marketing activities that businesses perform online.
Advantages >Low start up cost >Can be run from central location >Easy to enter market >Economically cheaper to store and supply products
Market Research
Quantitive - Measurable figures
Qualitative - Opinion based
Primary - New research carried out answering specific questions to achieve a specific understanding of a potential market.
Secondary - Makes use of information previously researched, secondary data.
Adding value to products and services
Added value is the difference between the price that is changed and the cost of inputs required to create the product or service.
Companies do this through:
>Design
>Production
>Marketing
