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Component 1 Business Opportunities > Markets and consumer protection. > Flashcards

Markets and consumer protection. Flashcards

1
Q

Definition of product:

A

a tangible item that is sold.

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2
Q

Definition of service:

A

intangible offering that involves a deed, performance, or effort that cannot be physically possessed

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3
Q

What is a customer?

A

A person who buys a product.

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4
Q

What is a consumer?

A

A person who purchases goods and services for personal use

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5
Q

What is a market?

A

place where buyers and sellers exchange goods and services

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6
Q

What is competition?

A

Two or more sellers of something similar act independently to try and persuade customers to buy their product.

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7
Q

What is market size?

A

The value or the volume of sales in a whole market

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8
Q

What is market share?

A

the portion of a market controlled by a particular company or product.

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9
Q

How to work out market share?

A

firm’s sales/total sales x100

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10
Q

Why do businesses analyse the market?

A

To use market trends to predict what will happen in the future, and to inform decisions such as more promotion or new products.

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11
Q

What methods are used to increase market share?

A

listening to customers, innovating existing products, new products, marketing campaigns, developing a unique selling point, employee motivation, high quality, increasing sales to existing customers, acquiring other companies.

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12
Q

What is a local market?

A

-Customers travel a short distance to buy the product and it has easy access.
-They understand local culture and desires, so can develop a relationship with customers.

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13
Q

What is a national market?

A

-Same product is sold across the country and have several locations to reach customers.
-OR the total demand nationally for a product/service

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14
Q

What is a global market?

A

-Sold across different countries.
-Will have different marketing in each region.
-Will go global because; home market is saturated, higher earnings, to spread risk or economies of scale.

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15
Q

What is a seasonal markets?

A

-Sales are concentrated in a critical sales period.

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16
Q

what is a mass market?

A

-Targets the whole market in the same way.
-Fierce competition.Wh

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17
Q

What is a niche market?

A

-Smaller section of a large market with expert knowledge and a tailored product.
-Less competition, higher prices can be charged, less potential customers.

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18
Q

What is a trade market?

A

Businesses sell to other businesses. Branding isn’t as important, just quality and price.

19
Q

What is a consumer market?

A

Sell to the general public. Rand image is more important. Short and emotional buying process.

20
Q

What is a market segmentation?

A

Dividing a market into distinct groups of buyers.

21
Q

How can you segment a market?

A

Demographics (age, gender, income), Psychographics (personality, opinion), Lifestyle, Buying Behavior, Geographics and cultures.

22
Q

Benefits of segmentation to a business?

A

-Enhances growth and profits.
-Can target communications.
-Regain/gain customers.
-Gain market share.

23
Q

Limitations of segmentation to a business?

A

-Could cause customer confusion.
-If research is wrong, could create the wrong segments.
-May be too small of a segment to make profit.
-Could lose identity.
-Increased production costs.

24
Q

Benefits of segmentation to a customer?

A

-More choice.
-Fit their budget.
-Closer to expectations.

25
Q

Limitations of segmentation to a customer?

A

-Increased costs may raise prices.
-Some segments are excluded.Wga

26
Q

What is a monopoly?

A

when a single group controls the production of a good or service. 25% market share is considered a monopoly. They can influence prices and there are barriers to enter the market.

27
Q

Advantages of a monopoly?

A

economies of scale, can be efficient and lower prices, better able to afford R&D

28
Q

Disadvantages of a monopoly?

A

increased prices, no choice in product, no incentive to innovate

29
Q

What is a perfect competition?

A

the most ideal type of competition- consists of having a lot of markets and many competitors

30
Q

Features of perfect competition?

A

1) Homogeneous product
2) Many small sellers
3) No barriers to entry/exit
4) Existing firms doe not have have advantage over new entrants, they all have the same level of technology and productivity levels.
5) Consumers and sellers are knowledgeable about prices.
THIS IS A MODEL, in reality there is always differentiation.

31
Q

What is an oligopoly?

A

A market structure in which a few large firms dominate a market

32
Q

Features of an oligopoly?

A
  • Supply concentrated in hands of relatively few firms
  • Firms must be interdependent, and have strong brand identity with differentiated products.
  • High barriers to entry
  • Prices are stable, although short wars do occur.
33
Q

Advantages of oligopolies?

A
  • Economies of scale
  • Price stability
  • Choice
  • R&D.
34
Q

What is a cartel?

A

an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition. This is illegal.

35
Q

Features of a monopolistic compeititon?

A

1) large no. of buyers and sellers (all act independently)
2) Low concentration ratio
3) Long run: no/low barriers
4) Differentiated products
5) Producers have some control over price
6) Info widely spread
7) Weak brand identity.

36
Q

Consumer protection: safety.

A

-In attempts to save costs, businesses may sell goods that are unsafe.
-They could cause harm to consumers.

37
Q

Consumer protection: globalisation.

A

Other countries may have lower safety standards.

38
Q

Consumer protection: internet.

A

-Protection from fraud, fake goods, non-delivery.
-The internet is largely unregulated.

39
Q

Consumer protection: scientific advances.

A

-New drugs/technology need testing first.

40
Q

Consumer protection: fake goods.

A

May charge the same price as legitimate brands but may not be checked.

41
Q

Consumer protection: fitness for purpose

A

Some goods are sold unsafe or unfit for purpose. The business should be liable.

42
Q

Consumer protection: increase in technology.

A

May confuse the consumer.

43
Q

Consumer protection: misleading customers,

A

-Adverts may excessively elaborate benefits.
-Falsely advertising discounts encourages customers to make snap purchases unnecessarily.

44
Q

Examples of consumer protection laws.

A

Trade Description Act.
Advertising Standards Authority.
Sale and Supply of Goods Act.

Component 1 Business Opportunities (5 decks)

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