Paper 1 Flashcards
(102 cards)
mass market characteristics
generic products - similar in function. STandardised
Example mass market
Bic pens, Primark clothes
niche market characteristics
Specialist products and services. Change in taste and preferences can be devastating to demand
Example niche market
Nespresso, Ferrari,
PESTLE FACTORS
Political, Economic, Sociological, Technological, Legal and Environmental
Market share formula
total sales of company divided by total sales of the market x 100
growth rate formula
final value- initial value divided by initial value
impact of more competition
Impact of more competition:
Reduce prices = impact on revenue
Increase marketing to retain customers = increase in costs
Increase quality = increase in costs
Improve customer service
Impact of less competition
Higher sales due to few options
Can raise prices as a result - revenues will be higher
Higher profits = higher investments and dividends (if shareholders are present)
Opportunities from ⬆profits for ⬇ competition:
⬆ investment - capital e.g. machines = EOS/⬇cost per unit
Dangers from ⬆profits for ⬇ competition:
Become lazy or complacent
May not invest
Rivals enter the market and offer something better than you
Product orientation
business worries about the internal factors before worrying about changes in the market
Businesses can maybe make revolutionary breakthroughs that the market may not have expected
BUT is the product adapted so customers want it? A business focusing on a solar powered car is great but how many people want it?
Market orientation
Marketing is easier to establish here as the customer is at the heart of the product.
BUT market research is needed which can take time and money - what if the rivals get their first and you are playing catch up
advantages of primary data
Addresses specific issues that the business wants to know
Up to date
Can understand customer feelings better
advantages of secondary research
Ofter free - Google search
Provides a good overview of the market
Large scale, reliable research - usually anyway
disadvantages of primary research
Expensive - can cost thousands to do properly
Risk of bias - leading questions
May need to look at other data to understand the findings
disadvantages of secondary research
Out of date
Generic - not tailored
Can be expensive depending on what you use - Mintel reports cost 2-3k
limitations of research
There are 2 main limitations to conducting market research:
Sample size is too small: This means the results may not be representative of the whole market and so incorrect decisions could be made.
Sample bias: The respondents selected may mean that certain types of people are over represented in the sample - their views may skew from those of the whole market
pros of market segmentation
Meet customers needs better
⬆ Brand loyalty
⬆Repeat customers
Price sensitive customers = ⬆prices
⬆Revenue and profits. Margins increas
cons of market segmentation
Higher costs
R+D
Production - lower units produced = ⬆cost per unit
Marketing - need to market to each customer differently
⬆Product range = EOS exploited.
Market Positioning
Deciding on how you want customers to perceive you products. This can be done by market mapping, adding value, competitive advantage and differentiation
two ways to achieve competitive advantage
Lowest cost producer - cost competitiveness
Differentiation
how is lower costs achieved
Producing more efficiently
Use of machinery to produce more
Lowest quality (that is accepted by consumers)
Lowest price
how is differentiation achieved
Accrual differentiation
Design
Functions
Taste
Performance
Perceived differentiation
Branding
Advertising
Sponsorship