Seneca Paper 1 Flashcards
Mass market advantages
Having more customers.
Benefitting from economies of scale (due to higher output levels).
Can build a strong market presence.
Mass market disadvantages
Higher levels of competition.
Lower profit margins
Niche markets Benefits:
Less competition. Specific market. Can develop specific expertise. Higher profit margins. Customer loyalty.
Disadvantages niche
No economies of scale.
Vulnerability because they have an undiverse product portfolio.
What is a brand?
A brand is a good or service that has something which is unique & recognisable. This could be from the way that the product is designed or a different feature.
A brand is more likely to become strong if it is easily recognised and distinctive.
Strong brands
Strong brands usually benefit from higher customer loyalty. Customers support the brand and will continue to go and buy their products repeatedly.
A brand can create higher profitability by itself. Some consumers will pay higher prices for items with a certain brand logo on them (e.g. Nike or Apple).
Dynamic Markets
Dynamic markets are markets that experience rapid and continuous change.
Responding to the external
Market
Businesses must identify and respond to changes in the external market.
Businesses that operate within dynamic markets must be able to respond to changing customer tastes and preferences.
For example, Blockbuster failed to respond to changes in the streaming and download market and it lost its market share to rivals like Netflix.
How markets change
Innovation. Markets can change and develop as a result of advances in technology and as a result of the changing tastes and preferences of customers.
Impact of competition
Competition can affect a business’ costs and demands as the presence of competitors may reduce demand for a business’ product or service.
Competition can force businesses to reduce their prices or increase their sales & marketing spend.
How competition affects the market- Rising costs
The presence of a competitor can also increase business costs as a business may increase its spending on promotion and advertising or may invest in research and development to improve the products offered for sale.
Risks:
Risk of failure, Financial loss, Lack of security
Uncertainty
Uncertainty is when a business cannot know how a situation will turn out.
E.g. Brexit
Uncertainty vs risk
Uncertainty is where a business is unable to foresee problems.
Risk is where there is a chance that something could go wrong & not end up as expected.
With uncertainty, it is hard to even have any expectations of what the future will be like.
Market research- demand
Market research into customers’ demands is important for business success.
Insights into customers’ wants and needs can help a business to improve the product, spot market opportunities and stay competitive.
Insights into overall demand trends can help a business to spot opportunities for growth and potential threats from new products/technology.
Competition market research
Market research into competitors can help a business understand the major threats in the market and then prepare the business to deal with these threats.
Market research for established fashion labels like H&M would identify the threats that come from online platforms like ASOS or Boohoo.
Market research target market
Market research into a business’ target market will give the business insights into their customers’ wants and needs and how they are changing over time.
Qualitative research
Qualitative research generally collects information about opinions and views rather than things that can be quantified.
For example, research into whether customers think the customer service at Waitrose is good is qualitative research.
Quantitative research
Quantitative research collects factual information on things that can be quantified and recorded easily.
For example, research into the number of cans of Coca Cola sold in the UK last year is quantitative research.
Market research- sampling
When a business is carrying out market research, sampling may be used to reduce the costs associated with market research. Sampling occurs when a business selects a sample of the population to save collecting data from everybody in that population.
1 advantage and 1 disadvantage of sampling
Sampling reduces cost as a business can choose a cross-section of the population instead of collecting data from everybody. Sampling reduces cost as a business can choose a cross-section of the population instead of collecting data from everybody.
Method of market research- technology
Technology can be used to analyse market research data by completing calculations and creating graphs and charts which can be used by managers and leaders.
Market Segmentation
Market segmentation is the process of dividing potential customers into different groups based on characteristics like age, gender, income and much more.
Businesses use market segmentation for a variety of reasons: chioosing marketing mix
When choosing the product, geographic, promotional and price segmentation can help a business to understand its customers’ needs and wants.
For example, Next provides clothing aimed at infants and toddlers using its Next Kids range.