The Market 1.1.1

Question 1

What is a market?

Answer 1

Any place buyers or sellers will come together to exchange goods and services.

Question 2

Define mass market

Answer 2

Is where businesses sell into the largest part of the market, where there are many similar products offered by competitors. e.g. coke

Question 3

Define niche market

Answer 3

Is where a business targets a smaller segment of a larger market, where customers have specific needs and wants. e.g. Sensodyne toothpaste

Question 4

What are the benefits of mass marketing?

Answer 4

Widest potential customer base
Lower risk- resources focused on one large market
Market research costs relatively low

Question 5

Define economies of scale

Answer 5

Where the average costs (of production, distribution and sales) fall as the business increases the amount of product that it produces, distributes and sells.

e.g., can benefit from bulk buying

Question 6

Define market size

Answer 6

The total number of potential buyers of a product or service within a given market, and the total revenue that these sales may generate.

Question 7

How do you work out market size?

Answer 7

Number of units sold x price

Question 8

What are the advantages and disadvantages of a niche market segment.

Answer 8

+ Less competition
+ Clear focus
+ Builds up specialist skills
+ Often charge a higher price
+ Profit margins are higher
+ Customers are more loyal
- Lack of economies of scale
- Vulnerable to market changes
- Likely to attract less competition if successful

Question 9

Define market share

Answer 9

The proportion % of a market that is taken by a business, products or brand.

Question 10

How do you work out market share?

Answer 10

Sales of one firm / total market sales x 100

Question 11

What is a brand?

Answer 11

A product produced by a company using one specific name. Creation of an identity to distinguish that firms and its product from other firms.

Question 12

What are the benefits to a business or building a brand?

Answer 12

Brand extension
Brand value
Brand personality

Question 13

What is a dynamic market?

Answer 13

One that is subject to rapid or continuous change e.g. shoes.

Question 14

What factors affect change in market trends?

Answer 14

Ethics
Environment
Economy
Demographics
Competition
Social
Technology

Question 15

Define online retailing

Answer 15

The process of buying and selling goods and services over the internet, also known as e commerce.

Question 16

What are the advantages of online retailing?

Answer 16

Can shop 24/7
Access to a wider market
Orders can be taken automatically without the need of staff.
Breaks down geographical barriers

Question 17

What are the disadvantages of online retailing?

Answer 17

Problems with fraud/ viruses
Most customers still want to shop in store
Issues with online security

Question 18

Define market growth

Answer 18

Is the percentage increase In the size of the market.

Question 19

What is the calculation for market growth?

Answer 19

Change in size of market / original size x 100

Question 20

competition will affect the market in many ways, these include

Answer 20

• The price a business is able to charge
• The buying power of the customer
• The selling power of the supplier
• Availability of substitutes
• Willingness and ability of new firms to enter the market

Question 21

Define innovation

Answer 21

Is when a new idea or invention is launched onto the market normally with a view to financial gains.

Question 22

What’s the difference between risk and uncertainty?

Answer 22

Risk is the situation under which the decision outcomes and their probabilities of occurrences are known to the decision-maker, and uncertainty is the situation under which such information is not available to the decision-maker.