The Market 1.1.1 Flashcards
What is a market?
Any place buyers or sellers will come together to exchange goods and services.
Define mass market
Is where businesses sell into the largest part of the market, where there are many similar products offered by competitors. e.g. coke
Define niche market
Is where a business targets a smaller segment of a larger market, where customers have specific needs and wants. e.g. Sensodyne toothpaste
What are the benefits of mass marketing?
Widest potential customer base
Lower risk- resources focused on one large market
Market research costs relatively low
Define economies of scale
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
Define market size
The total number of potential buyers of a product or service within a given market, and the total revenue that these sales may generate.
How do you work out market size?
Number of units sold x price
What are the advantages and disadvantages of a niche market segment.
+ 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
Define market share
The proportion % of a market that is taken by a business, products or brand.
How do you work out market share?
Sales of one firm / total market sales x 100
What is a brand?
A product produced by a company using one specific name. Creation of an identity to distinguish that firms and its product from other firms.
What are the benefits to a business or building a brand?
Brand extension
Brand value
Brand personality
What is a dynamic market?
One that is subject to rapid or continuous change e.g. shoes.
What factors affect change in market trends?
Ethics
Environment
Economy
Demographics
Competition
Social
Technology
Define online retailing
The process of buying and selling goods and services over the internet, also known as e commerce.
What are the advantages of online retailing?
Can shop 24/7
Access to a wider market
Orders can be taken automatically without the need of staff.
Breaks down geographical barriers
What are the disadvantages of online retailing?
Problems with fraud/ viruses
Most customers still want to shop in store
Issues with online security
Define market growth
Is the percentage increase In the size of the market.
What is the calculation for market growth?
Change in size of market / original size x 100
competition will affect the market in many ways, these include
- 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
Define innovation
Is when a new idea or invention is launched onto the market normally with a view to financial gains.
What’s the difference between risk and uncertainty?
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.
