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Business ALevel: Theme 1 > The Market 1.1.1 > Flashcards

The Market 1.1.1 Flashcards

1
Q

What is a market?

A

A marker is any place that buyers and sellers will come together to exchange goods or services

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2
Q

Definition of mass market

A

Where a business sells into the largest part of the market, where there are many similar products offered by competitors eg regular toothpaste

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3
Q

Definition of niche market

A

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants eg glasses

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4
Q

List 3 advantages of a mass market

A
  1. Able to target a larger/wider market/audience
  2. Market research costs are relatively low
  3. Better brand recognition
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5
Q

List 3 disadvantages of mass markets

A
  1. More competitors- customers less loyal
  2. Higher taxes to pay
  3. Main need to lower prices- lower profit margins/levels
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6
Q

List 3 advantages of niche markets

A
  1. Lower competition levels
  2. Creates USP (Unique Selling Point) easily
  3. Customer loyalty
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7
Q

List 3 disadvantages of niche markets

A
  1. Increased production costs (for materials, manufacturing etc)
  2. Increased spending on branding
  3. Vulnerable to market changes
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8
Q

What is market size?

A

Indicates the potential sales for a firm

Usually measured in terms of both volume (units) and value (sales)

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9
Q

How do you calculate market size?

A

Number of units sold x price

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10
Q

What is market growth?

A

A key indicator for existing and potential market entrants

Growth rates can be calculated using either value (eg market sales) or volume (units sold)

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11
Q

What is market share?

A

Means the proportion (%) of a market that is taken by a business, product or brand. Explains how the overall market is split between the existing competitors

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12
Q

How do you calculate market share?

A

(Sales of one firm/ total market sales) x 100

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13
Q

What is a market map?

A

A visual tool used by a business to identify the different brands selling similar products in one market, based on 2 variables to compare against

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14
Q

Benefits of a market map

A
  • Helps to identify areas that don’t have many brands (gap in the market)
  • Helps businesses create USPs
  • Helps businesses make better decisions/ avoid overcrowded, saturated markets
  • Allows businesses to monitor rivals
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15
Q

Drawbacks of a market map

A
  • Potentially lacks reliability as it’s based on opinions
  • Only focused on two variables (limited data)
  • Does not take into consideration changes to the market
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16
Q

What is a dynamic market?

A

One that is subject to rapid or continuous change eg.shoes

17
Q

What are the key sources of change?

A
  1. Customer tastes and preferences
  2. Impact of technology on what customers buy and how they buy
  3. Impact of new market business entrants
  4. Income levels/ Types of customer you’re selling to
18
Q

What factors affect change in market trends?

A
  • Demographics eg. Age
  • Ethics eg. Cruelty free
  • Economy eg. Minimum wages
  • Social eg. Cultural diversity
  • Environment eg. Sustainability
  • Competition eg. Price
  • Technology eg. Online shopping
19
Q

What is e-commerce?

A

The process of buying and selling goods and services over the Internet. Also known as e-tail and online-retailing e.g. ASOS, Amazon (websites)

20
Q

What is m-commerce?

A

Buying and selling online e.g. apps

21
Q

List the pros of dynamic markets

A
  1. Allows the business to cater to more audiences’ needs
  2. Attract more customers
  3. Achieve a competitive advantage
22
Q

List the cons of dynamic markets

A
  1. Labour costs may rise as a result of growing

2. Invest in research and development (R&D)

23
Q

List three positives of online retailing

A
  1. Faster for customers
  2. 24/7 access
  3. More convenient
24
Q

List three negatives of online retailing

A
  1. Delivery prices may put off customers
  2. Delivery time may be long
  3. For the business- can be expensive to develop apps and websites
25
Q

Definition of competition

A

Degree of competition is the number of firms that exist within a market-selling the same or similar products or services

26
Q

How does competition affect the market?

A
  • The price of business is able to change
  • The buying power of the customer
  • The selling power of the supplier
  • Availability of substitutes e.g. cola and Pepsi Cola
  • Willingness and ability of new firms to enter the market
27
Q

What is the definition of invention?

A

Formulation of new ideas for products or processes

28
Q

What is the definition of innovation?

A

Practical application of new inventions into marketable products or services (adapting original ideas)

29
Q

What are the two innovation types?

A
  1. Product/Service innovation: launching newly adapted or improve products (or services) onto the market
  2. Process innovation: finding better or more efficient ways of producing existing products, or delivering existing services
30
Q

List three benefits of product/service innovation

A
  1. Higher prices and profitability
  2. Added value
  3. Opportunity to build early customer loyalty
31
Q

List three benefits of process innovation

A
  1. Reduce costs
  2. Improved quality
  3. Better customer service- more responsive
32
Q

Definition of competitive advantage

A

The ability of a business to add more value for its customers than its rivals and attain a position of relative superiority

33
Q

How do you businesses achieve competitive advantage?

A
  • USPs
  • pricing
  • quality
  • wider product range
  • speed of service
  • branding e.g. celeb endorsement
34
Q

Definition of risk

A

The possibility that things will go wrong e.g. risk in making business investments

35
Q

Definition of uncertainty

A

The unpredictable and uncontrollable events that affect business e.g. uncertainty about the sales success for a new product launched

Business ALevel: Theme 1 (12 decks)

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