The Market 1.1.1 Flashcards
What is a market?
A marker is any place that buyers and sellers will come together to exchange goods or services
Definition of mass market
Where a business sells into the largest part of the market, where there are many similar products offered by competitors eg regular toothpaste
Definition of niche market
Where a business targets a smaller segment of a larger market, where customers have specific needs and wants eg glasses
List 3 advantages of a mass market
- Able to target a larger/wider market/audience
- Market research costs are relatively low
- Better brand recognition
List 3 disadvantages of mass markets
- More competitors- customers less loyal
- Higher taxes to pay
- Main need to lower prices- lower profit margins/levels
List 3 advantages of niche markets
- Lower competition levels
- Creates USP (Unique Selling Point) easily
- Customer loyalty
List 3 disadvantages of niche markets
- Increased production costs (for materials, manufacturing etc)
- Increased spending on branding
- Vulnerable to market changes
What is market size?
Indicates the potential sales for a firm
Usually measured in terms of both volume (units) and value (sales)
How do you calculate market size?
Number of units sold x price
What is market growth?
A key indicator for existing and potential market entrants
Growth rates can be calculated using either value (eg market sales) or volume (units sold)
What is market share?
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
How do you calculate market share?
(Sales of one firm/ total market sales) x 100
What is a market map?
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
Benefits of a market map
- 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
Drawbacks of a market map
- 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
What is a dynamic market?
One that is subject to rapid or continuous change eg.shoes
What are the key sources of change?
- Customer tastes and preferences
- Impact of technology on what customers buy and how they buy
- Impact of new market business entrants
- Income levels/ Types of customer you’re selling to
What factors affect change in market trends?
- 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
What is e-commerce?
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)
What is m-commerce?
Buying and selling online e.g. apps
List the pros of dynamic markets
- Allows the business to cater to more audiences’ needs
- Attract more customers
- Achieve a competitive advantage
List the cons of dynamic markets
- Labour costs may rise as a result of growing
2. Invest in research and development (R&D)
List three positives of online retailing
- Faster for customers
- 24/7 access
- More convenient
List three negatives of online retailing
- Delivery prices may put off customers
- Delivery time may be long
- For the business- can be expensive to develop apps and websites
