The Market 1.1.1

Question 1

What is a mass market?

Answer 1

Where products are aimed at broad market segments.

Question 2

Characteristics of a mass market

Answer 2

• Products are less unique as they are aimed at broad segments - wide appeal
• Low average cost due to economies of scale
• Lower prices leading to greater affordability and higher sales volumes
• Lower profit margins
• Highly competitive

Question 3

What is a niche market?

Answer 3

Products aimed at a specific group of buyers and are specialised to meet particular requirements.

Question 4

Characteristics of a niche market

Answer 4

• Products more specialised and unique
• Higher average costs due to small-scale production
• High prices due to USP making them less affordable leading to lower sales volume
• Higher profit margin

Question 5

What is market size?

Answer 5

The total value of sales in a market over a certain time period.

Question 6

What is market share?

Answer 6

The proportion of the total market a business holds.
Market share = sales of business/ total market sales x 100

Question 7

What is a brand?

Answer 7

A name, logo or image which helps one product/ service stand out from its competitors. It helps consumers to differentiate a product.

Question 8

What is the importance of a distinctive brand?

Answer 8

• Helps mass market products stand out
• Niche market products can communicate their offering to a small group of customers
• Charge a higher price if the brand is strong
• Perceived quality is better

Question 9

What is a dynamic market?

Answer 9

A market that is subject to rapid or continuous changes.

Question 10

What is online retailing?

Answer 10

Selling products via the internet

Question 11

Advantages of online retailing

Answer 11

• Access to more consumers e.g. internationally
• Enables longer trading hours
• Cheaper to run as lower fixed and variable costs
• Collect data by tracking consumer behaviour
• Consumers can shop at a time that suits them

Question 12

Disadvantages of online retailing

Answer 12

• High costs for website development, maintenance and promotion
• Dominated by larger, well-known businesses
• High levels of competition
• Lack of personal contact
  -Difficult to return unwanted items
• Consumers may be prone too credit card fraud

Question 13

How markets change

Answer 13

Changing market conditions offer new opportunities for firms but also pose threats. Changes include:
- Changing consumer tastes
- Changing demographics
- Amount of competition
- Changing legislation

Question 14

Innovation

Answer 14

Product innovation involves the adaptation or improvement of existing products
Process innovation involves the adaptation of existing processes

Question 15

Market Growth

Answer 15

Measurement of change in the entire market - business market share does not necessarily increase.
Caused by:
- increasing population sizes
- increasing incomes
- changing tastes and preferences

Question 16

Adapting to change

Answer 16

Allows businesses to thrive in dynamic markets. Strategies:
- create flexible business structures
- meet customer needs by carrying out market research
- invest in training, products and processes
- innovate

Question 17

What is competition?

Answer 17

Occurs when at least two businesses are providing goods/services to the same target market

Question 18

Direct competition

Answer 18

When businesses are targeting customers with the same product as competitors

Question 19

Indirect competition

Answer 19

When firms sell different products but compete with each other for the customers disposable income

Question 20

Competition benefits for customers

Answer 20

• lower prices
• better quality
• better customer service

Question 21

What is a risk?

Answer 21

Potential threat to business success (internally or externally).

Question 22

What is uncertainty?

Answer 22

When outcomes are difficult to predict.