The Market 1.1.1 Flashcards
What is a mass market?
Where products are aimed at broad market segments.
Characteristics of a mass market
- 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
What is a niche market?
Products aimed at a specific group of buyers and are specialised to meet particular requirements.
Characteristics of a niche market
- 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
What is market size?
The total value of sales in a market over a certain time period.
What is market share?
The proportion of the total market a business holds.
Market share = sales of business/ total market sales x 100
What is a brand?
A name, logo or image which helps one product/ service stand out from its competitors. It helps consumers to differentiate a product.
What is the importance of a distinctive brand?
- 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
What is a dynamic market?
A market that is subject to rapid or continuous changes.
What is online retailing?
Selling products via the internet
Advantages of online retailing
- 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
Disadvantages of online retailing
- 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
How markets change
Changing market conditions offer new opportunities for firms but also pose threats. Changes include:
- Changing consumer tastes
- Changing demographics
- Amount of competition
- Changing legislation
Innovation
Product innovation involves the adaptation or improvement of existing products
Process innovation involves the adaptation of existing processes
Market Growth
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
Adapting to change
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
What is competition?
Occurs when at least two businesses are providing goods/services to the same target market
Direct competition
When businesses are targeting customers with the same product as competitors
Indirect competition
When firms sell different products but compete with each other for the customers disposable income
Competition benefits for customers
- lower prices
- better quality
- better customer service
What is a risk?
Potential threat to business success (internally or externally).
What is uncertainty?
When outcomes are difficult to predict.
