The Market 1.1.1 Flashcards
What is a market
A place where buyers and sellers can meet and sell
What is the aim of marketing
To help identify, anticipate, and satisfy consumer needs and wants
What is market research
The process of systematically gathering data from consumers to influence business decisions
What is the mass market
The market aimed at the general population
What is the niche market
The subset of the main market which addresses a specialist need
Advantages of targeting a niche market
- less competition
- target specific customers and therefore gain loyal customers
- often charge a higher price
Disadvantages of targeting a niche market
- lack of economies of scale
- dependence on 1 product
- vulnerable to market changes (all eggs in 1 basket)
Advantages of targeting a mass market
- lower average unit costs because you can use large-scale production
- large sales volume leads to high revenue + profit
- more customers
Disadvantages of targeting a mass market
- lots of competition
- products are similar to others
- high volume production isn’t flexible to demand changes
What does ‘market size’ refer to
The total number of potential customers who could buy your product or use your service
How to calculate market share?
. Sales of a business
———————————- x100
Total sales in the market
What is market share
The specific business’s sales compared to the total sales in the market
What are the 2 ways to measure the size of the market
Sales volume (number of products sold)
or
Sales value (revenue)
What is a ‘brand’
A name, image, or logo which helps a product/service stand out from competitors
3 things that make a market dynamic (change)
- customer tastes and preferences
- impact of new technology
- impact of new businesses
Benefits of online retailing
- costs are lower as a physical shop isn’t needed (fewer staff to pay)
- customers can easily compare prices
Drawbacks of online retailing
- businesses face more competition as customers can easily shop around
- customers cannot physically see the product before buying
what is innovation
adapting and improving an existing product
advantages of innovation
- allows businesses to improve products with can increase market share, sales revenue, and profit
- allows businesses to improve its processes with can increase efficiency
- allows businesses to develop a USP which improves competitiveness
what is competitive advantage
businesses with better value, quality, and/or service that can therefore charge more due to the added value
what is market growth
the percentage rate of growth in market size of a period of time
how to calculate market growth
change in market size between Y1 and Y2
——————————— x100
size of the market in Y1
advantages of a dynamic market
- helps businesses gain a competitive edge by understanding the dynamics of their industry
- identifies opportunities
disadvantages of a dynamic market
- hard to keep up with competition (may fall behind)
- profit may suffer if spending money to constantly change the product
