The Market Flashcards
What is a mass market
The largest part of the market, there are many similar products offered by competitors, customers are less specific about their needs and wants
What is a niche market?
The smaller segment of the market, customers have more specific needs and wants
What are the benefits of mass marketing?
- Wider potential customer base
- Lower risk - resources focused on one large market
- Low unit costs from economies of scale
- Market research costs relatively low
What are the benefits of niche marketing?
- Less competition
- Clear focus - target particular customers
- Builds up specialist skills and knowledge
- Can often charge higher prices
- Profit margins often higher
- Customers potentially more loyal
What are the drawbacks of niche marketing?
- Lack of economies of scale
- Risk of over dependence on a single product or market
- Likely to attract competition if successful
- Vulnerable to market changes
What is market share?
The percentage of total sales that a business has in a market
How do you calculate market share
Sales of a business ÷ total sales in the market x 100
What is the best way for a business to achieve more growth in a market?
If a business has a large share in the market it may worry that boosting sales more may bring investigations from competition therefore the best way to achieve more growth is by encouraging growth in the market as a whole
How does competition affect the market?
- If a business has no competition then it can charge as high prices as it wants because it is in a monopoly market
- In normal markets, competition makes it difficult to charge high prices, this encourages businesses to be more innovative and creative about how to improve their products and service levels
What is the difference between risk and uncertainty?
- Risk can be assessed whereas uncertainty can’t
- Uncertainty is part of a business’ life
