The Market

Question 1

What is a niche market?

Answer 1

A product that targets a smaller portion of the population (a subset of the larger market)

Question 2

What is a mass market?

Answer 2

A product that targets majority of the market (broader market segments)

Question 3

Characteristics of a niche market ?

Answer 3

More specialised
Premium pricing
High profit margin (due to higher prices)
Lowers sales volumes (due to higher prices)
High average cost (due to small scale production)
Don’t benefit from economies of scale

Question 4

Characteristics of a mass market?

Answer 4

Less unique
Low average costs (benefit from economies of scale)
Low prices = greater affordability + higher sales Volume
Lower profit margins (due to low prices)

Question 5

How can size of a market be measured?

Answer 5

Through sales volume or sales value

Question 6

What is sales volume?

Answer 6

Number of products sold

Question 7

What is market share?

Answer 7

Proportion of the total sales of a product/business, compared to a market as a whole

Question 8

Market share equation?

Answer 8

Sales of a business / total sales in market x 100

Question 9

What is a brand?

Answer 9

A logo, image, or name which is unique and protected my law.

Question 10

Benefits of having a brand?

Answer 10

Product differentiation and be distinguished from the competition

Adds value = more desirable = can increase prices

Influence position of the business with its market

Question 11

How do mass markets use branding?

Answer 11

Stand out from competition

Question 12

How do niche markets use branding?

Answer 12

Communicate their offering to a small well defined group of consumers

Question 13

Benefits of having a strong brand image?

Answer 13

Charge higher prices
Consumer loyalty

Question 14

What is a dynamic market?

Answer 14

A market subject to rapid and continuous change

Question 15

What can failing to adapt in a dynamic market cause?

Answer 15

A business to not survive in the long run, as change is inevitable in a competitive market

Question 16

What is monopoly power?

Answer 16

A large business that dominates a market

Question 17

What is a benefit of having monopoly power?

Answer 17

Business might not face dynamic pressures, due to not being in a competitive market

Question 18

What are the 4 areas to consider when examining dynamic markets?

Answer 18

Online retailing
How markets change
Innovation & market growth
Adapting to change

Question 19

What are the advantages of online retailing?

Answer 19

Access to more customers
Larger trading hrs (24/7) = shop any time
Cheaper to run ( ⬇️ fixed/variable costs)
Collect data by tracking consumer behaviour, help primary research

Question 20

What are the disadvantages of online retailing?

Answer 20

Dominated by larger businesses - strong brand awareness
High level of competition
Lacks personal contact
Expensive to make website to stand out

Question 21

What does market change offer?

Answer 21

Offers new opportunities but also pose threats

Question 22

What are the changes that cause a market to be dynamic?

Answer 22

Changing consumer tastes & preferences
Changing demographics
Amount of competition
Changing legislation

Question 23

What are the two different types of competition?

Answer 23

Direct = similar product
Indirect = diff forms of transport

Question 24

What is mean by innovation?

Answer 24

Adaptation or improvement of an existing product or process

Question 25

What is market growth?

Answer 25

Measurement of the change in the entire market

Question 26

What is market growth expressed as?

Answer 26

A percentage of the original size

Question 27

What 4 factors can market growth be cause by and what can these cause ?

Answer 27

Increased population size
Increased income
Change in tastes & preferences

= Increase in demand

Question 28

How can adapting to and recognising change in a market help a business?

Answer 28

It allows businesses to thrive in a dynamic market

Question 29

What 4 strategies can a business use to adapt to change?

Answer 29

Create a flexible business structure
Meet customer needs ( market research + communicating with customers)
Invest in staff training, products processes
Innovate, in order to gain first mover advantage