The Market Flashcards
What is a niche market?
A product that targets a smaller portion of the population (a subset of the larger market)
What is a mass market?
A product that targets majority of the market (broader market segments)
Characteristics of a niche market ?
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
Characteristics of a mass market?
Less unique
Low average costs (benefit from economies of scale)
Low prices = greater affordability + higher sales Volume
Lower profit margins (due to low prices)
How can size of a market be measured?
Through sales volume or sales value
What is sales volume?
Number of products sold
What is market share?
Proportion of the total sales of a product/business, compared to a market as a whole
Market share equation?
Sales of a business / total sales in market x 100
What is a brand?
A logo, image, or name which is unique and protected my law.
Benefits of having a brand?
Product differentiation and be distinguished from the competition
Adds value = more desirable = can increase prices
Influence position of the business with its market
How do mass markets use branding?
Stand out from competition
How do niche markets use branding?
Communicate their offering to a small well defined group of consumers
Benefits of having a strong brand image?
Charge higher prices
Consumer loyalty
What is a dynamic market?
A market subject to rapid and continuous change
What can failing to adapt in a dynamic market cause?
A business to not survive in the long run, as change is inevitable in a competitive market
What is monopoly power?
A large business that dominates a market
What is a benefit of having monopoly power?
Business might not face dynamic pressures, due to not being in a competitive market
What are the 4 areas to consider when examining dynamic markets?
Online retailing
How markets change
Innovation & market growth
Adapting to change
What are the advantages of online retailing?
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
What are the disadvantages of online retailing?
Dominated by larger businesses - strong brand awareness
High level of competition
Lacks personal contact
Expensive to make website to stand out
What does market change offer?
Offers new opportunities but also pose threats
What are the changes that cause a market to be dynamic?
Changing consumer tastes & preferences
Changing demographics
Amount of competition
Changing legislation
What are the two different types of competition?
Direct = similar product
Indirect = diff forms of transport
What is mean by innovation?
Adaptation or improvement of an existing product or process
What is market growth?
Measurement of the change in the entire market
What is market growth expressed as?
A percentage of the original size
What 4 factors can market growth be cause by and what can these cause ?
Increased population size
Increased income
Change in tastes & preferences
= Increase in demand
How can adapting to and recognising change in a market help a business?
It allows businesses to thrive in a dynamic market
What 4 strategies can a business use to adapt to change?
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
