the market Flashcards
define mass markets
Where a business sells into the largest part of the market, where there are many similar products on offer
characteristics of a mass market
- Customers form the majority in the market
- Customer needs and wants are more “general” & less “specific”
- Associated with higher production output and capacity (economies of scale)
- Success usually associated with low-cost operation, heavy promotion, widespread distribution or market leading brands
define niche market
Where a business targets a smaller segment of a larger market, where customers have specific needs and wants
advantages of niche market
- Less competition- clear focus - target particular customers (often easier to find and reach too)
- Builds up specialist skill and knowledge = market expertise
Can often charge a higher price – customers are prepared to pay for expertise - Profit margins often higher
- Customers tend to be more loyal
disadvantages of niche market
- 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
define market share
Market share shows the proportion of sales that a
business makes within a market compared to its competitors.
whats the market share equation
Market share =
Revenue generated by firm/
Total revenue within the market x 100
whats the market size equation
Market size=Number of units sold x Average selling price
how do businesses combat competitiveness
strong branding
what does strong branding achieve
consumers awareness of their product, which generates brand loyalty if another business enters the market
features of a strong brand
- differentiate the product from rivals
- create customer loyalty
- help product recognition
- develop an image
- charge a premium price when brand is strong
what is a dynamic market
a market that is continuously and rapidly changing
factors leading to change in markets
- Seasonal factors
- Consumer tastes
- Consumer attitudes
- Government regulations
- The availability of new technologies
- New competitors entering the market
- Changes in business structure and outsourcing
what must businesses recognise
trends
what is a trend
the general direction in
which things tend to move.
why is it important for businesses to review and analyse trends
- Make better decisions
- Modify forecasts and set realistic targets in response to a trend
- Anticipate and deliver the right resources to the right places at the right time
- Recognise opportunities for innovation and improvement on its product or service
- Develop a strategic vision and formulate alternative futures for its product or service
what is a popular branch of e-commerce`
online retailing
positives of online retailing
- convenient for people who want to shop from home
2.easier to gather personal info to target more products - many costs avoided (staff,rent,etc)
4.lower marketing costs - can reach more customers
6.open 24/7 - greater flexibility
- distance isnt a issue
in what ways do markets change
- size of market
- nature of markets
- new markets
why may existing or new markets grow or occur
- economic growth
- innovation
- social changes
- changes in legislation
- demographic changes
what happens if businesses do not adapt to market changes
likely to lose market share or at worst collapse
what would help businesses to adapt to market changes
- market research
- investment
- continuous improvement in the increasingly competitive environment
- develop a niche
define competition
the rivalry that exists between businesses in a market
affect of competition on businesses
under some pressure to encourage people to buy their product
