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business theme 1 > the market > Flashcards

the market Flashcards

1
Q

the term ‘market’ refers to:

A

all the buyers and sellers that trade a particular type of product in a particular place

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2
Q

in most markets there are:

A

a mass market and several smaller niche segments/markets

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3
Q

products in a mass market are:

A
  • aimed at a large group of buyers
  • have a wide appeal and are useful to a variety of people, not just small segments of the population
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4
Q

products in a niche market are:

A
  • aimed at a specific group of buyers
  • specialised to meet the particular requirements of buyers in the niche market
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5
Q

confectionary market mass market and niche segments:

A

mass market: cadbury - sell a wide range of standard chocolate to a large range of consumers
niche market: moo free - specialises in dairy free chocolate

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6
Q

businesses in mass markets sell to:

A
  • more consumers than those in niche markets
  • sales volume in mass markets is higher than in niche markets
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7
Q

sales volume in mass markets being higher means that:

A

businesses in mass markets are more likely to benefit from economies of scale

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8
Q

economies of scale means that:

A

products sold in mass markets can be cheaper to produce than those sold in niche markets

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9
Q

to meet the large scales of volume needed to be successful in a mass market, businesses need:

A

a lot of capital, so new or small business can find it hard to succeed in mass markets

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10
Q

businesses in niche markets can be:

A
  • more risky than businesses in mass markets as they sell to a smaller number and narrower range of customers
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11
Q

if there’s a change in the niche market that affects what customers want to buy:

A

they could quickly lose sales and struggle to survive

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12
Q

usually in niche markets:

A

there’s a lot less competition than in mass markets

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13
Q

businesses in niche markets can usually charge higher prices than those in mass markets because:

A
  • a lot less competition
  • sell specialised products
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14
Q

market size is:

A

the total value of sales in a market over a certain time period (usually a year)

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15
Q

market size could also be measured by:

A

total number of consumers in that market

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16
Q

market share of a business is:

A

the proportion of the total market that the business holds

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17
Q

market share is calculated by:

A

dividing their sales in a certain time period by the total sales in the total market

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18
Q

market share is usually shown as:

A

a percentage

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19
Q

mass markets have a:

A
  • larger market size than in niche markets
  • there are usually many more businesses in a mass market than in a niche market
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20
Q

each business within a mass market is likely to have:

A

a smaller market share than each business within a niche market

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21
Q

branding creates a:

A

clear and obvious logo, name or statement that customers can instantly recognise

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22
Q

branding helps consumers to:

A

differentiate a business’s product from that of its competitors

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23
Q

branding is important in markets because:

A

it can encourage consumers to buy products and therefore affect the maltier share that a business has

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24
Q

in mass markets there are more:

A

businesses selling similar products than in niche markets

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25
Q

there is more competition in:

A

mass markets than in niche markets

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26
Q

because of more competition in mass markets, businesses in mass markets might focus more heavily on:

A

strong branding than businesses in niche markets

27
Q

in niche markets consumers are more likely to be interested in:

A

whether the product meets their particular requirements rather than being influenced by branding

28
Q

most markets are:

A

dynamic - they change and evolve rapidly

29
Q

markets can change in a variety of ways, for example:

A
  • consumer preferences
  • innovation
  • ways in which customers want to shop
  • competitors
  • changes in legislation
30
Q

consumer preferences:

A

can change - e.g. due to changes in fashion or advances in technology

31
Q

innovation:

A

new products or processes emerge - this can lead to the growth of some markets and the decline of others. for example, the development of digital cameras meant that this market grew and the market for older camera types such as Polaroid or disposable cameras declined

32
Q

ways in which customers want to shop:

A

can change, like the growth of online shopping

33
Q

competitors:

A

can leave or enter the market

34
Q

changes in legislation:

A

can affect the products sold in a market. For example, in 2018 the UK government introduced a tax on sugary drinks - many drinks manufacturers responded to this by changing their products so they contained less sugar, so they didn’t have to pay the tax

35
Q

businesses need to:

A

adapt to changes in the market in order to be successful and maintain their market share

36
Q

for example, firms may need to:

A
  • change existing products
  • develop new products
  • change how they market their products to keep up with the competition and changing consumer preferences
  • may also need to find ways to cut costs so they can lower prices and maintain demand for their products in a changing market
37
Q

online retailing is:

A

selling products via the internet, e.g. through apps or websites

38
Q

the growth of online retailing and the presence of big online retailers has had a negative impact on:

A

traditional retailers who have a shop-front on the high street. many high street retailers have been forced to close down completely, while others have survived by starting to sell online themselves

39
Q

benefits of online retailing for both businesses and customers:

A
  • a business’s costs are lower as it doesn’t need to have a physical shop or hire as many staff - lower costs allow it to sell for lower priced products or keep prices the same and make more profit
  • customers can order any time they want and often from anywhere in the world - this is convenient for the customer and increases the opportunity for sales for the business
  • customers can easily compare prices between different firms and find the lowest prices
40
Q

drawbacks of online retailing for both businesses and customers:

A
  • businesses face more competition as customers can easily shop around. retailers try to combat this by making the shopping experience on their website better than on their competitors’ websites, e.g. by saving payment and delivery details so it’s easier for customers to make repeat purchases
  • some consumers like to see products before they buy and some like to speak to staff. ways to tackle this include free returns to encourage consumers to purchase and online chat services
  • businesses need to make sure their customers’ personal details are protected from cyber criminals and that they aren’t processing fraudulent transactions. maintaining security is expensive but the consequences of having an insecure site can cost the firm lots of money and damage its reputation
41
Q

in a competitive market:

A

products are sold to the same group of customers by many competing businesses

42
Q

direct competition is:

A

when two or more businesses sell similar products that appeal to the same group of customers. for example, in the grocery market, Sainsbury’s, Tesco, Asda and Waitrose & Partners are all in direct competition as they all sell similar food and household products

43
Q

indirect competition is:

A

when two or more businesses sell products that are different, but they are competing for the same customers. for example, an Indian takeaway restaurant sells completely different food to an Italian takeaway restaurant, but they are in indirect competition as they are both competing for customers who want a takeaway meal

44
Q

the level of competition a firm faces affects:

A

many of the decisions it makes. for example, competition has a lot of influence on the decisions a firm makes about its marketing mix

45
Q

marketing mix:

A
  • product
  • promotion
  • pricing
  • place
46
Q

product:

A

a competitive market contains a lot of similar products.

47
Q

competition means that firms need to make sure that:

A

the product they are providing is of a good quality - if it’s not, then customers can easily choose to buy from a competitor

48
Q

firms also need to make sure that their products are:

A

distinctive from competitor products - this can mean that there is lots of innovation in competitive markets in order to create products that have a unique appeal over competitor products

49
Q

promotion:

A

competition means that firms have to try really hard to get their products noticed and encourage customers to buy them over competitor products. this means that there’s often a lot of promotional campaigns and advertising in competitive markets, which inform customers about the business’ products

50
Q

businesses in competitive markets may also focus heavily on:

A

branding and use methods such as celebrity endorsement to try to entice customers to buy their product

51
Q

pricing:

A

firms in a competitive market often use a competitive pricing strategy, which means prices are based on competitor prices - if a similar competitor product is of a similar quality but is cheaper, then customers are more likely to buy the cheaper product

52
Q

sometimes firms with new products on the market try to tempt customers away from competitors by using a:

A

penetration pricing strategy, which is where they set low prices for their products initially

53
Q

overall, prices are often cheaper for customers in a:

A

competitive market than in less competitive markets

54
Q

place:

A

in a competitive market, businesses need to make sure it’s as easy (or easier) for customers to access their product as it is to access competitor products. this can mean that in a competitive market, lots of businesses sell online - for many this includes apps so customers can buy more easily on the go

55
Q

firms have to be aware of what competitors in the market are doing and:

A

be ready to take action if the market becomes more competitive

56
Q

many competitive mass markets are:

A

dominated by a few national or global businesses - for example, the UK breakfast cereal market is dominated by firms such as Kellog’s, Nestlé and the Weetabix Food Company

57
Q

new and smaller firms often:

A

struggle to survive in these competitive markets as they haven’t got the budgets needed to make themselves stand out from the bigger firms and win market share

58
Q

these businesses might need to get:

A

investors to help raise more funds in order to compete successfully - this means there’s more incentive for firms in a competitive market to be limited companies rather than operate as sole traders or partnerships

59
Q

even big and established companies might need to:

A

change the nature of their ownership in order to gain more market share in a competitive market - e.g. a private limited company might transition into a public limited company

60
Q

a new firm can find it easier to succeed in a competitive market by operating as a:

A

franchise. a franchise is an agreement that allows a business to use the idea, name and reputation of an established business

61
Q

all business activity comes with an:

A

element of risk - there’s always a chance that something could go wrong

62
Q

when taking a risk, the probabilities of different outcomes are:

A

often known. before making a decision, businesses can consider the probability of a negative outcome and think about how they can minimise the chance of this happening. they can make a conscious decision about whether or not to take the risk - this means that risks are controllable

63
Q

uncertainties are:

A

unexpected events - they’re often things that firms know could happen, but it’s very difficult for them to predict if or when they’ll actually happen, or what their outcome will be

64
Q

uncertainties are usually:

A

external things that businesses can’t control, like unexpected bad weather. they’re things that often affect the market as a whole rather than just individual businesses

business theme 1 (19 decks)

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