The Market

Question 1

What is a market

Answer 1

A place where buyers and sellers can meet and sell

Question 2

What is the aim of marketing

Answer 2

To help identify, anticipate, and satisfy consumer needs and wants

Question 3

What is market research

Answer 3

The process of systematically gathering data from consumers to influence business decisions

Question 4

What is the mass market

Answer 4

The market aimed at the general population

Question 5

What is the niche market

Answer 5

The subset of the main market which addresses a specialist need

Question 6

Advantages of targeting a niche market

Answer 6

• less competition
• target specific customers and therefore gain loyal customers
• often charge a higher price

Question 7

Disadvantages of targeting a niche market

Answer 7

• lack of economies of scale
• dependence on 1 product
• vulnerable to market changes (all eggs in 1 basket)

Question 8

Advantages of targeting a mass market

Answer 8

• lower average unit costs because you can use large-scale production
• large sales volume leads to high revenue + profit
• more customers

Question 9

Disadvantages of targeting a mass market

Answer 9

• lots of competition
• products are similar to others
• high volume production isn’t flexible to demand changes

Question 10

What does ‘market size’ refer to

Answer 10

The total number of potential customers who could buy your product or use your service

Question 11

How to calculate market share?

Answer 11

. Sales of a business
———————————- x100
Total sales in the market

Question 12

What is market share

Answer 12

The specific business’s sales compared to the total sales in the market

Question 13

What are the 2 ways to measure the size of the market

Answer 13

Sales volume (number of products sold)
or
Sales value (revenue)

Question 14

What is a ‘brand’

Answer 14

A name, image, or logo which helps a product/service stand out from competitors

Question 15

3 things that make a market dynamic (change)

Answer 15

• customer tastes and preferences
• impact of new technology
• impact of new businesses

Question 16

Benefits of online retailing

Answer 16

• costs are lower as a physical shop isn’t needed (fewer staff to pay)
• customers can easily compare prices

Question 17

Drawbacks of online retailing

Answer 17

• businesses face more competition as customers can easily shop around
• customers cannot physically see the product before buying

Question 18

what is innovation

Answer 18

adapting and improving an existing product

Question 19

advantages of innovation

Answer 19

• allows businesses to improve products with can increase market share, sales revenue, and profit
• allows businesses to improve its processes with can increase efficiency
• allows businesses to develop a USP which improves competitiveness

Question 20

what is competitive advantage

Answer 20

businesses with better value, quality, and/or service that can therefore charge more due to the added value

Question 21

what is market growth

Answer 21

the percentage rate of growth in market size of a period of time

Question 22

how to calculate market growth

Answer 22

change in market size between Y1 and Y2
——————————— x100
size of the market in Y1

Question 23

advantages of a dynamic market

Answer 23

• helps businesses gain a competitive edge by understanding the dynamics of their industry
• identifies opportunities

Question 24

disadvantages of a dynamic market

Answer 24

• hard to keep up with competition (may fall behind)
• profit may suffer if spending money to constantly change the product