The Market Flashcards
What is niche marketing?
Smaller segment of a larger market
What is mass marketing?
Where a business sells into the largest part of the market, where there are many similar products offered by competitors
What are the key features of a mass market?
- Customers from the majority in the market
- Customer need and wants are more ‘general’ and less ‘specific’
- Associated with higher production output and capacity + potential for economies of scale
- Success usually associated with low cost operation or market leading brands
What is the aim of mass marketing?
- Create products with universal appeal
- Aim for leadership of the largest of the market segment
- Build strong brands that are associated with the underlying product
- Exploit economies of scale and earn high profits
What are the mass market methods?
- Batch production
- Flow production
What are the niche market methods?
- Job production
What are the benefits of successful mass marketing?
- Widest potential customer base
- Lower risk - resources focused on one large market
- Low unit costs from economies of scale
- Market research cost relatively low
What are the benefits of targeting a niche market?
- Less competition
- Clear focus
- Builds up specialist skills & knowledge
- Can often charge a higher price
- Profit margins often higher
- Customer loyalty
What are the drawbacks of targeting a 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
What is market size?
- Indicates the potential sales of a firm
- Usually measured in terms of both volume (units) and value (sales)
- Size of individual segments within the overall market can also be measured
- Not normally a marketing objective
What is market growth?
- A key indicator for existing and potential market entrants
- Growth rate can be calculated using either value or volume (units sold)
What is market share?
- Explains how the overall market is split between the existing competitors
- Tends to be calculated based on market value, but volume can also be used
- Good indicator of competitive advantage
- Key is to look for significant +/- changes
- Market share % = (company sales / total market sales) x100
What are dynamic markets?
- All markets are dynamic - they all change considerably by market
- Key sources of change:
- Customer tastes and preferences
- Impact of technology on what customers buy and how they buy
- Impact of new market entrants
What is the role of innovation?
Innovation is about putting a new idea or approach into action. Innovation is commonly described as ‘the commercially successful exploitation of ideas’
What is product innovation?
Launching new or improved products (or services) on to the market
What is process innovation?
Finding better or more efficient ways of producing products, or delivering existing services
What are the benefits of product innovation
- First mover advantage - which can include some of the following
- Higher prices and profitability
- Added value
- Opportunity to build early customer loyalty
- Enhanced reputation as an innovative company
- Public relations - e.g. news coverage
- Increased market share
What are the benefits of process innovation?
- Reduced costs
- Improved quality
- More responsive customer service
- Greater flexibility
- Higher profits
How does competition affect the market?
- Battle for market share
- Pricing
- Battle for competitive advantage
What is competitive advantage?
- The ability of a business to add more value for its customers than its rivals and attain a position of relative advantage
- A situation where a business has an advantage over its competitions by being able to offer better value, quality and/or service
What is risk?
- The possibility that things will go wrong
- Risk can be assessed managed e.g. through contingency planning
What is uncertainty?
- The unpredictable and uncontrollable events that affect business
