THE MARKET

Question 1

WHAT IS A MARKET?

Answer 1

Historically, it was known as places where buyers and sellers come together to trade goods. However, the modern market trade can exist via telephone, mail order or the internet.

Question 2

WHY DOES RISK EXIST?

Answer 2

Risk exists because entrepreneurs commit resources (such as money) that could be lost. Many businesses fail, ad new start-ups face this risk.

Question 3

WHY DOES UNCERTAINTY EXIST?

Answer 3

Uncertainty exists because businesses operate in an ever-changing environment and are subject to changing external factors such as legal, economic and social factors.

Question 4

TYPES OF MARKET

Answer 4

1. Consumer goods markers
2. Markets for services
3. Commodities markets
4. Financial markets
5. The housing market

Question 5

WHAT DOES MARKETING INVOLVE?

Answer 5

Marketing involves a range of activities to support the process of communicating with customers with the goal of selling them products that meet their needs. It involves:

1. Understanding customer needs
2. Understanding the dynamics of the market (including competitors)
3. Developing successful products
4. Promoting the business and its products

Question 6

WHAT IS A MASS MARKET AND WHAT DOES IT INVOLVE?

Answer 6

1. Targeting a large population of the market with a generic product.
2. Requires production on a large scale and investment in capacity
3. Potential for high sales revenue
4. May compete with many other businesses in the market
5. Promotion will involve mass market techniques such as TV and newspapers
6. Businesses will have to be competitive on price in order to succeed.

Question 7

WHAT IS A NICHE MARKET AND WHAT DOES IT INVOLVE?

Answer 7

1. Targeting a small population of the market with a specialist product
2. Production on a small scale (possibly bespoke)
3. Low volumes but high profit margins
4. Few competitors but limited number of potential customers
5. Promotions through specialist mediums
6. Direct marketing
7. Business will have to compete on quality and customisation in order to succeed.

Question 8

WHAT IS AN INDIVIDUAL MARKET AND WHAT DOES IT INCLUDE?

Answer 8

1. In some industries technology has allowed businesses to profile individuals and customise their products so that they can target customers as individuals, such as online bespoke greeting cards.

Question 9

WHY ARE BRAND NAMES GIVEN TO PRODUCTS?

Answer 9

To distinguish them from other products on the market. Brand names are used in particular by companies competing in the mass market.

Question 10

WHAT IS THE PURPOSE OF MARKETING?

Answer 10

Marketing is the process of understanding customers in order to develop products and services which can then be communicated to customers through promotion.