Theme 1: 1, 1.2, 1.5 Flashcards
What is a market?
Any place where buyers and sellers will come together to exchange goods or services.
What is marketing?
The department tasked with targeting the right product for the right target market using the right combination of price, promotion + place
- it’s about understanding and meeting the needs and wants of customers
What is a marketing strategy and marketing objectives?
A Marketing strategy is the actions or plan needed to achieve a corporate objective
A Marketing objective clarifies the goals that the marketing strategy aims to achieve for a business.
What is a mass market and what examples are there?
A mass market refers to a large, undifferentiated market of consumers with widely varied backgrounds.
Mass marketing is where products are targeted at the whole market.
e.g. HandM, Zara, Adidas
Why may a mass market producer struggle to make profits?
- competition is fierce so the battle may have to be on the basis of price meaning its hard to make satisfactory profits
What is a niche market and what examples are there?
A niche market refers to a small, specialised market where consumers have particular backgrounds and needs.
Niche marketing is where products and services are targeted towards a specific segment of a market.
e.g. Rolex, Fendi, Versace
What are the differences between niche and mass markets?
- product quality is higher in a niche market as it is expensive to make and there is a lower quantity produced
- mass markets usually have lower prices due to large competition whereas niche markets have higher unit costs but can charge higher prices due to distinctiveness - therefore have a more premium price
- mass markets may use flow production (assembly line/factory) whereas niche markets may use bespoke job or batch production
- mass markets can take advantage of E.O.S
- mass markets use retailers who sell the products to the end customer whereas niche markets may sell more directly as they want to protect their brand + relationship they have with their customers
(they may use retailers however to access a larger no. of people and decrease costs)
How is marketing different for mass and niche markets?
- promotion for mass markets takes place on mass media e.g. popular videos, Tv programmes, billboards e.g. Mars at the Olympics
- whereas promotion for niche markets takes place on niche media more tailored to the needs of the consumer e.g. at Rolex at horse racing
What are the advantages of mass markets?
> gain from E.O.S
> lots of potential customers so higher potential for revenue
What are the disadvantages of mass markets?
> high levels of competition so hard for start-ups
volatile sales
lower loyalty so have to spend more money to ensure this
higher PED, products need to be differentiated
higher marketing costs as a result
What are the advantages of niche markets?
> fewer competitors
strong brand
USP + differentiated so can charge higher prices
low PED (lower marketing costs)
small scale production can be flexible + follow trends easily
What are the disadvantages of niche markets?
> higher cpu and production costs
lower E.O.S
risky as demand may not be constant
less access to people/smaller market so lower potential for revenue
What is Market Size and how is it calculated?
Total value or volume of sales in the market in monetary terms or by amount sold.
- Number of units sold x Price
What is Market Share and how is it calculated?
The proportion of total market sales that a firm has.
- (Sales of one firm/total market sales) x100
What is a monopoly market?
This is when there is only one sole business trading in a market so they face no competition and can charge high prices.
How can you increase your market share?
It is very difficult……
> grow your market: PRODUCT DEVELOPMENT
> diversity and enter and new/different market - MARKET DEVELOPMENT
> eliminate competiton
What is a Dynamic Market?
A market that is constantly changing.
Sellers respond to the changing needs of buyers by improving existing products or service or introducing new ones.
4 reasons the environment is dynamic
> social trends e.g. hairstyles
changes in technology e.g. smartphones
competitive environment e.g. fashion
consumer tastes e.g. fashions
What is Innovation?
It is about putting a new idea or approach into action
e.g. Apple have innovated with their face recognition to get rid of passwords making access easier + quicker
What can innovation do?
- spur market growth
2. can help a business gain market share
What is the difference between innovation and invention?
invention is the formulation of new ideas
but innovation is the practical application of these ideas/inventions into marketable products or services
What are the two types of innovation?
- Product innovation = launching new or improved products or services
- Process innovation = finding better or more efficient ways of producing existing products or delivering existing services
Benefits of product innovation?
> competitive advantage
first mover advantage
improve brand image
increased market share due to differentiation
demand will be more inelastic as you are the first mover - monopoly so higher prices
positive PR
opportunity to build early customers loyalty
Benefits of process innovation? e.g. MINI, AMAZON, MCDONALDS
> more efficient so unit costs decrease so prices are lower: PRICE COMPETITION so can compete
more convenient and accessible so appeals to a wider range/different range of people: NON PRICE COMPETITION
improved quality
greater flexibility