Theme 1 Flashcards
Advantages of Mass Markets
Larger Volume of sales, Non-Specific Products - easier to sell.
Disadvantages of Mass Markets
High Competition, Inflexible to Changes in Demand.
Advantages of Niche Markets
High Profit Margins, Less Competition, Small Scale Production - Flexible.
Disadvantages of Niche Markets
High Risk - Inconsistent Demand, High Unit Costs - No EOS
Market Share Equation
SALES OF A BUSINESS/TOTAL SALES X 100
How To Adapt To A Dynamic market
Be Flexible With The Market, Investment in new Technology and Products.
Advantages of Primary Research
Reliable, Tailored to the Business, Qualitative Data
Disadvantages of Primary Research
Time Consuming, Expensive, Biased Questions/Responses
Advantages of Secondary Research
Easily Accessible, Quick and Efficient.
Disadvantages of Secondary Research
Can Be Expensive, May not be up-to-date.
Product Orientation
Product is developed with quality/function in mind but not necessarily in line with customer requirements.
Market Orientation
The consumer is the most important factor when providing products for the market in other words, the business has a sensitivity to customer requirements.
Market Mapping
Technique used to understand how products/businesses are viewed relative to competitors, based on two relevant characteristics.
Advantages of Market Mapping
Helps Decision Making, Gain Better Understanding of Customers + Competitors.
Disadvantages of Market Mapping
Often perceptions of businesses may not fit into the model, New Entrants may change the market.
Competitive Advantage
A sustainable way that a business can keep its products/services ahead of competition.
How Can A Competitive Advantage Be Achieved?
By using resources to achieve a cost advantage or differentiation advantage.
Factors Affecting Demand?
SIDS CAFE
Demand Increase?
Outward Shift Right
Demand Decrease?
Inward Shift Left
Factors Affecting Supply?
SPITE - Subsidies, Production Cost, Indirect Tax, Technology, External Shocks.
Increase In Supply?
Outward Shift Right
Decrease In Supply?
Inward Shift Left
PED Formula?
% Change in QD/% Change in Price
Elastic Products
Between - 1 and - Infinity
Inelastic Products
Between 0 and - 1
Factors Influencing PED
Degree Of Differentiation, Number Of Substitutes, Luxury or Necessity?, Cost, Value of Brand.
Significance of PED
Helps understand consumers responsiveness to price change, Pricing Strategy, Sales Forecasting.
YED Formula?
% Change in QD/ % Change in Income (Y)
Normal Good
Demand Increase as Income Increases,
Inelastic,
Between 0 and 1,
Examples; Milk and Bread.
Luxury Good
Demand Rises as Income Rises,
Elastic,
Positive Number Greater Than 1,
Examples; Business Class Travel, Luxury Cars.
Inferior Good
Demand Falls as Income Rises,
Negative Number,
Examples, Supermarket Own Brands + Bus Transport.
Factors Influencing YED
Inelastic or Elastic?
Brand Power,
Consumer Spending,
Expectations.
Design Mix
Aesthetics, Function, Cost.
Why Is Design Mix Important
Gives a business competitive advantage over rivals.
Above The Line Advertisement
Advertising to a mass audience - TV, Cinema, Newspaper.
Advantages of ATL Advertisement
Reach Large Audiences Very Quickly
Disadvantages of ATL Advertisement
Very Expensive, Could Target Wrong Audience.
Below The Line Advertisement
Personal Advertising to Small Niche Markets - Posters, Leaflets, Social Media.
Advantages of BTL Advertisement
Increased Customer Loyalty, Ability To Target Promotion.
Disadvantages of BTL Advertisement
Targeting Different Cultures Can Be Difficult, Smaller Audiences.
Branding Definition
A name or symbol that distinguishes one product from another supplier.
Factors To Determine Pricing Strategy
Brand Strength, Level of Competition, PED, Stage of Product Life Cycle.
