Theme 1 Flashcards
What is a market?
buyers and sellers which trade in a particular market
What are the 2 types of market
mass
niche
what is a mass market
aimed at a large group of buyers. Wide appeal and useful to a variety of people not just a small segment of the population
What is a niche market
aimed at specific group of people. Product is specialised to meet certain needs of buyers in the market
Give examples of mass and niche markets in confectionary market.
Cadbury- mass
Moofree- niche
moo feee sells milk free chocolate
Why does businesses in a mass market have cheaper products
More consumers , so sales volume is higher. They can achieve economies of scale this means products are sold cheaper.
Why do new businesses struggle to survive in a mass market?
New businesses need capital (lots of) they might not have this and struggle
Why are businesses in a niche market more risky than mass market?
they sell to a smaller number of consumers and narrower range of consumers. If there is a change in the market they may struggle to survive
Why can niche markets charge higher prices ?
niche markets sells specialised products this means they can charge higher prices.
What is market size?
total volume of sales in a market over a certain period of time.
How can market size be calculated?
Total consumers in the market
What is market share and how to calculate?
The proportion of the total market a business holds.
business sales
———————- = % answer
total sales in the total market
Why do mass markets have larger market size than niche markets?
There are lots more businesses
What is branding? Why is it important?
Creates a clear logo name and statement. It’s important cos it allows consumed to differentiate their products to consumers
Why do mass markets focus on branding?
mass market businesses sale similar products. so they focus heavily on branding. Niche market consumers focus more on particular requirements met when buying a product
what is a dynamic market + examples
constantly changing market e.g fashion
How can consumer preferences change?
Changes in fashion and advances in technology.
How can markets change?
innovation
change in consumer preferences
the way they want to shop
legislation
How can innovation bring market change?
New products or processes emerge this can lead to growth in some firms and a decline in others. e.g development of digital camera removed polaoirds and disposable camera
How can a change in legislation bring market change?
can affect products sold in a market. 2018 uk government introduced a sugar tax on sugary drinks - many drink manufacturers changed their products so they contained less sugar so they dont have to pay tax
why do businesses need to adapt to changes?
to be successful and maintain and gain market share
what is online retailing?
selling products via the internet
What are 3 benefits to online retailing
less costs to open a store - less staff - saves costs - can lower prices to consumers or keep price same and gain extra profit
convienece - open 24 hours - purchase anytime from anywhere - increases opportunity for sales
customers can easily compare pricing and pick firms with lowest price
3 drawbacks of online retailing
more competition - customers can easily shop around - they can tackle this by making their shopping experience on online stores better than competitors- e.g saving payment details and delivery details
some consumers like too see the products and speak to staff - ways to tackle this includes free returns and online chat services
need to protect fradulent / cyber crimes and transcations and protects consumers personal details - this is expensive and costly
what is direct competition
two or more businesses sell similar products to the same group of consumers e.g grocery market asda tesco sainsburys
what is indirect competition
two or more businesses sell different products to same group of customers e.g italian and chinese takeaways
what are the 4 marketing mixes?
product
price
place
promotion
What is product?
comptitive market contains lots of similar products - need to make sure theres is good quality - they need to be differentiated - this leads to a rise in innovation - to make product unique
what is promotion?
They need to get their products noticed and encourage customers to buy them - they can use promotional campaigns and advertising - can also use branding / celebrity endorsement.
what is pricing?
they use compeitive pricing- if competitior price is lower and quality is better than all customers will move - they can use pentration pricing (setting prices low initally ) to attract customers
what is place?
they need to make sure their products can be easily accessed by consumers. they can sell their products online
How can a small firm change if a large firm opens next to them?
Better quality clothes
promotional offers e.g buy one get one free
lower prices
Why do smaller competitors struggle in competitive markets
They don’t have the budgets needed to make themselves stand out. They need investors to help raise more funds in order to compete successfully.
Why do smaller competitors struggle in competitive markets
They don’t have the budgets needed to make themselves stand out. They need investors to help raise more funds in order to compete successfully.
How can new entrance firms stay competitive in a competitive maket
By becoming a franchise - this is an agreement that allows a business to use an idea name and reputation of another business.
what is a risk?
the probabilities of the outcome are known. Before making a decision businesses can consider the profitability of a negative outcome and decide whether or not to take the decision or not. this makes risks controllable
what are uncertainties?
unexpected events they are things which a business knows could happen but can’t predict if or when it will happen. Uncertainties are usually external things that a business can’t control. E.g bad weather. They usually affect the market as a whole rather than an individual business
What is product orientation?
business focuses on design quality or performance of its products rather than what consumers actually want
What is product orientation?
They might focus on advances in technology to develop a product and function that they think consumers may like. They create new innovate products that consumers may like and put it on the market.
Give an example of a company which product orientates?
Apple continuously develops the design and quality of its i phones and focuses on innovative new functions to capture its market.
What is market orientation?
firm focus heavily on selling products that match consumer preferences. It invests heavily on market research to find out what consumers want and willing to buy.
Why do market ordinated products often charge higher prices?
it’s considered a modern and successful approach than a product orienated one. They tailor products to match consumers
Is market orientation high risk or low risk and why?
low risk as it focuses on consumer feedback
What is market research?
collection and analysis of market information
What does market research find out about consumers?
their wants and needs
and identifying their current wants and needs and try to decide what they would want and need in the future
How does market research allow businesses to predict how much demand there is for its products?
researching level of demand can allow them to know how much supply they need to buy. if their research shows demand is falling they will take steps to increase demand.
How does market research allow the firm to market better?
how they shop e.g online or in store and how they use the product.
this could help them market the product better
How does market research allow firm to know how much to charge?
They can see how much consumers are willing to pay for the product. They want to charge enough to make profit.
How does market research allow businesses to identify competitors.
they research competitors and see what they are doing better than them
Overall what can market research help firms do?
Make more informed decisions
What is quantitative research?
Research which has numerical statistics facts and figures. May have questionnaires
What is qualitative research?
Based on opinions of consumers and doesn’t produce numerical or quantitative results. They are open questions e.g how does a product make you feel . And not restricted to multiple reason
How is quantitative research better?
It gives you data which can be statistically analysed, which makes analysis quicker and easier
Why is qualitative research better?
It is more informative as the responses can be flexible
What is primary research?
Research carried out by the business first hand
What is secondary market research?
Involves using data which is already available
Give the different ways in which a firm can carry out primary market research
Questionaires
Surveys
Phone call
Interviews
Observations for example, looking at the behaviours of the way consumer shop
Focus groups of about 8 to 10 people who come together every month this is beneficial because the ideas can change and they discuss about products
What is test marketing in primary research?
They launch a product in one region and measure cells and customer response before launching it across the country
What is sampling?
Make predictions about the whole market based on sampling a small section of the market
How is primary market research beneficial niche markets?
It is specific for the purpose which is needed for a business can go out and find information which it’s a specifically looking for
How does primary market research keep away competitors?
It is exclusive to the business so competitors can’t see it nor can they benefit from it
What is the limitation to primary market Research ?
It is labour intensive expensive and slow
What does secondary data include information from?
Government publications, reliable Internet sources trade magazines and market reports
In what three ways is secondary market research better than primary market research?
It is quick cheaper and faster than primary market research
What is a limitation of secondary market research?
The data could be very generic and out of date.
What are the benefits of sampling (costs)
costs are kept low because you sample a small group of people rather than the whole market
What can a firm get accurate answers before sampling?
Needs to represent the market age, gender and income. This will be more accurate.
How does the margin of error occur?
Big sampling is more accurate but doesn’t give you 100% of the answers this is because there is always the margin of error.
How do small firms not benefit from sampling?
They cant afford to ask a great number of cosumers for a sample. this increases inaccuracy
Would a niche market focus on costs or accuarcy and why?
Niche market need to understand the consumer better. they need to focus on accuracy to find out what consumers actually want?
Would a mass market focus on costs or accuracy?
Costs because products in a mass market are usually similar and to the same group of consumers.
they can see what products are in demand
can use social networking sites to see reviews
so they focus on costs because they need to keep their costs down.
What should a firm do to avoid bias in market research?
Questionaires that lead a respondent to an answer.
What are limitations of questionaires? Respondents answer?
They might give a response which doesnt reflect their answer e.g they think their answer isnt socially respectable.
What 3 places can a business conduct market research?
Social networking , data bases and websites
How can a firm use its own website to conduct market research?
surveys
questionaires
What sorts of things can they see about a consumers based on their website?
What time of day is consumers mainly go on their websites
what they click on the most
how likely it is to buy their products and how much they are likely to spend
What are the limitations of databases?
The consumer may scroll and not buy something and the firm wont know why
What can a firm see about its competitors through using websites?
Their products and prices
What can a firm read on their or competitors websites and give examples of some platforms and sites
reviews of their products on other platform and online retailors like amazon and specific review websites like trip advisor
what are the drawbacks of reviews
consumers are likely to give bad reviews because they are unhappy with product.this wont reflect the true quality of a product.
What is social networking?
Use of internet- based platforms to make connections with people.
What is ravelry company?
small niche social platform used by crafts, knitting and crochet.
What can a firm monitor on its social media?
It can post and monitor its responses. They can find out what consumers are saying about their product and competitors products. its quick and cheap
What tools can firms use to conduct market research from other social network platforms?
They can pay other social network sites to post surveys on consumer news feed.
What tool does Facebook have which allows it to conduct market research.
Can analyse demographic of its followers and which other pages a firms followers are interested in
What is a limitation of social networking? age?
Depending on the platform you use you will get different answers. E.g facebook is used by older people whilst tt is used by under people.
How can a business collect data and form a database?
Loyalty cards e.g Tesco and Sainsburys they collect names and addresses of consumers which and see their preferences based on what they buy. in exchange for money back based on how much they spend
What can a firm do with information gathered from a database?
Target specific consumers with specific deals which is more effective.
How can firms use databases as part of secondary research?
They can pay for other bases online for a fee and see information on trends , businesses and competitors.
What are the drawbacks of using secondary market research for databases?
It is usually quantative information. This wont give much information about how consumers actually feel about the product.
What is segmentation?
Dividing the market in different groups of buyers
How can market research help segment the market
Can see different wants and needs and which aren’t being met.
you can get to know more about types of consumers in the market.
What can a firm do about needs and wants not being met?
they can create new products
what are the 4 market segmentations?
Demographic
Geographic
Income
Behavioural
What are the 3 things which come under demographic? Explain?
Age- saga hotels are aimed to those above 50
social economic class - modern 1 bedroom flat aimed to young professionals
gender - yoghurts are usually aimed towards woman
What comes under demographic? Which companies mainly use this?
Neighbourhoods, cities , towns, county and country. Usually used by multinational companies as they have consumers all over.
What comes under income segment?
Chanel makeup aims their products towards high income people
Superdrugs own branded make up marketed towards lower income customers.
What comes under behabioural segment?
Usuage - e.g mobile phone suppliers market differently towards heavy phone users comapred to light e.g apple have bigger screens for maybe netflix watchers
lifestyle - busy young workers who work 9-5 may want ready meals
hobbies - high content protein snacks maybe marketed towards healthy eaters , people who go gym or play sports.
Draw a market map
High price
Low quality Highquality
Low price
What can market maps show? Who can benefit from this?
Why?
Gaps in the market.
New entrants and new businesses
Wont be any close competitors
What is the problem with finding and joining gaps in the market?
You need to carry out market research to see if there is actually demand for those products. Have people actually left these markets.
How can market mapping help to push consumers away from competitors?
You can see who your competitors are. You can use marketing strategies to push them away from competitors.
What can a firm do if it realises its sales are falling? on a market map?
They can see how customers view their product on a market map. They can also reposition their products on the map.
Can a market map show popularity?
Yes they show the features of most popular brands.
Can a market map show how much consumers are willing to pay? What can this help them with?
Yes they show how much consumers are willing to pay based on the quality. E.g cameras depending on quality. It can help them with their pricing strategy.
Drawbacks of market mapping? 2 things?
Over simplified.
Biased
How can a market map be to simplified?
They dont say the reasons why a firm e.g can have low quality and high price.
e.g it could be because they are the only seller on the street with that price.
How can market maps be too biased?
They are opinions and biased. People have different views on whether a product is high or low quality.
What is competitive advantage?
When a firm has a unique feature which makes it better than other compeitiors.
What are the 7 ways a firm can gain competitive advantage?
Low costs
Convenience
product innovation
advertising and marketing
relaibility and quality
good customer service
product differentation
How can low costs mean competitive advantage
products maybe similar- low costs= low prices to consumer. or they can keep prices same and increase their profit margins
How can product innovation create competitive advantage?
A business can aim to be the first in the market to introduce new functions for an existing good or create a new unique product altogether .
this increases demand and sales.
How advertising and marketing create competitive advantage?
The more a firm advertises its product and markets it to make it attractive to buyers the more likely it is to generate sales.
How can brands use celebrities in their advertising and marketing?
Create a strong brand imagine by having distinct logos and celebrity endorsement to make their products more memorable and encourage consumers to buy it.
How can a brand use product differentiation to achieve comeptitive advantage?
Have a USP gives it a stand point.
emphasis this USP in their marketing and advertising which makes it really stand out.
How can a brand use reliability and quality to achieve competitive advantage? How can it allow them to achieve higher prices
Consumers will pay for higher quality and more reliable goods
good reputation means they can charge higher prices.
How can a brand use good customer service to achieve competitive advantage?
good customer service is important before , during and after the time of purchase.
What 3 things do staff need to be to achieve good customer service?
Polite, efficient and knowledgebale
How does Apple have great customer service?
Workshops on how to get the most out of their products
Helpful after sales service
How can convenince help to achieve good customer service?
Making the buying experience quicker and easier will attract customers e.g next day delivery increases convience.
What is added value.
The difference between the costs of production of a product compared to the price a consumer pays for the product
What is the formula for added value?
Price product is sold for - cost of making product
What few things can lead to added value?
Branding
logo
convience
