Theme 1 Flashcards
What is a Niche Market?
Where a business targets a smaller segment of a larger market, where customers have specific needs and wants.
What is a Mass Market?
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 form the majority in the market
- Customers needs and wants are more “general” & less “specific”
- Associated with higher production output and capacity + potential for economies of scale
- Success usually associated with low-cost (highly efficient) operation or market leading brands
What are the aims of Mass Marketing?
- Create products with universal appeal
- Aim for leadership of the largest market segment
- Build strong brands that are associated with the underlying products
- Exploit economies of scale to earn high profits
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 costs relatively low
What are the advantages of a nice market segment?
- Less competition- a “big fish in a small pond”
- Clear focus- target particular customers
- Builds up specialist skill and knowledge
- Can often charge a higher price
- Profit margins often higher
- Customers tend to be more loyal
What are the disadvantages of a nice market segment?
- 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- all “eggs in one basket”
What is market size?
- Indicates the potential sales for a firm (the “size of the prize”)
- 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- since a firm cannot influence it
What is market growth?
- A key indicator for existing and potential market entrants
- Growth rate can be calculated using either value (e.g. market sales) 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 indicators of competitive advantage
- Key is to look for significant +/- changes
What is a dynamic market?
- All markets are dynamic- they all change!
- But the pace and nature of change varies considerably by market
- Key sources of change:
- Customers 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 in dynamic markets?
Innovation is about putting a new idea or approach into action. Innovation is commonly described as ‘the commercially successful exploitation of ideas.’
What are the two types of innovation?
Product innovation- launching new or improved products (or services) on the market.
Process innovation- finding better or more efficient ways of producing existing products, or delivering existing services.
What are the benefits of process innovation?
Reduced costs
Improved quality
More responsive customer service
Greater flexibility
Higher profits
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 competitors by being able to offer better value, quality and/or service.
Why is market research important for a business?
Market research is important because customers differ in terms of …
- the benefits they want
- amount they are able to or willing to pay
- Media (e.g. television, newspapers, websites and magazines) they see
- Quantities they buy
- Time and place that they buy
What are insights provided by effective market research?
- Dimensions of the market (size, structure, growth, trends etc.)
- Competitor advantage (market share, positioning, USPs)
- Needs, wants and expectations of customers (& how these are changing)
- Market segments- existing and potential opportunities for new segments
What is product and market orientation?
Product orientation: Business develops products based on what it is good at doing.
Marketing orientation: Business responds to customer needs and wants- designs products accordingly.
Why is market orientation important to marketing success?
Markets are much more dynamic
Customers are becoming more demanding
Barriers to market entry getting lower
What are the two key categories of market research?
Primary research- data collected first-hand for a specific research purpose.
Secondary research- data that already and which has been collected for a different purpose.
What are the benefits of primary research?
- Directly focused to research objectives
- Kept private- not publicly available
- More detailed insights- particularly into customer views
What are the drawbacks of primary research?
- Time-consuming and costly to obtain
- Risk of survey bias
- Sampling may not be representative of
What are the benefits of secondary research?
- Often free and easy to obtain
- Good source of market insights
- Quick to access and use
What are the drawbacks of secondary research?
- Can quickly become out of date
- Not tailored to business needs
- Specialist reports often quite expensive
What are the main sources of secondary data?
Google, Government departments, Trade associations, Trade press & magazines, Competitor websites & marketing materials, Market research reports
