Theme 1 Flashcards
Define market share.
The amount sold by a business as a percentage of the total market for the product concerned.
Advantage and disadvantage of selling in a mass market.
Can make use of Economies of scale enabling you be more competitively priced.
Saturated market
Advantage and disadvantage of selling in a niche market.
Can differentiate your product more and focus on customer needs more closely. - customer loyalty and repeat purchases.
Very vulnerable to trend changes. Should be careful not to place all your eggs in one basket.
How can a business adapt in a dynamic market?
Improving products or making new ones.
What’s the difference between risk and uncertainty?
With ‘risk’ the outcomes are known and can be quantified by calculating probabilities.
With ‘uncertainty’ events are unpredictable. Can be caused by factors outside the businesses control.
Define market research.
The process of gathering data in order to understand current and future customer needs and the nature of the market.
Define product orientation.
Where a business focuses on creating the product and it’s USP. It doesn’t worry about the market.
Define market orientation.
Where a business creates the product to meet the needs of the market. They concentrate on customer preferences and it involves a lot of market research.
What are the limitations of market research?
Sample size - big enough to represent the market fairly but not too big to be expensive
Bias - need a variety of people from the market your examining. Questions can’t lead to a specific answer.
What’s market segmentation?
When a market is divided up into groups, each of which has different preferences and needs.
E.g. by age, income, education, hobbies
Define product differentiation.
When a business creates a distinctive product. This can be giving it a USP, or changing perceptions of the product function or through branding.
What’s a market map?
A tool used to analyse the positioning of brands/products in a market. It plots them according to how they meet customer needs, could be by price and quality.
What’s an advantage and a disadvantage of market mapping?
Can identify gaps in the market which can lead to product differentiation.
A gap in the market doesn’t mean there’s demand.
What’s added value?
The difference between the selling price and the costs involved in the production/delivery of a service.
The business increases the worth customers place on a product by improving it in some way.
