theme 1 a level business

Question 1

what is a mass market?

Answer 1

a mass market refers to a market where the products appeal to a wide range of consumers/ a wide range of segments within the whole market. has a wide range of appeal to most of the population not just segments of the population

Question 2

market definition

Answer 2

a market refers to all of the buyers and seller of paticular type of product in a paticular place, eg. the Uk clothes market refers to all of the people buying and selling clothes within the UK

Question 3

nieche market definition

Answer 3

products that are aimed at a specific group of buyers or a specific segment of a larger/more mass market. products in niche markets tend to be more specialised in order to meet the paticular requirements of the buyers in the niche market

Question 4

what are some benefits of operating in a mass market ?

Answer 4

• likely to be more profitable as will appeal to a wide range of customers/ has a wider target audience
• can benefit from economies of scale as will be operating in a large market and can therefore afford large machinery which will make it cheaper to produce products in the long run
• low production costs as are all identical items such as shampoo and aren’t personalised items
• ## higher sales volumes

Question 5

drawbacks of operating in a mass market?

Answer 5

• hard to gain an initial foothold in a mass market for a smaller business as won’t be able to compete fairly with the larger businesses due to things such as machinery being too capital intensive to purchase.
• higher levels of competition will need to focus a lot on business stratergy in order to stay competitvie and make more sales than competitors

Question 6

what are some benifits and drawbacks of operating in a niche market?

Answer 6

benefits
- can appeal to a niche segment and therefore less likely to have high levels of competition (lower levels of competition)
- can generate high profits as products may be bespoke or different to that of indirect competitors operating in the mass market.

drawbacks
- may be seen by sources of finance such as banks as more risky as have a smaller potential target audience/ customer base
- sell a less diverse product range
- if there is an external change or factor which affects the market this could quickly affect the level of sales/customers that the niche market attracts

Question 7

market share definition

Answer 7

market share is the proportion of the total market that the business holds, caluclated by dividing the total value of the sales of a business with the total value of all of the sales of the total market and x100 to get a percentage awnser

Question 8

market size definition

Answer 8

market size refers to the total value of sales within the whole market over a certain time period which is usually a year.
can also measure market size by the amount of consumers in a market

Question 9

what is a dynamic market and why is this important to a business

Answer 9

most markets are dynamic which means that they are rapidly changing and evolvign therefore a business needs to be able to innovate at an appropriate speed in order to maintain their competitive advantage, market share, and profit levels.

can change with regards to consumer preferences,innovation, the way that customers shop eg. the rise of online shopping and bricks and clicks, the competitive landscape or there can be changes in legislation within a market.

Question 10

how do firms adapt to a dynamic market?

Answer 10

develop new products,change current products, change how they market products in order to keep up with consumer preferences,lower prices/ more competitive pricing

Question 11

what are some of the benefits and drawbacks of online retailing?

Answer 11

benefits
- lower costs as don’t need a physical shop or to employ as many staff
-can reach a wider target market geographically
- better convenience for customers as can order at any time from anywhere in the world
- customers can compare prices more easily and get the best deal

drawbacks
- may limit the segments of a market that a business can reach for example a business which sells clothes aimed mainly at the 50-60 age group is less likely to operate solely online as many of this age group would prefer to shop in store and may have problems with operating a website compared to younger people who are more used to the recent advances made in technology in the last 20 years
- may face more competiton online so need to make sure that they have ways to adapt to a dynamic market
-some consumers want to speak to staff face to face and see a product face to face before buying it
- expensive to maintain security in order to protect customers details etc

Question 12

what does it mean for competition to be direct?

Answer 12

direct competition is where two or more businesses sell similar products that appeal to the same group of customers such as sainsbury’s and waitrose in the food market are in direct competition

Question 13

what does it mean for competition to be indirect ?

Answer 13

indirect competition is where two or more businesses sell products that are different but they are competing for the same customers eg a takaway indian and a takeaway italian are both competing for the same customers

Question 14

how does competition affect the marketing mix of a business

Answer 14

the marketing mix the four p’s
price - may make a business become more competitive on price in order to take customers away from competitors eg the sue of the competitive pricing stratergy which is based off of the prices of other businesses
product - a firm in a competitive environment needs to make sure that their product is of good quality, distinctive from competitors and innovative
place - businesses need to make sure that it is easy for a customer to purchase their product/ gain acess to it as this helps to improve brand image and get a competitive edge
promotion -
have to make sure that their product is notices by consumers and encorages them to buy it over comepetitors products

Question 15

are large companies more likely to be sole traders or limited companies?

Answer 15

larger national or global businesses are more likely to be limited companies (plcs & LTDs) because new and smaller firms will often struggle to compete in large mass markets and in order to win market share business owners often need to gain investors which can be achieved by selling shares under a limited company ownership structure

Question 16

what are risks?

Answer 16

risks are decisions that are made which have calculated outcomes and probabilities of outcomes that are known and within control of the business.

Question 17

what are uncertainties?

Answer 17

uncertainties are unknown events which may happen and are out of the control of business owners such as a recession, however businesses can plan for the future using cash flow forecasting and business plans to reduce the impact which an uncertainty such as a recession may have on the business in the future.

Question 18

what does it mean for a product to be made with a product orientated approach ?

Answer 18

if a product is produced with a product orientated approach this means that production and marketing decisions that are made focus heavily on the design,quality and the performance of the product rather than necesscarily being exactly what the customers want. when making a product in this approach it is often said that the business puts the product on the market and then convinces customers to buy it even if they didn’t want it initially. Apple and many tech companies which have high levels of brand loyalty use this approach when designing new and innovative products

Question 19

what is a market oriented production and marketing approach?

Answer 19

when producing and marketing a new product the business focuses heavily upon selling products that match consumer preferences and tastes and is often more market research heavy than product orientation.
- higher market research costs in order to sell a product that is extremely close to what the market is demanding
- considered to be a more modern and successful approach to development and marketing
- can be seen as a more low risk strategy as is based on consumer feedback and can accurately predict the demand levels of the product