Theme 1.1.1: Meeting Customer Needs - The Market

Question 1

What is a market?

Answer 1

A place where buyers and sellers interact to agree to trade a certain product for a certain price.

Question 2

Niche Market

Answer 2

A small market with specific needs for a specialised product or service. E.g Lush with their Eco-friendly products.

Question 3

Mass Market

Answer 3

A very large market where people tend to buy the same / similar products. E.g the soft drinks market, dominated by Coca Cola

Question 4

Mass Marketing

Answer 4

A business providing a standardised product to a large number of people with specific needs and wants. E.g Shampoo, everyone needs it (unless you are bald)

Question 5

Characteristics of a niche market

Answer 5

. Smaller than a mass market
. High production costs due to flexibility, thus high costs also
. Low sales volume
. Targeted to a very specific group of people, your not going to target dog food to people who have a cat.

Question 6

Characteristics of a mass market

Answer 6

. Huge, usually billions of pounds spent on it.
. Standardised products.
. Product is highly available and well know. For example more people can identify Ronald McDonald from a picture than they can Jesus.

Question 7

Niche Market Advantages

Answer 7

. Less Competition
. Easier to meet customer needs due to flexibility
. Increased customer loyalty (repeat purchases)
. Can respond to market change quickly. For example if tomorrow everyone was suddenly against the use of an ingredient in coke, they would be buggered.

Question 8

Niche Market Disadvantages

Answer 8

. Little to no room for expansion
. Successful niches can be taken over by bigger businesses. For example red bull was a niche then coca cola brought out monster.
. Vulnerable to economic down turns.

Question 9

Mass Market Advantages

Answer 9

. Lots of customers
. High Sales
. High Revenue
. Lots of room for expansion
. Lower Production costs

Question 10

Mass Market Disadvantages

Answer 10

. Competition is high
. Competitive pricing means lower profit margins
. High advertising and promotional costs mean reduced profitability

Question 11

Market Size

Answer 11

Measured by sales revenue / value or the volume minus actual number of items sold.

Question 12

Market Share

Answer 12

The literal percentage of a market that a business occupies in terms of how much money it receives overall and number of sales. E.g a market of crisps gains 100 billion overall, walkers gains 68 billion of this, they have a market share of 69%

Question 13

Ways of growing your market share

Answer 13

. Expansion of production
. More sales
. More customers
. More profits

Question 14

Dynamic Markets

Answer 14

Markets that are constantly changing and can change dramatically in a short period of time. The fashion industry is an example of a dynamic market e.g Coat market may have been dominated by Paul’s Boutique, n in 2010, now they really, really don’t dominate at all.

Question 15

Why is it important that a business can ADAPT to the changing nature of their market?

Answer 15

. New technology can be introduced which can lower the cost of production, if businesses don’t keep on top of this their competitors may sell products for cheaper and take their customers.
. The needs of buyers is constantly changing and if you don’t keep up to their demands they will switch to competitors.

Question 16

Online Retailing

Answer 16

The selling or promoting of a product online e.g Amazon

Question 17

Digital Economy

Answer 17

All the areas of an economy that are directly impacted by digital technologies e.g Apple, Snapchat etc

Question 18

Market changes

Answer 18

Changes to either the supply or demand of a product or service.

Question 19

Causes of market change

Answer 19

. Change in consumers needs or preferences
. New technology and innovation
. New laws and regulations e.g the ban of asbestos changed the building market
. Competition from other companies

Question 20

Product innovation

Answer 20

When new technology makes it possible to make new products or, improve the quality of already existing ones.

Question 21

Process innovation

Answer 21

Using new technology to improve production methods so that costs can be reduced or quality can be improved and prices for the consumer may also be cut

Question 22

What areas does process innovation also affect?

Answer 22

. Distribution Channels
. Stock Control Systems
. Supply Chains

Question 23

In terms of adapting to change, what may competitors cause other businesses to do?

Answer 23

. Cut Prices
. Improve Quality
. Diversify into Different Markets

Question 24

What is Marketing?

Answer 24

Action or process of promoting and selling a product or service including market research and advertising. How a business connects to its customers

Question 25

What 5 things does competition result in for the consumer?

Answer 25

. Lower Prices
. Better Quality
. More Choice 
. Innovation
. Greater Efficiency