topic 2 key words Flashcards
Bad competition
Where there is a small number of large, powerful providers on the market that only aim to maximise their sales, which may result in mis-selling and a lack of differentiation in products.
Barriers to entry
The features of the market that make it difficult for new firms to enter and compete.
Barriers to expansion
the features of the market that make it difficult for new firms to grow.
Competitive market
A market where there is a large number of sellers and where no one of these is so big that it can dominate the market.
Concentration ratio
The percentage of a particular market accounted for by a certain number of firms.
Customer inertia
The idea that customers are reluctant to change their financial services provider and therefore tend not to challenge poor service
Effective competition
When the providers on the market compete to provide the best product, rather than taking advantage of lack of customer awareness or poor regulation.
Genuine competition
Where there are several providers, who are independent of each other, that design a range of clearly differentiated products for
consumers to choose from.
Good competition
Where there are a good number of providers on the market so that consumers have a variety of firms to choose from.
Market share
The sales that a company makes as a proportion of the total market for the products and services it provides, or the sales of a specific product as a proportion of the total market for that product.
Oligopoly
A market dominated by a few large firms, eg the financial services sector.
Product complexity
The idea that financial services products can be too complicated for consumers to understand.
Wasteful competition
Where providers spend huge amounts of money on designing, branding and marketing a product that is only slightly different from
those of its competitors.
