Topics 1-8 (Markets) Flashcards
Advantages of Mass Markets
- Large Scale Production means lower average cost
- Straight-forward
- Large sales volume
- Brand Loyalty
Disadvantages of Mass Markets
- Lots of competiton
- Homogenous products need to stand out
- High volume output isn’t flexible if demand changes
Advantages of Niche Markets
- Can charge a premium price
- Easier to target customers
- Small scale production, less benefit from EoS
- Less competition
Disadvantages of Niche Markets
- Risky as demand may not be constant
- Higher unit costs
What is a dynamic market?
Dynamic markets change over time. Companies must adapt as markets shrink, grow, emerge or dissapear. Fixed markets, e.g. Baked Beans, do not change much.
Reasons for market growth
- Economic growth
- Innovation
- Social Changes
- Legislation Changes
- Demographic Changes
5 main ways in adapting to change
- Flexibility
- Market Research
- Investment
- Continuous Improvement
- Develop a niche
One advantage of being market oriented?
These businesses can respond quicker to changes in the market, and they can be better at beating competition.
Factors affecting if a business is product or market oriented
- Nature of the product
- Policy decisions
- Degree of Competition
What are the benefits to a company of using market research?
- Helps reduce the risk of failure
- Identify customer needs and wants
- Finds out likely demand
- Reduces waste
- Provides insight on consumer behaviour
Methods of Primary Market Research
- Questionairres
- Postal Surveys
- Telephone Interveiws
- Focus Groups
- Observation
- Test Marketing
Methods of Secondary Market Research
Internal:
- Sales figures
- Annual Reports
- Stock Movements
External:
- Information from competitiors
- Government publications
- Retail audits
What is test marketing?
Test marketing involves selling a new product in a restricted geographical area to test it before national launch. It reduces the risk of failure of failure.
The limitations of Market Research
- 90% of all products fail
- Market Research is not always accurate
- Launching products is extremely risky
- Humans do not always react in the same way
- EXPENSIVE
What is market segmentation?
Where markets are divided into different segments. Some companies focus on one specific segment, for example, luxury cars are targeted at wealthy customers.
