Types of Market

Question 1

In what ways can the size of a market be measured?

Answer 1

Volume (number of units sold in that market within a given time frame) or value (number of units sold x the average price)

Question 2

What are the advantages of mass marketing?

Answer 2

• Potential for large amounts of revenue

- Opportunity for economies of scale

Question 3

What are the disadvantages of mass marketing?

Answer 3

• Little differentiation means there is no opportunity to charge premium prices
• Often a lot of competition
• Marketing is often expensive as a large amount of consumers need to be targeted.

Question 4

Define MASS MARKETING

Answer 4

Mass marketing is targeting the whole market with one product that is marketed in the same way.

Question 5

Define NICHE MARKETING

Answer 5

Niche marketing is targeting a smaller segment within the market who have specific characteristics, wants and needs.

Question 6

How is market share calculated?

Answer 6

(No. of units sold by an individual business/total no. of units sold in that market) x 100.

Question 7

What are the advantages of niche marketing?

Answer 7

• High levels of differentiation mean consumers are willing to pay premium prices
• Tailor made products allow businesses to effectively meet consumer needs and therefore gain a competitive advantage
• Promotion can be targeted and cost effective

Question 8

What are the disadvantages of niche marketing?

Answer 8

• Small target market means low potential for revenue
• Difficult to benefit from economies of scale
• A drop in demand can have significant negative affects.
• Premium prices may attract competitors who could decrease market share.

Question 9

What are the factors that could cause a change in the market?

Answer 9

• Demographics
• Social trends
• The economy
• New competitors
• Ethical or environmental reasons
• New technology or innovation

Question 10

Define INVENTION

Answer 10

The development of new ideas for products and processes.

Question 11

Define INNOVATION

Answer 11

The practical application of new inventions into marketable products or services.

Question 12

What are the benefits of the innovation of products?

Answer 12

• The opportunity for first mover advantages; the opportunity to build market share and a loyal customer base.
• Businesses can charge premium prices as it may gain them a competitive advantage

Question 13

What are the benefits of the innovation of services?

Answer 13

• Improves efficiency
• Reduces cost
• Improves quality
• Increases flexibility

Question 14

How can a firm become more adaptable?

Answer 14

• Engaging in ongoing market research
• Investing in new research and development
• Continuously improving efficiency (keeping costs low)
• Increasing flexibility (having multi skilled workers)

Question 15

Define RISK

Answer 15

Risk is the possibility that things may go wrong. A business has control over how much risk they take.

Question 16

Define UNCERTAINTY

Answer 16

Uncertainty is the inability to predict future events, particularly those outside of the business’ control.

Question 17

How is market change/growth calculated?

Answer 17

(change in market size/original market size) x 100

Question 18

Define ONLINE RETAILING

Answer 18

Online retailing involves buying and selling things online, through e-commerce.

Question 19

What are the benefits of online retailing?

Answer 19

• Increased geographical coverage
• Increase convenience
• Lower overheads
• Personalisation
• More effective targeting

Question 20

What are the drawbacks of online retailing?

Answer 20

• Increases the consumer’s ability to compare prices
• Returns and handling of goods can be expensive
• Increased levels of competitors

Question 21

Define PUREPLAY RETAILERS

Answer 21

Pureplay retailers are retailers that operate solely through e-commerce and have no physical store.

Question 22

Define a MARKET

Answer 22

A market is anywhere where buyers and sellers come together to transact with each other through the process of buying and selling goods or services. This can be online through website or in a physical store.

Question 23

Define a DYNAMIC MARKET

Answer 23

A dynamic market is one which is always changing. The business will need to constantly update their marketing mix in order to meet the needs of their customers.

Question 24

Define COMPETITION

Answer 24

Competition is the number of competitors that a business faces within the market that it operates.