Understanding Markets

Question 1

Define Market

Answer 1

A place where buyers and sellers come together.

Question 2

Define Demand

Answer 2

The amount of a product or service that consumers are willing and able to buy at any given price over a period of time.

Question 3

What factors affect the demand of a product?

Answer 3

Price of the product, Price of other goods, Competitors, Income of consumers, Fashion at the time, Seasonal factors, Marketing & Advertising.

Question 4

Define Market Segmentation

Answer 4

The classification of customers or potential customers into groups or sub-groups (market segments), each of which responds differently to different products or marketing approaches.

Question 5

What are the main types of market segmentation?

Answer 5

Demographic and Geographic segmentation.

Question 6

What is Demographic Segmentation?

Answer 6

The main forms, of demographic segmentation, are: Age, Gender and Social Class.
E.g. Age: Club 18-30 targets its holidays at a specific age range, whereas Saga holidays are aimed at people over 50.

Question 7

What is Geographic Segmentation?

Answer 7

The main forms, of geographic segmentation, are: Location, Region, Urban/Rural.
E.g. Location: Customers within 10 miles of the M25.

Question 8

What are the Benefits of Market Segmentation?

Answer 8

Increase market share, Assist new product development, Extend products into new markets, Identify ways of marketing a product.

Question 9

What are the Drawbacks of Market Segmentation?

Answer 9

Difficulty in identifying the most important segments for a product, Recognising changes in the segments interest in the product, Reaching the chosen segment with marketing, Meeting the needs of customers not included in the chosen segment.

Question 10

Define Market Size

Answer 10

The volume of sales of a product (e.g. the number of computers sold), or the value of sales of a product (e.g. the total revenue from computer sales).

Question 11

Define Market Growth

Answer 11

The percentage change in sales (volume or value) over a period of time.

Question 12

What factors influence Market Growth?

Answer 12

Economic growth, Changes in taste, Fashion, Social changes, The nature of the product (high/low price).

Question 13

Define Market Share

Answer 13

The percentage of the total sales of a product or service achieved by a firm or a specific brand of products.

Question 14

Market Share =

Answer 14

sales of one product or brand or company /

total sales in the market X100