Unit 3

Question 1

Whast is a Market?

Answer 1

Market - The Market is all customers and consumers who are interested in buying a product and have the ifnancial resources to do so

Question 2

Why does the Market for a business change overtime?/ what affects the the amount of money customers spend on buying goods and services?

Answer 2

Consumer Marekts (for individual consumers)
Indstrial Marekts (for businesses)

Price of Products - Price of Products change overtime, Consumers will buy the product with the lower price (nike)

Changes in INcome - Consumers income is changing for the wrost so they will end up spending money on needs instead of luxurious wants (housing prices)

Changes in Population - When the country’s population grows in size, the more people the more business sales (london)

Changes in Fashon - The normality of fashion changes, people want what’s hot and don’t want outdated brands that no one wears anymore (crocs)

More Competition - Some Business get lost in the erruption of the new brands and fashion and get left behind, people want the cooler brands that have risen up (hmv)

Question 3

What is a Consumer Base?

Answer 3

the group of people a business sells its product to

Question 4

Target Market?

Answer 4

individuals identified by a business as the customers or cunsumers of its products. (when a business decides to produce products for a particular grop of consumers

Question 5

What are Consumer Markets?

Answer 5

Products sold to the final consumer: eg televisions and cars

Question 6

What are Industrial Markets?

Answer 6

productsd sold to other businesses for use in the production process: eg machinery and equipment

Question 7

What is Market Segmentation?

Answer 7

The process of dividing a market of potential customers into groups, or segments, based on different characteristics

Question 8

How are the different ways markets are segmented in Market Segmentation?

Answer 8

There are many ways markets are segmented:

Socio - economic groups (income) - the money that the customer has

Demographics (age, gender, ethnicity)

Geographic - recognises the consumers in one location may have different needs from cunsumers in another location

Phycographics (lifestyles, beliefs, attitudes)

Question 9

What is a Market SEGMENT?

Answer 9

A part of the whole market in which consumers have specific characteristics

Question 10

What are Benefits to Market Segmentation?

Answer 10

Better matching of product to specific customer needs, likely to increase sales

Helps with new product development - focused on needs of customers in the segment

Small Firms who wouldent be abnle to co operate in a whole market then hav an option to make it easier and operare in 1 or 2 segments

Marketing strategies can be better targetted at each segment. This reduces sxarce rescources. For example, advertising can be directed at the target market and not wasted on trying to sell the product to the whole market

Question 11

What is Free Trade?

Answer 11

no barriers exist that might prevent trade between different countries

Question 12

What is Niche Marketing?

Answer 12

Developing products for a small segment of the Market
OPPOSITE OF MASS MARKETIG

Question 13

What is Mass Marketing?

Answer 13

Selling the same prodct to the whole Market
OPPOSITE OF NICHE MARKETING

Question 14

What are Benefits and Limitations of Niche Marketing?

Answer 14

B: Less copmpetition in the small firms which means that you do not have to waste scarce rescources responding to competitor actions
Consumers will usualy pay more for an exclusive product which gives firms the oppertunity to charge high Prices

L: Small Chanfges in Consumer Spending Patterns could significantly effect the firms since there are such less customers

Question 15

What are Benefits and Limitations of Mass Marketing?

Answer 15

B: Much Larger Market Has the Potential for high sales and profits
Changes in consumer patterns don’t have a massive effect on abusiness in a mass market which reduces the risk for them

L: Many more competitors which lowers price
Consumers nowerdays are often looking for something more different and exclusive and don’t want the same product mass marketing

Question 16

What is a Market oriented Business?

Answer 16

Businesses that Conduct Market Research to find out exactly what consumers want, and design a product to meet their requirements
(Describes most businesses including McDonald’s, Nike, Innocent)

Question 17

What is a Product Oriented Business?

Answer 17

Businesses that Concentrate on developing a really good product, then persuading consumers to buy it afterwards
(Sony, Walkman, Apple Iphone, Range Rover but these businesses do still use market research)

Question 18

What is Primary Research and Secondary Research?

Answer 18

Primary Research - The gathering of New Information, specific to the needs of the business eg focus groups and test markets

Secondary Research - The use of data that is already in existence eg Commercial Reports and Goverment Data

Question 19

What is Market Research?

Answer 19

The process of collecting and anyising data about the customers, competitors and market for a product

Question 20

What are Advantages and Disadvantages of Primary Research?

Answer 20

Advantages of Primary Research: New ideas that the company may not have seen before

These ideas are not outdated

Disadvantages of Primary Research:
People may be rushing this survey / focus groups to get to the reward therefore not producing good and helpful awnsers

Question 21

What are Advantages and Disadvantages of Secondary Research?

Answer 21

Advantages of Secondary Research: Could solidify the message / point by using better language or simplify the message so that people can understand this easier.

Easier for the business to find instead of hosting focus groups or spending money on polls, much easier to find.

Disadvantages of Secondary Resarch: Could be missing vital information that was said when the information first came around.

Could be outdated opinions / information

Question 22

What is the Product Life Cycle?

Answer 22

The life of a Product is the period of time during which it appeals to customers.

Question 23

What are the different stages of a Product Life Cycle?

Answer 23

Introduction Stage: The product is introduced in the Market, Sales are Low. Product might be making a loss in this stage

Growth Stage: Product is becoming better known to consumers. Product starts to earn profit during this stage.

Maturity Stage: Sales are no lonjger growing but are no longer falling

Decline Stage: Profits are falling and the p[roduct becomes unprofitable

Question 24

How does Brand Image increase a Business’es sales and revenue?

Answer 24

Consumers will recognise the product more eassily when looking at simmilar products

Product can be priced as higher than not well known brands

Easier to launch new products because Consumers already know and trust the brand

Question 25

What are different pricing methods and what are the Advantages / Disadvantages?

Answer 25

Market Skimming - setting a high price for a new product that is unuique or very different from any other product on the market

Penetration Pricing - setting a low price to attract new customers

Competitive Pricing - setting a price simmilar to that of competitors

Cost Plus Pricing - based on the cost of making the product - prices may be set higher then competitors

Promotional Pricing is when the normal price is discounted or when consumers are offered more of the product for less than the full price. - may lose money from this due to the lower price - also attracts more customers so more revenue

Question 26

What is Demand?

Answer 26

Demand - the number of people who are willing and able to purchase your product

Question 27

What is Price Elasticity of Demand?

Answer 27

Price Elasticity of demand measures how much the demand for your product changes when you change the price

if demand is elastic: a change in price causes a big change in demand
If demand is inelastic: a change in price causes a small change in demand

Question 28

What does Revenue Equal to?

Answer 28

Revenue =Price x Sales

Question 29

What is Promotion?

Answer 29

Promotion - refers to all the ways of spreading information about a product, brand or company

Question 30

What is Above the Line Promotion and Below the Line Promotion?

Answer 30

Above the line promotion - uses traditional advertising media eg TV, radio, newspapers, internet media. It has to be paid for directly

Below the line promotion: Promotion that is not paid for communication but still convinces the consumer to buy the product

Question 31

What is the Channel of Distrobution?

Answer 31

How a product gets from the Producer to the Final Customer

Question 32

What is a Wholesaler?

Answer 32

A business that buys products in bulk from producers and then sells them to Retailers

Question 33

What is a Retailer?

Answer 33

shops and other outlets that sell goods and services to the final customer

Question 34

What are Advantages and Disadvantages of Channels of Distrobution?

Answer 34

Producer → Consumer - All of the profit is earned by the Producer, it is the quickest method of getting the product to the consumer - All promotional activities and storage costs must be paid by the producer, customers cannot try the products before buying,

Producer → Retailer → Consumer: Cusomter can see and try the Prducts before buying, retailer will pay for advertising and is normally in a better location for the consumer - The retailer takes some of the profit away from the Producer, producer must pay delivery costs to the retailers

Produer → Wholesaler → Retailer → Consumer: Transport cost to the retailer is paid by the wholesaler, Distrobution through Wholesaler means the Producer can sell it’s product to a Larger Market

Producer → Agent → Wholesaler → Retailer → Consumer: Agent has Knowledge of the Market and will find the best possible Wholesaler and Retailers to do their Job - The Producer now get’s barely any profit

Question 35

What is E Commerce?

Answer 35

Use of the Internet and other Technologies by Business to Market and Sell goods

Question 36

What are Oppertunities and Drawbacks to E Commerce?

Answer 36

Introduced to new customers abroad than they did before
Reduced Costs - the staffing and other costs of owning a shop are not needed
An Online Website can provide a consumer with everything it needs to convince a consumer to buy the product

Increased Competition since you are boeing introduced to new and bigger markets

Question 37

What is International Franchising?

Answer 37

International Franchising - International Businesses expanding Abroad (expanding into an international market) - this is one of the easiest ways to expand internationally because you can just sell your rights to a foreign country.

Question 38

What is a Joint Venture?

Answer 38

Joint Venture An agreement with two businesses where they work on a project together - such as Uber and Volkswagon working together, Volkswagon providing electric cars and Uber using them in Berlin