1.1.1 Markets

Question 1

What is a market?

Answer 1

Anywhere where buyers and sellers meet e.g Westfield

Question 2

Define ‘market research’?

Answer 2

• The process of systematically gathering data from consumers which can be used to influence the business decisions

Question 3

What is market size?

Answer 3

• The total sales value or sales volume in a given market

Question 4

What is a mass market?

Answer 4

• • Where products are aimed at the largest (broadest) part of the market

Production usually happens on a large scale

Mass marketing occurs when businesses sell their products to most of the avalibale market

Question 5

What is a niche market?

Answer 5

• Where a business targets a smaller segment of a larger market, where customers have specific needs and wants

Production usually happens on a small scale

Question 6

What are the characteristics of a mass market?

Answer 6

• Products are less unique as aimed at broader market segments
• Low average costs due to large scale of production- benefit from economies of scale
• Low prices lead to greater affordibility & higher sales volume
• Low prices lead to lower profit margins

e.g. Primark

Question 7

What are the characteristics of a niche market?

Answer 7

• Products more specialised & unique as aimed at narrow market segments
• High average costs due to small scale production
• High prices make products less affordable & lead to lower sales volume
• High prices can allow business to earn higher profit margin

e.g. Louis Vuitton

Question 8

What can the size of a market be measure through?

Answer 8

• Sales volume or sales value

Question 9

What is sales volume?

Answer 9

• The number of products sold
  (i.e physical amount of products being sold)

Question 10

What is sales revenue?

Answer 10

Price X Quantity sold
(i.e the financial value of the units sold)

Question 11

How can you calculate market share?

Answer 11

Sales of a business/Total sales in the market X100

Question 12

What is a brand?

Answer 12

• • A name, image or logo which helps one product/service stand out from it’s competitors

Branding is one of the key ways businesses achieve product differentiation

Question 13

Define ‘product differentiation’.

Answer 13

• The process of distinguishing a product or service from competitors products in the market

Question 14

Why are brands so good?

Answer 14

• • Brands add value, often making product/service more desirable to consumers
• Businesses operating in mass markets use brands to stand out from competitors
• Brands influence the position of a business within its market- stong brands are able to charge higher prices than weaker brands

Question 15

What is meant by a business ‘adding value’?

Answer 15

• The process by which firms increase the price that the consumer is willing to pay

Question 16

What is meant by a dynamic market?

Answer 16

• A market that is a subject to rapid or continuous changes

e.g. the mobile phone market- landline-Iphone 15

Question 17

What are the 4 areas to consider when examining dynamic markets?

Answer 17

• Online retailing
• How markets change
• Innovation and market growth
• Adapting to change

Question 18

What is online retailing?

Answer 18

• Selling products via the internet

Question 19

What are the advantages & disadvanatages of online retailing?

Answer 19

• Advantages:
• Provides business access to more consumers, including internationally
• Enables longer trading hours as the business is open 24/7
• Cheaper to run as it lowers fixed and variable costs compared to bricks and mortar retailers
• Businesses can collect data by tracking consumer behaviour which helps with primary market research

Disadvantages:
* May be high costs for website development, maintenance, and promotion
* High levels of competition mean that it will be expensive to make a website stand out
* There is a lack of personal contact with customers

Question 20

What changes cause markets to change & become dynamic?

Answer 20

• • Changing consumer tastes and preferences
• Changing demographics
• Amount of competition e.g. international trade means larger market sizes but also more competition
• Changing legislation

Question 21

Innovation and market growth

What does product innovation involve?

Answer 21

• The adaptation or improvement of existing products
  e.g. improved camera on new iphone

Question 22

Innovation and market growth

What does process innovation involve?

Answer 22

• the adaptation or improvement of existing processes
  e.g. just in time stock control

Question 23

Innovation and market growth

What is market growth?

Answer 23

• Measurement of the change in the entire market, expressed as a percentage of original size

Question 24

Innovation and market growth

What can market growth be caused by?

Answer 24

• • Increasing population sizes can increase demand in certain markets
• Increasing incomes can increase demand in certain markets
• Changing tastes and preferences can cause the market to grow
  e.g. the growth in the electric car market

Question 25

# Adapting to change What strategies are there to adapt to change?

Answer 25

- * Meet customer needs, by carrying out market research and communicating with customers * Invest in staff training, new products and processes * Innovate so as to gain the first mover advantage

Question 26

When does competition occur?

Answer 26

- When at least 2 businesses are providing good/services to the same target market

Question 27

What is direct & indirect competition?

Answer 27

- Direct competition-Occurs when businesses are targeting the same customers with the same product as a competitor e.g. iphone - Indirect competition-When firms sell different products but compete with each other for the customer disposable income e.g. cinema & theatre companies

Question 28

How can competition beneift a customer?

Answer 28

* Businesses offer lower prices * Businesses produce better quality products * Businesses provide better customer service

Question 29

What is the difference between risk & uncertainty?

Answer 29

- Risks can be calculated & prepared for Uncertainties cannot as they are unexpected events ## Footnote e.g. of risk- loss of staff e.g of uncertainty-will energy prices rise?