What is the definition of a business?
Transformation of resources into goods and services to satisfy customer needs with profit as an aim
Business activity encompasses various sectors and aims to meet consumer demands.
Name the four sectors of business activity.
- Primary sector
- Secondary sector
- Tertiary sector
- Quaternary sector
Each sector represents a different type of production and service provision.
What does the primary sector involve?
- Farming
- Mining
- Oil extraction
- Forestry
- Fishing
This sector is known as the extractive industries.
What is the role of the secondary sector?
- Processing basic materials into semi-finished and finished products
- Manufacturing and construction industries
Examples include car production and baking.
What does the tertiary sector provide?
- Services to firms and consumers
Examples include insurance, banking, and transport.
What is the quaternary sector focused on?
- IT support services
This sector has evolved with the IT revolution, impacting costs and service delivery.
What is deindustrialization?
The decline in manufacturing due to changes in consumer demand, lack of investment, and other factors
It has forced businesses to adapt product ranges and practices.
What is a market?
Anywhere buyers and sellers communicate to exchange goods or services
Markets can vary from street markets to online platforms.
Define marketing.
The management process responsible for identifying, anticipating, and satisfying consumer requirements profitably
This definition is provided by the Chartered Institute of Marketing.
What is a mass market?
A very large market targeting products with mass appeal aimed at the general population
Example: general toothpaste.
List the advantages of mass markets.
- Sell to a large number of customers
- Economies of scale
- Wide audience advertising
This can lead to increased revenue and brand loyalty.
What are the disadvantages of mass markets?
- Strong competition
- Generic products
- Rapidly changing consumer preferences
Businesses must adapt quickly to maintain sales.
What is a niche market?
Addresses a specific need of a subset of the population
Example: Sensodyne toothpaste for sensitive teeth.
List the advantages of niche markets.
- Less competition
- Stronger customer loyalty
- Ability to charge higher prices
Niche markets cater to specific consumer needs.
What are the disadvantages of niche markets?
- Smaller market size
- Harder to grow the business
- Trends can change quickly
- Higher production costs
These factors can limit profitability and expansion.
What is market size?
Measurement of all sales by all companies within a marketplace
It can be measured by volume and value.
How is market share calculated?
Market share = Sales of a business / Total sales in the market x 100
Understanding market share helps evaluate business performance.
What is a brand?
A unique name, design, symbol, or combination that identifies a product or service
Branding helps differentiate products in competitive markets.
What characterizes a dynamic market?
Subject to rapid or continuous changes
Businesses must adapt quickly to avoid collapse.
What are the advantages of online retailing?
- Lower costs
- Open 24/7
- Wider market reach
- Convenient for customers
Online retailing is a growing dynamic market.
What are the disadvantages of online retailing?
- High competition
- Lack of personal experience
- Delivery problems
- Technical issues
- Security risks
These factors can affect customer satisfaction and business reputation.
What external influences can cause market changes?
- Political
- Economic
- Social
- Technological
- Legal
- Environmental
These factors can significantly impact market dynamics.
What is the role of innovation in market growth?
Drives change as firms develop new products and services
Successful innovations can shift consumer loyalties.
How can businesses adapt to change?
- Flexibility
- Market research
- Investment
- Continuous improvement
- Develop a niche
Adapting is crucial for maintaining market share.
