1.1

• The Market:

  • financial
  • consumer goods
  • housing
  • commodities - for raw materials & traded goods (wheat, coffee)
  • services (insurance, cinemas)
• A housing market refers to the buying and selling of residential properties, including houses, apartments, and other types of dwellings.
• Types of markets:

  • Niche markets - A small market that targets a specific group of customer needs.
  • Mass markets - Large market, no specific group is targeted.
• Advantages of operating in niche market:

  • less competition which means they can charge higher prices which means higher profit margins for a business.
  • Can create a good relationship with customer because it targets specific needs.
  • Products may be easier to advertise, made to meet specific needs, meaning business is aware of target audience.
  • Business has a clear focus therefore a distinctive brand.
• Disadvantages of operating in a niche market:

  • There is a smaller amount of customers as products only target certain people, so business may bring in less revenue.
  • Products may be more expensive.
  • Business will not benefit from economies of scale/bulk buying discounts.
• Advantages of operating in mass market:

  • More customers, means more sales which means more revenue.
  • products more likely to be popular/higher demand
  • Potential to have a bigger brand
  • Will benefit from economies of scale
  • potentially have larger market share
• Disadvantages of business operating in mass market:

  • Amount of competition increased this means there will be a lot of competitive pricing, so products will have to be cheaper which also means lower profit margins.
  • Doesn't meet specific customer needs.
  • Need more creativity with advertising as products will need draw attention because it doesn't target any specific any needs.
• Market size:

  • MARKET SIZE - value of all of the sales in a popular market - can be volume or value.
  • VOLUME - number of products
  • VALUE - revenue taken in from those products

  Entrepreneurs may want to research if their market is growing or shrinking in volume or value before entering the market.
• Market share:

  • MARKET SHARE - Used to describe the proportion of a market held by a business, always in %

  Market share formula:

  • sales of a business/ total sales in that market x100

  Market growth formula:

  • Difference/original x100
• Branding:

  • BRANDING - process where a business makes itself known to the public and differentiates itself from competitors.

  How does a business establish their brand?

  • Advertising
  • Create an image (logos, advertising, celebrity endorsement)
  • Try to be different to competitors
  • Meet customer needs
  • Adapt with changing needs
  • Social media presence
• Branding:

  Why are brands important?

  • To differentiate from competitors
  • Charge more
  • Become market leader
  • Build customer loyalty
• Dynamic market:

  • If something is dynamic it can change quickly e.g. fashion, technology
  • In a dynamic market businesses constantly need to adapt
• Business online:

  • Called online retailing/e commerce/e tailing

  E COMMERCE - business online (trading goods and services)

  M COMMERCE - business on a mobile phone (apps)

  E TAILER - online retailer (shop)
• IT to support market research:

  Websites:

  • can be used to provide access to online surveys
  • some businesses have review systems on websites, that allow customers write of their experience.
  • businesses can carry out secondary research by gathering data from websites of rivals. A wide range of info is gathered easily and cheaply.
• IT to support market research:

  Social networking sites:

  • fast growing number use social media platforms such as instagram, tiktok and twitter.
  • social media can provide a cost-effective and in depth tool for gaining insights into a firms customer base, market, brand appearance and other important market research aspects.
  • social media platforms offer numerous ways to gain insight into emerging posts and popular trends, also what customers are talking about in real time.
• IT to support market research:

  Databases: a database is an electronic filing system. Business that uses computers will use a database. It can be updated and recalled when needed. Collection of common data is called a file. Files are a set of related records. File searching facility for finding specified info from a file. File sorting facility for rearranging data in another order. Is a market for info held on databases possible to buy banks of info from markets researchers who have compiled data over years. Storage of personal data on computers is subject to data protection act.
• Market segmentation: markets can be divided into different groups. Each segment is made up of consumers that have similar needs.

  Geographical segmentation: different customers are likely to have different needs depending on where they live.

  Demographical segmentation: AGE - targeted to different age groups. GENDER - different genders want different things. INCOME - different classes. SOCIAL CLASS - occupations. ETHNICITY - people from different ethnic groups likely to live in same country. RELIGION - different religious groups can display different tastes.
• Market segmentation: Behavioural segmentation:

  USAGE RATE - quantity and frequency of purchase.

  LOYALTY - product loyalty
• Product differentiation:

  Is achieved through - design, taste, function, performance, environmental impact, customer service, ergonomic factors (easy to use) and brands.

  Product differentiation - arises when customers perceive a distinct difference between a product and the alternatives provided by competitors.

  Sustainability isn't just about how long a product lasts. A business is said to be sustainable if it uses renewable energy.
• Market positioning:

  After choosing a segment to be in a business needs to decide now to compete in those segments. Market position is defined by customers (the place a product occupies in customers minds & perceptions customers have about a product).

  Market (positioning) map - illustrates the range of positions that a product can take in a market based on dimensions that are important to customers. It is a good way to find out where it is positioned in the market compared to competitors, also help spot gaps in the market.
• Advantages of map positioning:

  • helps spot gaps in the market
  • useful for analysing competitors
  • encourages use of market research

  Disadvantages of map positioning:

  • just because there is a gap does not mean it should be filled (zero demand).
  • not a guaranteed success
  • is market research reliable?
• Repositioning a product/brand/business:

  Repositioning - when a business changes the position of the product/service in the minds of customers. This can be done by advertising, promoting, using celebrities, packaging, changing methods.