1.1

• dynamic market


  A market that is subject to rapid or continous change
• positives of dynamic market

  • higher demand and prices
• negatives of dynamic markets

  • need to research about trends constantly
• niche market definition


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


  where a business sells into the largest part of the market, where there are simular products offered by competitiors.
• key features of a mass market

  • customers form the majoirty of the market
  • customer needs and wants are more general and less specific
  • success usually associated with low cost operation or market leading brands
• the aim of mass marketing

  • create products with universal appeal
  • aim for leadership of the largest market segment
  • build strong brands that are associated with the underlying products
  • exploit economies of sales to earn high profits
• advantages of mass markets

  • large scale production means economic of scale and lower average unit costs
  • mass marketing is straightforward as everyone is equally targeted
  • large volume of sales means high revenues
  • high revenues can be pumped into research and development
• disadvantages of mass markets

  • lots of competititon in mass markets
  • homogeneous (simular, a like) products need to be differentiated through marketing which can be expensive
  • high volume production may not be flexiable enough to keep up with changes in demand
• market size definition


  is the total of all sales of all the products in the market
• market share


  explains how the overall market is split between the existing competitors
• online selling advantages


  • orders can be made 24/7
  • can be reached world wide
  • no paying rent for a shop
  • convenient for customers
• online selling disadvantages


  • parcels being sent back can be expensive
  • website could shut down temporarily
  • people may be scared to give bank details to websites due to online scams
• product orientation definition 


  a business is product orientates when it only looks at the product or the production process when deciding what to make next.
• when is product orientation appropriate?

  • little competition in the market, the business can make what suits its product capacity
  • when there is limited consumer knowledge
  • when there is low disposable income of customers, when funds are limited customers will buy what is available
• Product orientation example


  Apple creates IPhone and IPads and innovative productsm but they create and make what they can, not what customers want. This is because consumers may not know what they want from technology that has not yet been invtented. Also consumers may want what is not yet possible e.g. battery which charges to 100% in 5 mins.
• Market orientation definition


  is a business philosophy where the focus is on identitfying customer needs or wants and meeting them. When a company has a market orientation approach, it focuses on designing and selling goods and services that satisfy customer needs in order to be profitable.
• How does effective market research help a business?

  • reduces risk for the business
  • understanding consumer behaviour
  • understanding how much consumers will pay for a product
  • identitfying potential competitors
  • quantify potential consumer demand for a product and forecast sales
• primary research


  is reseaech the business conducts for themselves. It involves going directly to a sources - usually customers and prospective customer in the target market - to ask questions and gather information.
• examples of primary research

  • questionnaires
  • observation
  • customer interviews
  • foucs groups
• secondary research


  gathering research that already exists also known as desk research
• examples of secondary research

  • government sources
  • trade publications
  • reports
  • internet sources
  • newspapers, magazines or radio.
• quantitative research 


  • involves gathering data and measuring responces
  • data displayed in charts, graphs, statistics and percentages
  • questionaires written to gather numerical data
  • quantitative research asks questions to a large sample to provide valid and useful data for the business.
• limitations of market research

  • expensive
  • bias
  • sample size, too small may lead to inaccurate results as you might have only got a small amount of opinions.
• ways of segmenting a market

  • location
  • demographics
  • age
  • lifestyle
  • income
  • gender
• market mapping


  is the process of finding the variable which differntiate brands in the market and then plotting them on a map - identifes gaps in the market.
• ways of gaining a competitive advantage

  • added values
  • price leadership ,adopting a very low cost model and compete on price.
  • innovation
  • reliability
  • quality
  • advertisement
  • branding
  • convenience
  • customer service
• ways to product differentiate

  • through reputation
  • through customer service
  • through value for money
  • through product features
• What is a benefit of competitive markets for consumers?

  • They lead to more efficient businesses
  • more competition means the business needs to listen to consumer needs and wants and constantly strive to meet those needs
  • business will be less wasteful
• In homogenous markets, how do businesses compete?

  • On non-price factors like promotions
• What is indirect competition in the context of food retail?

  Sainsbury's competes with fast food chains
• What is business risk?

  Possibility of lower profits or losses
• What factors influence business risk?

  • Raw materials
  • competition
  • economic climate
• What is a consequence of business failure for owners?

  • business owner may lose their house if they have unlimited liability
• What is financial risk for a business owner?

  • Loss of personal savings invested in business
• How can high debt levels affect a business?

  • it may struggle if interest rates rise.
• What is a common reason for business failure?

  Poor cash flow management
• How can cash flow be improved?

  By ensuring customers pay on time
• What does uncertainty refer to in business?

  Inability to predict external shocks
• How can uncertainty affect spending decisions?

  It may lead to delayed purchases