1.1.1 The Market

• • A market is any place where buyers and sellers can meet, e.g. amazon or a shopping mall.
• The aim of marketing is to help identify, anticipate and satisfy consumer needs and wants profitably
• Market research helps identify products and services they can develop in response to the needs and wants that their customers have
• • Market research is the process of systematically gathering data from consumers which can be used to influence business decisions.
• Mass Markets

  • Mass marketing occurs when businesses sell their products to most of the available market 
  • Production usually happens on a large scale.
• Niche markets

  • Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market.
  • Production usually happens on a small scale.
• Characteristics of Mass markets

  • Products tend to be homogenous as they are aimed at broad market segments.
  • Low average costs due large scale production economies of scale.
  • Low prices - greater affordability & higher sales volume.
  • Lower profit margins.
• Characteristics of Niche markets

  • Products - more specialised & unique as they are aimed at narrow market segments.
  • High average costs due to small scale production.
  • Don't have economies of scale.
  • High price = low sales volume.
  • High prices allow them to earn high profit margins.
• Market size

  • Size of a market can be measured through  sales volume/sales value.
  • Sales volume is the number of products sold.
  • Sales revenue = price x quantity sold.
• Market Share

  The market share that a business has is the proportion of the total sales of a product/service compared to the market as a whole.
• Calculation - Market share


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• A brand is a name, image, or logo which helps one product/service stand out from its competitors.
• • Branding is one of the key ways businesses achieve product differentiation.
• Brands add value, often making the product/service more desirable to consumers.
• Businesses operating in mass markets use branding to stand out from the competition.
• Businesses operating in niche markets use branding to communicate their offering to a small group of consumers.
• Strong brands are more likely to be able to charge higher prices for their products than weaker brands.
• The perceived quality of a strong brands products is better than others.
• A dynamic market is a market that is subject to rapid or continuous changes.
• Businesses with  monopoly power might not face the same dynamic pressures as businesses in more competitive markets.
• 4 areas of dynamic markets

  1. Online retailing
  2. How markets change
  3. Innovation & market growth
  4. Adapting to change
• Advantages of online retailing

  • Access to international consumers.
  •  Longer trading hours - business is open 24/7.
  • Cheaper to run - lowers fixed & variable costs.
  • can collect data on consumer behaviour -  primary market research.
  • Consumers can shop at a time that suits them - higher sales.
  • Consumers can receive offers that they are more likely to benefit from.
• Disadvantages of online retailing

  •  High costs for website development, maintenance, and promotion.
  • Online retailing is dominated by well-known large businesses.
  • High levels of competition = expensive to make a website stand out.
  •  Lack of personal contact with customers.
  • Consumers may find it difficult to get the desired level of customer service.
  • Consumers may find it difficult to return products.
  • Can cause consumers credit card fraud.
• Changes that cause markets to be dynamic

  1. Changing consumer tastes/preferences
  2. Changing demographics.
  3. Amount of competition.
  4. Changing legislation.
• Product innovation involves the adaptation or improvement of existing products.
• Process innovation involves the adaptation or improvement of existing processes. Eg JIT
• Market growth is the measurement of the change in the entire market, expressed as a percentage of the original size
• • The businesses market share does not necessarily increase automatically as the entire market continues to grow
• Causes of market growth

  • Increasing population sizes - increased demand
  • Increasing incomes - increase demand
  • Changing tastes and preferences can cause the market to grow
• Recognising & adapting to change will help businesses to thrive in dynamic markets.