1.1

• mass market is the market that is aimed at the general population
• A niche market is a subset of the main market and addresses a specialist need
• In a mass market, a product is marketed to all consumers in the same way as it is designed to appeal to all audiences globally
• advantages of mass markets:

  • large scale production = economies of scale + lower average unit costs
  • straightforward as everyone is equally targeted
  • large volume of sales = high revenue
  • high revenues can be pumped into research + development
• disadvantages of mass markets:

  • lots of competition
  • homogenous products must be differentiated through marketing = expensive
  • high volume production may not be flexible to keep up with changes in demand
• Branding is very important in mass marketing to instil loyalty in customers and to differentiate from homogenous products in the mass market
• advantages of the niche market:

  • charging premium prices
  • easier to target customers
  • small scale production is flexible to follow trends
  • less competition
• disadvantages of niche markets:

  • very risky as demand may not be constant
  • higher unit costs = no economies of scale
  • smaller market size = fewer potential customers
• Niche markets can be profitable markets as prices are higher as consumers are willing to pay. However, the profits signal more competitors to enter the market and have a small range of products which makes them more risky ventures. Also, the market for more expensive items may be very limited, and not enough products are sold for the business to be viable.
• market size is the total of all the sales of all the products in that market, which can be measured in volume of sales and value.
• Market Share formula: The proportion (%) of a market that is taken by a business, product or brand.

  sales of x / total sales in whole market x 100
• A dynamic market is one that is subject to rapid or continous changes
• market growth is the % rate of growth in market size over a period
• Competition in markets benefit the consumer as:

  • A business needs to be efficient
  • the business must listen to consumer needs and wants to strive to meet those needs
  • more competition = less wasteful
• More competition means producing good quality products/services or customers will go elsewhere. More competition in homogenous markets means businesses must compete on non-price factors = exciting promotions
• Business risk is the possibility of a business having lower than anticipated profits or experience a loss. This is influenced by material costs, competition, the overall economic climate and government laws
• examples of risk factors are:

  lack of job security

  financial risk
• Uncertainty is when a business are unable to predict external shocks or future events
• Examples of uncertainty:

  • spending decisions
  • impact on households
• A business can protect itself from risk by taking out insurance
• A business can protect itself from uncertainty by taking out a long term loan at a fixed rate of interest
• Market research can be used for:

  • identifying needs and wants of customers
  • Quantify likely demand
  • Gain insight into customer behaviour
• Benefits of market research:

  • For business decision making
  • To develop marketing plan
  • To prepare for changes in the market
• product orientation is when a business develops products based on what it is good at doing
• market orientation is when a Business responds to customer needs and wants and designs products accordingly
• primary research is collecting data first hand e.g. Questionaries, observations, customer interviews, focus groups
• Secondary research is gathering data that already exists e.g. Internet, trade publications, government sources
• benefits of primary research:

  • directly focused to research objectives
  • Kept private
  • More detailed insights (to customers)
• benefits of secondary research:

  • free and easy to obtain
  • good source of market insights
  • Quick to access and use
• drawbacks of primary research:

  • time consuming and costly to obtain
  • risk of survey bias
  • sampling may not be representative
• drawbacks of secondary research:

  • Can quickly become out of date
  • not tailored to business needs
  • specialist reports are expensive
• Benefits of qualitative research:

  • focused on understanding customer needs, wants, expectations
  • effective of testing elements of marketing mix
  • Can highlight issues
• Drawbacks of qualitative research:

  • expensive to collect and analyse
  • based on opinions
• Benefits of quantitative research:

  • Easy to analyse
  • Numerical data provides insights to trends
  • Can be compared to other sources
• Drawbacks of quantitative research:

  • Doesn't give reasoning
  • Can't get customer views
  • may lack reliability is sample size or method isn't valid
  • Doesn't explain the reasons behind numerical trends
• limitations of market research:

  • bias - findings can't be trusted
  • sample size - affordability
  • sampling - picking the right people
• market segmentation is the process if splitting a business target market into different groups
• A market segment is a category of customers who have similar likes and dislikes in an otherwise homogenous market
• Market segmentations:

  • Income
  • Lifestyle
  • Customer behaviour
  • location
  • demographic
• Market mapping is the process of using a graph to plot competitors and their products to understand competitor behaviour and spot gaps in the market