1.1 flashcardssss

• • MARKET – place where buyers and sellers meet​
• • NEEDS – essential, WANTS – non-essential​
• • MARKET RESEARCH – process of systematically gathering data from consumers which can be used to influence business decisions​
• • SALES VOLUME – number of products sold​
• • ADDING VALUE – the process by which firms increase  the price that the customer is willing to pay
• • DYMANIC MARKETS - a market that is subject to rapid and continuous changes​
• • SALES REVENUE = price x quantity sold​
• • MARKET SHARE = (sales of a business/total sales in market) * 100​
• • MASS MARKET – aims products at broad market segments - large scale production​
• • NICHE MARKET – aims products at a small group of customers within a larger market, who share the same characteristics – small scale production​
• ADVANTAGES ​OF MASS MARKETS

  Lots of customers to sell to​

  Benefits of economies of scale​

  Low prices lead to greater affordability and higher sales volumes​

  
  

  DISADVANTAGES​ OF MASS MARKETS

  A lot of competition​

  Advertising to large diverse groups isnt easy ​

  Products are less unique​

  Low prices lead to low profit margins ​
• 
  

  ADVANTAGES​ OF NICHE MARKETING

  Low levels of competition​

  Businesses have a clear focus – easier to focus on a few customers' needs​

  Products are more specialised and unique ​

  
  

  DISADVANTAGES​ OF NICHE MARKETING

  Dependant on small group of customers ​

  High average costs – so do not benefit from economies of scale​

  High prices make products less affordable and lead to lower sales volumes ​
• A brand is a name, image, or logo which helps a product/service stand out from its competitors/ achieve differentiation​

  
  

  Brands add value which make products more desirable to customers ​

  
  

  Brands influence the position of the business within the market 

  Brands are unique and are protected by law

  
  

  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 that of weaker brands
• Brands add value,often making the product/service more desirable to consumers

  
  

  Adding value is the process by which firms increase the price that the consumer is willing to pay
• 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,well defined group of consumers
• 4 elements to consider when examining dynamic markets:​

  • online retailing ​
  • How markets change ​
  • Innovation and market growth ​
  • Adapting to change ​
• 
  

  ADVANTAGES​ OF ONLINE RETAILING

  More access to customers

  Available 24/7 so theres longer trading hours ​

  Cheaper as it lowers fixed and variable costs ​

  Helps primary market research​

  Customers can shop at a time that suits them​

  
  

  DISADVANTAGES​ OF ONLINE RETAILING

  It's dominated by larger businesses that are more well-known​

  Lack of personal contact with customers​ ​

  May be difficult to return unwanted products​

  Opens customers up to credit card fraud​
• The following changes cause markets to be dynamic:​

  -changing customer tastes and preferences​

  -changing demographics​

  -changing legislation​

  -the amount of competition (direct/indirect)​
• • Innovation – involves the adaptation/improvement of existing products ​
• • Market growth – the measurement of the change in the entire market ​
• Market growth can be caused by a number of factors:​

  -increasing population changes ​

  -increasing incomes​

  -changing tastes and preferences ​
• ADAPTING TO CHANGE

  businesses to thrive in dynamic markets

  
  

  Strategies to adapt to change include

  -Create flexible business structures,especially in terms of operations and people management

  -Meet customer needs,by carrying out market research and communicating with customers

  -Invest in staff training, new products and processes

  -Innovate to gain the first mover advantage
• Competition - occurs when at least two businesses are providing goods/services to the same target market
• Competition can be direct or indirect

  -Direct competition occurs when the business is targeting customers with the same product as a competitor

  -Indirect competition occurs when firms sell different products but compete with each other for the customers disposable income
• Competition benefits

  -Businesses offer lower prices

  -Businesses produce better quality products

  -Businesses provide better customer service
• The absence of competition reduces incentives for businesses to innovate,be efficient or offer consumers lower prices
•   RISK AND UNCERTAINTY

  
• Risk DISADVANTAGES

  
  

  -Technical failures due to the break down of essential equipment

  -Cyber security threats

  -Loss of key staff

  -Currency fluctuations for firms trading internationally
• Uncertainty DISADVANTAGES

  
  

  -Businesses continue to face uncertainty after Britains’ exit from the European Union

  -Will the economy go into recession?

  -Will energy prices continue to rise?

  -What will happen to interest rates?

  -How will rivals react to a new product launch?
• • PRODUCT ORIENTATION – focussing on the characteristics of the product rather than the needs of the customer.​
• • MARKET ORIENTATION - focussing on the needs of the customers and use this information to design products that meet customer needs.​
• • MARKET RESEARCH – the objective collection, compilation and analysis of information about a market​
• • PRIMARY RESEARCH - gathering information directly from customers ​
• SECONDARY RESEARCH - collecting and analysing data that already exists
• • MARKET SEGMENTATION – where a single market is divided into submarkets ​- Each segment is a different set of customer characteristics.​
• PRODUCT ORIENTATION

  • Emphasis is on creating the product first then finding a market  - a business believes that the product will sell itself.​

  
•  

  ADVANTAGES​ OF PRODUCT ORIENTATION

  -Quality focus​

  -Innovation –companies may invest heavily in research to produce high quality products​

  -Cost Efficiency: By focusing on producing standardised products in large quantities, companies can achieve economies of scale, reducing production costs per unit.​

  -Can enhance a customers reputation and therefore increase brand loyalty​
• DISADVANTAGES​ OF PRODUCT ORIENTATION

  
  

  -Customer neglect ​

  -Lack of market orientation – could ignore market trends, competition, and customer feedback​

  -Marketing challenges – could fail to communicate the benefit of a product to customers ​
• MARKET ORIENTATION

  -Customers are at the centre of the marketing decisions ​

  -The result of market orientation is that the firm will benefit from an increased demand of the product

  
•  ADVANTAGES​ OF MARKET ORIENTATION

  
  

  -Customer satisfaction​

  -Competitive advantage – products and services can meet and even exceed customer expectations , thus differentiating themselves from customers ​

  -Innovation ​

  -Long term success – customer loyalty could lead to this​