Theme 1

• What are the characteristic of niche markets?

  Small market segment - sometimes untouched by larger business involves selling to small customer groups sometimes with specific needs. Good for small firms
• What are the characteristics of mass markets?

  When a business sells the same products to all consumers and markets in the same way. E.g. Fast moving consumer goods such as crisps, breakfast cereals, computer software and Coca cola are sold in mass markets. There are a lot of customers.
• Examples of markets:

  • Consumer goods markets - Where products such as food, cosmetics and magazines is sold.
  • Markets for services - This can include services for individuals such as hairdressing or business services such as auditing
  • The housing market - Where people buy, sell and let property.
  • Commodity markets - Where raw materials such as oil, copper wheat and coffee are traded
  • Financial markets - Where currencies and financial products are traded
• Marketing is not just about selling it involves...

  • Identifying the needs and wants of consumers
  • Designing products that meet these needs
  • Understanding the threats from competitors
  • Telling customers about products
  • Charging the right price
  • Persuading customers to buy products
  • Making products available in convenient locations
• What is the formula for market share?

  Sales of a business / Total sales in the market x 100
• What is market size?

  The size of a market can be estimated or calculated by the total sales of all business in the market. Market size is usually estimated in a number of ways.
• How is market size usually estimated?

  Value : The total amount spent by customers buying products.

  For example, it was estimated that the value of the fast-food market in 2014 was just over £29.4 billion. This included branded fast food chains and independent outlets selling hot or cold eat-in-food without table service or takeaway food.
• What is another way that the market size is usually estimated?

  Volume : The physical quantity of products which are produced and sold.

  For example, the global crude steel production in 2014 was still 1,661 million tonnes (worldsteel.org). Some estimates of volume are based on the number or percentage of users, subscribers or viewers. This is often the case in markets for services, such as the number of mobile phone users, the number of television viewers or percentage of households with digital television.
• What does market share or market penetration mean?

  The term used to describe the proportion of a particular market that is held by a business, a product, a brand or a number of business or products. Market share is shown as a percentage
• Why might the measurement of market share be important?

  May indicate a business that is a market leader. This could influence other companies to follow the leader or influence the leader or influence the leader to maintain its position. It may influence the strategy or objectives of a business.
• Brands

  Many businesses try to establish themselves in markets by giving their products a brand name. Products are given brand names to distinguish them from other products in the markets.

  Branding is important in mass markets where lots of products are competing for a share of the market.
• What might apple branding be used to?

  Differentiate the product from those of rivals

  Create customer loyalty

  Help product recognition

  Develop an image

  Charge premium price when the brand becomes strong.
• What does dynamic mean? - dynamic markets

  Most markets do not remain the same over time - they are likely to change.

  They may grow, shrink, fragment, emerge or completely disappear.

  For example, there is no longer a market in the UK for cassettes.
• What is an example of a failure to adapt to a dynamic market?

  Blockbuster

  A failure to adapt to a dynamic market can lead to the failure of a business.
• Online retailing

  Development of online retailling
• Whats one way that markets change?

  The size of markets: The size of some markets can remain quite suitable over a period of time. For example, the size of the milk market in the UK probably hasn't changed much for many years. This is because the consumption of milk is fairly consistent
• What is another way that markets change?

  The nature of markets: Many markets are in a state of flux - this means that the structure and nature of the market is subject to constant change for example, in many markets products are constantly updated, modified, and relaunched.
• What is income elasticity of demand?

  It reveals how responsive the change in quantity demanded is to a change in income.
• What is the formula for income elasticity of demand?

  % change in quantity demanded / % change in income
• Interpretation of numerical YED values positive:

  A good with a positive YED value is considered to be a normal good (A good for which the quantity demanded increases when income Y increases)

  Normal goods can be classified as necessities or luxuries
• Interpretation of numerical YED values negative:

  A good with a negative YED value is considered to be an inferior good. (A good for which the quantity demanded decreases when income Y increases)
• What is a luxury good?

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  Demand rises when income rises and demand falls when income falls

  Demand is responsive to a change in income (income elastic)

  Examples: Cars, smart watches, foreign holidays, cinema visits, jewellery and branded goods
• What is a necessity?

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  Demand is not very responsive to a change in income (income inelastic)

  E.g. Staple food items such as: bread, milk, eggs and potatoes.

  Fuel and toothpaste
• What is inferior?

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  Demand rises when income falls (negative income elasticity)

  Demand falls when income rises

  E.g. public transport, domestic holidays, canned food, unbranded/ own label goods
• What are the factors influencing income elasticity of demand?

  Availability of substitutes, necessity of the good, and time
• Yed is influenced by many factors in the economy that changes the wages of workers ...

  • During a recession wages usually fall and demand for inferior goods rises while demand for luxury goods falls
  • During a period of economic growth and rising wages, demand for luxury goods increases while demand for inferior goods decreases
  • Other influences on income include minimum wage legislation, taxation, increased international trade
• What is the significance of YED to a business?

  because it can help a business plan their production and products planning in this way will help them to generate higher profits and have less exposure to downturns in the economy
• another reason why YED is important to a business?

  production planning: a business needs to plan how much its going to produce which will help it determine the number of resources such as raw materials and labour it will need
• What is primary market research?

  When a business collects data directly from the source. E.g through questionnaires
• What is secondary market research?

  The collection of existing data it can be internal (from within the business e.g. existing market research reports, sales figures etc) or it can be external (from outside of the business e.g. GOV publications or information from competitors etc)
• What are some examples of primary market research?

  Questionnaires: Surveys (postal), interviews - personal or telephone, focus groups or consumer panels, observation and test marketing
• What are some examples of secondary research?

  Internal data : existing market reports, sales figures, reports from members of the sales force resulting from direct contact with customers, annual report and accounts published by businesses.

  
  

  External data : Information from competitors, Government publications, Data from customer service on complaints which have been received about a product