The Market

• Niche


  Business targets a smaller segment of a larger market where customers have specific needs and wants
• Mass


  Sells into the largest part of the market where customers have less specific needs and wants and there are many similar products on offer
• Market size


  Indicates the potential sales for a firm which can be measured in volume or value
• Market growth


  An indicator for existing and potential market entrants which is calculated using market volume of value
• Market share


  Explains how the overall market is split between its competitors calculated based on market value
• Brand


  Recognisable symbol in the market which is associated with quality
• Competitive advantage


  The ability for a business to add more value for its customers than rivals and attain advantage
• Dynamic markets


  Markets prone to change
• Sources of change in dynamic markets

  • Economic growth
  • Social and demographic changes
  • Legislation
  • Innovation
  • Technology
  • New entrants
• Innovation


  The commercially successful exploitation of ideas
• Competition affecting the market

  Battle for market share, competitive advantage and pricing
• Lower prices


  Preventing customers from going elsewhere, enable you to remain competitive
• Lower prices


  Lower revenue
• Improve quality or customer service

  Meet customer needs = increased sales
• Improve quality or customer service

  Higher cost for materials = need to charge higher price
• More convenient location


  More outlets, website
• More convenient location


  Increased fixed costs = increased BEP = reduced margin of safety = more risk
• Risk


  When you can predict the change of an outcome in the future
• Sources of risk


  • Employees leaving
  • Not trained
  • Strike
  • Health and safety
  • Cyber security
• Uncertainty


  When you can't predict the chance of an outcome in the future
• Types of uncertainty


  • Economy – exchange rates, interest, inflation
  • Cultural changes
  • Competition – innovation, prices, expansion