paper 1

• mass markets are aimed at the general population eg. regular toothpaste
• a niche market aims to address a specialist need eg. sensitive toothpaste
• benefit of mass markets is that larger demand means companies can use economies of scale which lowers costs

  a weakness is that there is lots of competition as the products are all very similar
• a benefit of operating in a niche market is that the company can charge premium price for their product as there is less competition.

  but a weakness is that there is smaller demand so companies are less likely to use economies of scale so higher production costs.
• market size can be measured by volume of sales and value spent by the customer
• market share is the proportion of the market taken up by one business
• market share = (sales of x - total market sales) x 100
• dynamic markets are subject to continuous and rapid change
• risk is when potential outcomes of a decision are known eg. rolling a dice
• uncertainty is when none of the outcomes are known in advance
• product orientation is when the product is the most important factor eg. only selling black cars
• market orientation is when the consumer needs are the most important production factor eg. cars in customised colours
• primary research = original data gathered by the researcher eg. interviews
• secondary research = pre discovered data eg. news
• two forms of data are quantitative and qualititative
• market segmentation = an identifiable group of individuals that share one or more characteristic eg. demographic (gender)
• market maps can be used to identify gaps in the market
• competitive advantage can be created via cost or differentiation
• product differentiation = when a product is different from competitors in some way so likley able to charge a higher price
• demand is the amount of a good that consumers are able and willing to buy
• what can cause a change in demand

  • consumer incomes
  • trends
  • advertising
  • demographics
  • external shocks
  • season
  • prices of complimentary or substitute goods
• supply = the quantity of a good that producers and willing and able to put on the market
• what can cause a change in supply

  • cost of production
  • new technology
  • indirect taxes
  • subsidies
  • external shocks
• price changes cause a movement in the supply or demand curve where as non price changes cause a shift
• supply line goes right and demand goes left
• price elastic = demand changes with price
• price inelastic = demand doesn't change with price
• PED = price elasticity of demand
• factors influencing PED = luxury?, substitute?, incomes of consumers
• PED = percentage change in quality/in price

  0 = perfectly inelastic

  less than 1 = inelastic

  1 = unit elastic

  more than 1 = elastic
• YED = income elasticity of demand
• normal goods = as income rises so does demand
• inferior goods = as income rises demand falls (usually can afford better options)
• income elasticity of demand = responsiveness of demand to a change in consumer incomes
• size of number = how much change
• positive or negative = normal of inferior
• YED = % change in quantity / in income
• product design involves function, aethstetics and cost
• function = is it fit for it purpose and how well does it perform (ergonomics = high effieciency and low discomfort)
• aethstetics = how it looks, tastes, smells and more