Section 1 - Meeting Customer Needs

• Market


  All of the buyers and sellers that trade a particular type of product in a particular place
• Types of markets


  • Mass market
  • Niche market
• Mass market

  • Products are aimed at a large group of buyers
  • Products have wide appeal and are useful to a variety of people
• Niche market


  • Products are aimed at a specific group of buyers
  • Products are specialised to meet the particular requirements of buyers in the niche market
• Mass market


  • Standard chocolate (e.g. Cadbury)
• Niche market


  • Dairy-free chocolate
  • Vegan chocolate (e.g. Moo free)
• Businesses in mass markets sell to more consumers than those in niche markets, so sales volume in mass markets is higher
• Businesses in mass markets are more likely to benefit from economies of scale as producing products sold in larger volumes can be cheaper
• Businesses in niche markets can be more risky as they sell smaller volumes and a narrower range of products
• There is usually less competition in niche markets than in mass markets
• Businesses in niche markets can usually charge higher prices than those in mass markets
• Market size


  The total value of sales in a market over a certain time period
• Market share


  The proportion of the total market that a business holds, calculated by dividing their sales by the total sales in the market
• Mass markets have a larger market size than niche markets
• Businesses in mass markets are likely to have a smaller market share than businesses in niche markets
• Branding


  Creating a clear and obvious logo, name or statement that customers can instantly recognise, to help differentiate a business's product from its competition
• Branding is important in all markets as it can encourage consumers to buy products and affect a business's market share
• Businesses in mass markets might focus more heavily on strong branding than businesses in niche markets, as consumers in niche markets are more likely to be interested in whether the product meets their particular requirements rather than being influenced by branding
• Businesses can Target Mass and Niche Markets
• Mass market


  Market likely to appeal to all or most of the population in a particular place
• Niche market


  Market for a specialised product or service that appeals to a small, specific group of customers
• Products in mass markets have a wide appeal to a large gap of buyers
• Example of mass market products

  • Standard chocolate like 'Cadbury'
• Niche market products

  • Dairy free chocolate
• Businesses in mass markets

  Sell to more customers than those in niche markets, but make a lower profit margin
• Businesses in niche markets

  Sell to a smaller number and narrower range of customers, but can charge higher prices
• Market size


  Total value of sales in a market over a certain time period
• Market share


  Proportion of the total market that a business holds, calculated by dividing their sales by total market sales
• Mass markets have a larger market size than niche markets, but each business in a mass market has a smaller market share than those in a niche market
• Branding


  Creates a clear and obvious logo, name or statement that customers can instantly recognise, helping them differentiate a business's product from competitors
• Branding is more important in mass markets than niche markets, as there is more competition
• Dynamic markets


  • They change and evolve rapidly
• Ways markets can change

  • New product innovations
  • Decline of older products
  • Changes in how customers want to shop
  • Competitors entering or leaving the market
  • Changes in legislation
• Businesses need to adapt to changes in the market in order to be successful and maintain their market share
• Online retailing


  Selling products via the internet, e.g. through apps or websites
• Benefits of online retailing

  • Lower business costs
  • Customers can order anytime
  • Customers can easily compare prices
• Drawbacks of online retailing

  • More competition as customers can easily shop around
  • Some customers prefer to see products in person
  • Need to ensure customer data security
• Direct competition


  Two or more businesses selling very similar products that appeal to the same group of customers
• Indirect competition


  Businesses selling different products that are competing for the same customers, e.g. restaurants and takeaways
• Ways competition affects business decisions

  • Product quality and distinctiveness
  • Promotional campaigns and branding
  • Pricing strategies