BUS U1.1

• Goods and services are sold in markets. However, over time the size and characteristics of markets are likely to change.
• It is possible to trade goods and services without buyers and sellers meeting up, e.g. over the telephone, using newspapers, through mail order or on the Internet.
• Examples of markets


  • Consumer goods markets
  • Markets for services
  • The housing market
  • Commodity markets
  • Financial markets
• Marketing


  The management process responsible for identifying, anticipating and satisfying customer requirements profitably
• Mass markets


  • Businesses sell the same products to all consumers and market them in the same way
  • Fast-moving consumer goods are sold in mass markets
  • Businesses can produce large quantities at a lower unit cost by exploiting economies of scale
  • There is often a lot of competition in mass markets
• Niche markets


  • Small market segments that have sometimes gone 'untouched' by larger businesses
  • Businesses sell to a small customer group, sometimes with specific needs
  • Easier to focus on the needs of the customer in a niche market
  • Possible to charge premium prices if there is no competition
• If a business successfully exploits a niche market it still may attract competition.
• Niche markets, by their nature, are very small and unable to support many competing firms.
• Businesses that rely on a single niche market may be vulnerable because they are not spreading their risk.
• Market size


  • Estimated or calculated by the total sales of all businesses in the market
  • Can be measured by value (total amount spent by customers) or volume (physical quantity of products produced and sold)
• Market share


  The proportion of a particular market that is held by a business, a product, a brand or a number of businesses or products
• Branding


  • Distinguishes products from those of rivals
  • Creates customer loyalty
  • Helps product recognition
  • Develops an image
  • Allows businesses to charge a premium price
• Dynamic markets


  Markets that are likely to change over time - they may grow, shrink, fragment, emerge or completely disappear
• A failure to adapt in a dynamic market can lead to the collapse of a business.
• Online retailing (e-tailing)


  • Involves shoppers ordering goods online and taking delivery at home
  • Specialist e-tailers and many traditional retailers now have online services
  • Growth in online retailing is rapid and expected to continue
• Benefits of online retailing for businesses

  • Retailers can market their goods to people who prefer to shop from home or who find it difficult to get to traditional shops
  • Reduced costs of physical retail space and staff
• Comparison websites provide shoppers with search engines that can filter and compare products based on price, features and other criteria
• Most comparison shopping sites compare prices from many different retailers, but do not sell products themselves
• Comparison sites tend to specialise in particular product groups
• Some comparison sites have been criticised for not giving the best deals
• This is because comparison sites filter out the tariffs that do not pay commission
• The Big Deal website was set up in 2013 to help consumers reduce their energy bills
• The cheapest energy deals were not presented to customers by the five major price comparison websites
• Benefits of online retailing

  • It is easier to gather personal information from customers so that they can be targeted with other products and offers in the future
  • Selling costs, such as sales staff, rent and other store overheads can be avoided. The savings might be enormous and allow online retailers to charge lower prices
  • Marketing costs will also be lower. It is much cheaper, for example, to send a marketing message by email to 1000 customers than it is to send 1000 newsletters by post
  • Online retailers can reach more customers. A single store in a high street can only attract a limited number of customers. However, a website advertising a 15,000-item product range can have a global reach
  • An online retailer is open 24/7. There are not many stores that can match this level of service
  • Online retailing provides greater flexibility. An online store can be updated instantly and as frequently as is necessary. For example, it is possible to promote a 'deal of the day' on the home page, without the need for expensive printed display material
• The size of the milk market in the UK probably hasn't changed much for many years
• The majority of markets are likely to grow
• The global packaging market stood at US$799,000 million in 2012, increasing by 1 per cent over 2011 with sales projected to increase by 3 per cent
• Some forecasters reckoned growth to 2018 would reach 4 per cent per year, with sales reaching over US$1 trillion
• Factors driving growth in the packaging market include increasing urbanisation, investment in construction and housing, development of retail chains, and the expanding cosmetics and healthcare sectors in the emerging economies
• Dial-up Internet services are gradually being withdrawn in many countries and being replaced by the much faster broadband services
• Markets often decline because the need for a product ceases to exist
• In the case of coal, other fuels, such as oil, gas, nuclear and renewable sources are now preferred by households and industry
• Many markets are in a state of flux, meaning the structure and nature of the market is subject to constant change
• Consumer spending patterns in India have changed, with shopping becoming more social, involving the whole family, and occurring more frequently, with immediate gratification becoming more important
• Traditionally the purchase of a house and a car took priority in India, but today more Indian consumers want to buy holidays abroad and many are prepared to spend increasing amounts of money on 'comfort'
• Another change in India is the desire to buy more 'upmarket' brands
• Social media is influencing consumer behaviour in India as people attempt to match the spending habits of their peers
• New markets are always developing, often from the growth of 'emerging economies' like the BRIC countries and other developing nations
• New markets also appear when completely new products are launched, such as mobile phones, smartphones, flat-screen televisions, and e-books
• Economic growth


  Global living standards tend to rise over time, meaning the world's population has more money to spend, and people demand different types of goods