Theme 1 - Business A level

• What is a mass market?

  This is the market that is aimed at the general population.
• What is a niche market? 


  This is a subset of the main market and addresses a specialist need.
• What is a homogenous product?

  Products that are similar.
• What is a homogenous product?

  Products that are of the same kind; alike.
• What are the advantages of operating in a mass market?

  • Large Scale production - economies of scale, lower average unit costs.
  • Straightfoward - everyone is equally targeted.
  • Large volumes of sales - high revenues.
  • High revenues - used to fund research and developement.
• Disadvantages of operating in a mass market.

  • Lots of competition
  • Has to be differentiated through marketing - this is expensive
  • High volume production - inflexible so can’t keep up with changes in demand.
• Describe mass market characteristics.

  Branding instills loyalty in customers.

  Branding helps to differentiate brands.
• Advantages of niche markets.

  • Charge premium price
  • Easier to target customers
  • Small scale production - flexible and follows trends
  • Less competition compared to mass markets.
• Disadvantages of niche markets.

  • Very risky - demand may not be constant
  • Higher unit costs - no economies of scale
  • Smaller market size - fewer potential customers
• How are niche markets profitable?

  Prices are charged higher as niche market customers are willing to pay a premium price.

  Profits can signal new competitiors to the market.

  Businesses in niche markets also have a smaller range of products so they are risky ventures.

  Lack economies of scale as there is not enough products sold for the business to be viable.

  Market for some expensive items is limited.
• What does market size mean?

  TOTAL of all the sales of all the producers in the market.
• How is market size measured?

  Volume of sales

  Value
• What is the market share formula?

  Sales of x / Total sales in whole market x 100