Theme 1 (People)

• Characteristics of mass markets


  • Customer needs and wants are more generic/less specific
  • Associated with higher production output and capacity
  • Intense competition, usually on price
• Characteristics of niche markets


  • Needs and wants are more specific
  • Smaller market with lower production output
  • Usually higher prices charged leading to bigger profit margins
• Market size and market share differ between mass and niche markets

  • Mass markets: large market size with market share split over a larger number of competing firms
  • Niche markets: smaller market size with market share split over a smaller number of competing firms
• Brands influence the position of a business in a mass / niche market


  Having a strong brand allows firms to establish themselves in highly competitive markets (mass) and in smaller, less competitive markets (niche). It allows firms to differentiate from rivals, create customer loyalty, help product recognition and charge higher prices through increased value
• Dynamic markets


  Markets that are subject to rapid or continuous change
• Market size


  The total value or volume of sales in the market
• Market share


  The proportion of total sales in a particular market for which one or more firms/brands are responsible; expressed as a percentage
• Innovation


  A new idea or invention which is launched onto the market normally with a view to financial gain
• The formula for calculating market size by value is: total unit sales in market x average price
• The formula for calculating market share is: Sales of a business / Total sales in the market x 100
• The formula for calculating market growth is: Change in the size of the market / Original size of the market x 100
• Benefits of online retailing to consumers

  • Cheaper products
• Drawbacks of online retailing to consumers

  • Risk of poor quality
• Benefits of online retailing to retailers

  • Increased customer base
• Drawbacks of online retailing to retailers


  • Expensive investment in technology
• Reasons how markets change

  • Size of the market
  • Tastes and preferences of customers in the market
  • Number of firms competing in the market
• Ways competition affects the market


  • Increased pressure on prices
  • Increased innovation as firms aim to achieve competitive advantage
  • More consumer choice
• Ways businesses adapt to change


  • Invest in new technology, products, processes etc
  • Adapt the marketing mix
  • Undertake market research to keep in touch with trends
• Risk


  The potential for loss by an entrepreneur when undertaking a venture to attain rewards, including financial risk and opportunity cost
• Uncertainty


  The inability to predict exactly what will happen in the future, as markets are often subject to external influences
• Product orientation


  The approach to business which places the emphasis upon the production process and the product itself
• Market orientation


  The approach to business which places the needs of consumers at the centre of the decision-making process
• Primary market research


  The collection of first-hand data, which did not exist before for a specific purpose and is therefore original data
• Secondary market research


  Research that has already been undertaken by another organisation for a different purpose and therefore already exists
• Quantitative data


  Statistical data that informs a company about people's behaviour but does not identify the reasons
• Qualitative data


  Non-statistical information that gives a company in depth insight into the reasons for human behaviour
• Benefits of primary market research


  • More specific to the needs of the business and its research objectives
  • More detailed insights into behaviours, attitudes and wants of target customers
• Drawbacks of primary market research


  • Can be expensive and time consuming
  • The risk of survey bias
• Benefits of secondary market research


  • Often free and easy to access
  • Good source of market insights as data collected by experts
• Drawbacks of secondary market research


  • Can quickly become out-of-date
  • Not tailored to specific research objectives
• Sample size


  The size or proportion of the whole population chosen as representative of the market for market research purposes
• Bias

  A preference to hold a viewpoint that does not take into account all of the alternatives within a population
• Ways in which ICT could be used to support market research


  • Company websites
  • Social networking and use of social media
  • Databases
• Ways of segmenting a market

  • Demographic
  • Geographic
  • Behavioural
• Market mapping


  The process of positioning competition within a market by plotting the key variables that differentiate products within the market against each other
• Competitive advantage


  A feature of a business' product that allows it to perform more successfully than others in the market
• Product differentiation


  How a business distinguishes its product(s) from those offered by its competitors
• Adding value


  Increasing the value that a business creates by undertaking the production process
• Businesses can achieve competitive advantage through a number of strategies including price, adding value, innovation, reliability, quality, reputation, branding and promotion, customer service and convenience
• Businesses can differentiate in many ways including flexible pricing, wider product ranges, better value, better quality etc