BUSINESS AS P1

• Mass markets

  Very large markets in which products with mass appeal are targeted
• Niche markets

  Smaller markets, usually within a large market/industry, in which products are targeted at a specific customer group
• Characteristics of mass markets

  • Business sells the same products to all consumers & markets in the same way
  • Number of customers is huge-possibly billions of products are sold globally
  • Businesses can produce large quantities at lower unit cost by exploiting economies of scale
  • Higher competition which leads to more investment in marketing
  • Higher sales & profit (low average profit, high total profit)
• Characteristics of niche markets

  • Involves selling to a smaller customer group sometimes with specific needs
  • Less/ no competition so they can charge premium prices for new products
  • High average profit, low total profit
• Market size (value)

  Total amount spent by consumers buying products
• Market size (volume)

  Total physical quantity of products which are produced & sold
• Market share

  The proportion (%) of a market that is taken by a business, product/ brand or the contribution of each firm in the total market size, shown as a %
• Brand name

  A name, term, sign, symbol, design/ any other features that allow consumers to identify the goods & services of a business & to differentiate them from those of competitors
• Uses of brand names

  • Create customer loyalty
  • Help product recognition
  • Develop an image
  • Charge premium price when the brand becomes strong
• Dynamic markets


  Markets that are subject to rapid/ continuous change
• Online retailing


  Involves shoppers ordering goods online & taking delivery at home
• Advantages of online retailing

  • Distance is no object
  • Customers can buy from anywhere in the world
  • Online retailers can reach more customers
• Disadvantages of online retailing

  • Owners need IT skills
  • Issues with online security worries older customers to share their bank details
• Factors that lead to dynamic markets

  • Increase/decrease in market size
  • Changes in the nature of the market
  • Development of new markets
  • Higher product innovation & market growth
• Factors that lead to market growth

  • Economic growth
  • Innovation
  • Social change
  • Changes in legislation
  • Demographic changes
• Factors that help businesses adapt to market change

  • Flexibility
  • Market research
  • Investment
  • Continuous improvement in the increasing competitive environment
• Competition

  Rivalry that exists between businesses in a market
• How competition affects businesses

  • Lowering prices
  • Offering better quality products
  • Using more attractive advertising
• How businesses can reduce competition

  • Taking over their rivals through buying them in the market
  • Creating obstacle which makes it difficult for other firms to enter the market
• Advantages of competition to consumers

  • More choice
  • Better quality product
  • Lower prices
• Risk


  When the business decides knowing that if they are in control of the factors affecting their decision, it will incur positive results. However, if they are not in control of the factors, then it is likely to incur negative results.
• Uncertainty


  When an unexpected situation happen which is complete beyond the control of the business
• Market research


  Involves gathering, presenting & analysing information about the marketing & consumption of goods & services
• Purposes of market research

  • Identify & anticipate customer needs & wants
  • Quantify likely demand
  • Gain an insight into consumer behaviour
• Primary market research


  Information that did not exist before research began, obtained firsthand by the business to match its specific needs
• Methods of primary research

  • Questionnaires/surveys
  • Focus groups & Consumer panels
  • Face-to-face & Telephone interviews
  • Product trials & Test marketing
• Advantages of primary research

  • Data can be collected that directly applies to the issue being researched
  • Business that initially collects the data will be the only organisation with access to it, gaining marketing advantages
• Disadvantages of primary research

  • Expensive to collect & may take longer than desk research
  • Sample taken may not represent the views of all the population
• Secondary market research


  Information that already exists in some form
• Methods of secondary research

  • Websites
  • Social media
  • Newspaper/magazines
  • Television/ radio
  • Reports
  • Databases
• Advantages of secondary research

  • Easy, quick & cheap to collect
  • Several sources may be used, allowing data to be checked & verified
• Disadvantages of secondary research

  • Data is not always in a form that a particular business would want
  • Data may be out of date & irrelevant, especially in fast-changing markets
• Quantitative research


  Involves the collection of data that can be measured, such as statistical data like sales figures & market share
• Qualitative research


  Involves the collection of data about attitudes, beliefs & intentions, such as from focus groups & interviews
• Sampling methods

  • Random sampling
  • Quota sampling
  • Stratified sampling
• Sample


  A small group of people that must represent a proportion of a total market when carrying out market research
• Stratified sampling


  Combination of random & quota sampling. When total population is divided into different groups/segments.
• Product orientation


  Business focuses on the production process & the product itself. It puts most of its efforts into developing & making products which it believes consumers want & which will sell well.
• Market orientation


  An approach to business which places the needs of consumers at the centre of the decision-making process.
• Advantages of market orientation

  • It will be more confident that the launch of a new product will be a success. It can respond more quickly to changes in the market because of its use of market information.