Theme 1: A Level Business Edexcel

• Niche market


  Where a business targets a smaller segment of a larger market, where customers have specific needs and wants
• Mass market


  Where a business sells into the largest part of the market, where there are many similar products on offer
• Niche markets


  • They can charge a higher price, as consumers are likely to buy for the good quality
  • Take longer time, more resources, small audience, difficult to be successful/unique
• Mass markets


  • A larger audience, doesn't use a lot of resources or time
  • Products would usually be cheaper, big competition, not a lot of quality, small profit margins
• Market share


  Proportion of total sales in a market made by a business or brand (shown as a %)
• Brand name


  A name, term, sign, symbol, design or any other feature which allows consumers to identify the goods and services of a business and to differentiate them from these competitors
• 1. E-commerce

  Conducting business transactions online
• Online retailing (e-tailing)


  Retailing of goods online
• Markets can be measured in terms of value (the sales revenue generated) and volume (the number of sales made)
• Market size for wedding photography in Weardale: Price per wedding = £500, Estimated bookings = 45, Market share = 15%
• Market research


  The process of gathering, recording and analysing data to identify opportunities and threats, measure consumer behaviours
• Primary research


  Research that is unknown, so this specific information is needed to know if the products/services is satisfying the customers' needs
• Secondary research


  Research that is already known, but needs to be collected
• Qualitative research


  Research that has chains of reasoning, and is not just a simple yes or no or a figure
• Quantitative research


  Research that is based on numbers and figures
• Benefits of market research


  • Easier to track and monitor success rate
  • Cost effective
  • Lets customers provide feedback
• Drawbacks of market research


  • May only target a small audience
  • Takes a lot of time
  • Requires extra personnel
• Product orientation


  A business approach which places the emphasis on the production process and the product itself
• Market orientation


  A business approach which places the needs of consumers at the centre of decision-making
• Advantages of product orientation


  • Focus on creating and offering high-quality goods and services
  • Innovative products that focus on providing the best user experience
  • Better market research leading to a reduced risk
• Disadvantages of product orientation


  • Competitors easily replicate techniques
  • High research and development is expensive, and could leads to debts if failed
  • Problematic if demand doesn't outstrip supply
  • Tend to be a niche market, so have a smaller audience
• Advantages of market orientation


  • Respond more quickly to changes in the market
  • Better prepared to face up to new competition
  • More confidence in a successful product launch
• Disadvantages of market orientation


  • Unpredictable nature of human behaviour
  • Sampling and bias issues in market research
• Market segmentation


  Dividing markets into different sections (market segments)
• Market segment


  Part of a whole market where a particular customer group have similar characteristics
• Businesses can segment the market geographically, demographically, psychographically, and behaviourally
• Psychographic segmentation


  • Interest in fashion
  • Political leanings
  • Different likes of sports/music/travel
• Market positioning


  The perception customers have about products compared with their competitors
• Market mapping (perceptual maps)


  A map which compares 2 attributes and characteristics of rival brands
• Limitations of perceptual maps


  • Only 2-dimensional - may ignore other key attributes

  Requires a lot of market research (expensive, time consuming)

  May be intuitive maps, therefore may show lack of understanding of an industry
• Risk


  Where the outcome is unknown, but the probability distribution governing that outcome is known
• Uncertainty


  Characterised by both an unknown outcome and an unknown probability distribution
• Effective market research is important for a business to determine who and where their customers are, find opportunities for growth, and know where to advertise and stay up to date with current trends
• Direct competition


  Any company that offers the same thing as you
• Indirect competition


  A business whose products or services are different from yours but potentially could satisfy the same need and reach the same goal
• Competitive advantage


  An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices
• Benefits of perceptual maps


  • Can reveal gaps in the market

  Can show a business who its closest competitors are

  Can show how much customers expect to pay
• Market map


  A map which compares 2 attributes and characteristics of rival brands, for example price vs quality in supermarkets
• Perceptual Maps


  • Market maps can reveal gaps in the market
  • Can show a business who its closest competitors are
  • If the sales are declining, the business might use a market map to find out how customers view their product, then try to reposition it
  • Can show how much customers expect to pay, e.g. a camera of varying quality. This can help with pricing strategy
• Limitations of Perceptual Maps


  • Only 2-dimensional - may ignore other key attributes
  • Requires a lot of market research (expensive, time consuming)
  • May be intuitive maps, therefore may show lack of understanding of an industry
  • Can simplify too much
  • The position of the brands is opinionated and therefore biassed