1.1.1 the market

• mass market


  when a business sells the same products to all consumers and markets them in the same way
• niche market


  involves selling to a small customer group, sometimes with specific needs
• advantages of mass market

  huge number of customers, produce large quantities at a lower cost unit by exploiting economies of scale = higher sales and higher profit
• disadvantages of mass market

  lots of competition therefore business may spend more money on marketing
• advantages of niche market

  avoid competition - could also charge premium prices, easier to focus on customer needs
• disadvantages of niche market

  could attract competition, easily be overrun by a larger business, if business collapses then they have no other products or market as a backup
• market size: value

  the total amount spent by customers buying products
• market size: volume


  the physical quantity of products which are produced and sold
• market share


  sales of a business / total sales in the market x100%
• marketing


  involves a range of activities that help a business sell its products
• marketing also involves...

  • identifying customers needs and wants
  • designing products that meet their needs
  • understanding threats from competitors
  • telling customers about products
  • charging the right price
  • persuading customers to buy products
  • making products available in convenient locations
• marketing is the management process responsible for identifying, anticipating and satisfying customer requirement profitably
• markets


  places where buyers and seller would meet to exchange goods
• examples of markets...

  • consumer goods market
  • markets for services
  • housing market
  • commodity markets (raw materials such as oil, wheat and coffee)
  • financial markets (where currencies and financial products are traded)
• why can measurement of market share be important?

  • could influence other companies to follow the ''market leader'' in order to maintain their position
  • could also influence the business' strategy or objectives
  • an indication of the success or failure of a business or its strategy
• brands


  products that are given brand names to allow consumers to distinguish and differentiate the products if a business from its competitors
• dynamic market


  they may grow, shrink, fragment, emerge or disappear overtime.

  a failure to adapt in the dynamic market can lead to a collapse of a business.

  those that can adapt to changes in the dynamic market are more likely to survive in the long term
• online retailing/e-tailing


  involves shoppers ordering online and having it delivered to your home
• benefits of online retail services...


  market their goods to people who prefer online shopping

  easier to gather customers' personal info so that they can be targeted in the future

  rent and other overhead costs can be avoided = enormous savings and also charge lower prices

  lower marketing costs

  reach more customers

  open 24/7

  affords greater flexibility - eg, promote ''deal of the day'' on the homepage without the need for expensive printed display

  customers can buy products from anywhere in the world
• how markets change: size of markets

  the size of some markets can remain stable over a large period eg, the milk market

  
  

  many are likely to grow eg, the global packaging market

  
  

  some markets decline eg, the coal industry
• how markets change: nature of market

  many markets are in a state of flux - meaning the structure and nature of the market are always in constant change

  many products are always updated, modified and relaunched - choice availability is widening.

  eg, restaurants
• how markets change: new markets

  new markets are always developing. they appear when new products are launched

  no had phones in the 1970-90s up until now.
• What are the two types of market growth mentioned in the study material?

  Growth in existing markets and growth in new markets
• How does economic growth influence market growth?

  It raises living standards, allowing people to spend more money, which enables businesses to sell more products
• What role does innovation play in market growth?

  Businesses can create new wants and needs and meet them with new products
• How can clever marketing techniques contribute to market growth?

  They can develop new wants among consumers
• What social changes can impact market growth?


  Changes such as a decline in marriages, more working women, and more one-parent families can increase market size for childcare and housing
• How do changes in legislation affect markets?

  New laws can influence market growth, such as environmental legislation promoting renewable energies and 'green goods'
• What demographic changes can affect market size?

  Changes in population structure, such as an aging population, can increase market size
• How does an aging population contribute to market growth?

  It leads to a larger population, increasing demand for elderly holidays, healthcare, and care homes
• What are the main factors influencing market growth?

  • Economic growth
  • Innovation
  • Social changes
  • Changes in legislation
  • Demographic changes
• What happens to businesses that do not adapt to market changes?

  They are likely to lose market share or even collapse.
• What are the ways businesses can adapt to market changes?

  • Flexibility: Prepare for change in working practices, machinery, equipment, pricing, and staff.
  • Market research: Stay aware of changes in customer needs and wants.
  • Investment: Invest in new product development to survive longer.
  • Continuous improvement: Provide good customer service and encourage new product ideas for competitive advantage.
  • Develop a niche: Serve a niche market if unable to diversify.
• What does flexibility in a business context refer to?


  Being prepared for change in working practices, machinery, equipment, pricing, and staff.
• Why is market research important for businesses?

  It helps businesses stay aware of changes in customer needs and wants.
• How does investment in new product development affect a business?

  It is likely to help the business survive longer.
• What does USP stand for in a business context?

  Unique Selling Point
• How does having a USP affect sales and market share?

  It increases sales, which leads to an increase in market share.
• What is the role of continuous improvement in a business?

  It leads to good customer service and encourages new product ideas, providing a competitive advantage.
• What might a business do if a market declines and it cannot diversify?

  It may survive by serving a niche market.