1.1 Meeting Customer Needs

Question 1

What is a mass market

Answer 1

an unsegmented market in which products with mass appeal are arrived at every customer.

Question 2

what is a niche market

Answer 2

targeting a small segment of the market with specific characteristics and needs

Question 3

what are advantages of a mass market

Answer 3

• targets a mass market (very high sales volume)
• gives brand awareness, lead yo more profit

Question 4

what are the disadvantages of a mass market

Answer 4

• high competition
• high volume production not flexible to demand changes

Question 5

what are advantages of a niche market

Answer 5

• less competition
• able to meet unique customer needs (charge premium)

Question 6

what are disadvantages of a niche market

Answer 6

• no economies of scale (low scale production)
• sensitive to market changes

Question 7

what are economies of scale

Answer 7

falling unit (or average) costs experienced by a business as it increases in size.

Question 8

what is purchasing economies of scales

Answer 8

A growing business reduces unit costs by buying raw materials in bulk, benefiting from discounts.

Question 9

Advantages of purchasing economies of scale

Answer 9

• lower cost pu - buying in bulk offers in discount
• higher profit margins - costs go down business makes more profit

Question 10

Disadvantages of purchasing economies of scale

Answer 10

• storage costs - buying in bulk requires space
• Bulk buying may reduce flexibility, making it harder to switch suppliers or adapt to changes in demand.

Question 11

what is marketing economies of scale

Answer 11

As output increases, businesses lower unit costs by spreading advertising and promotional expenses over a larger volume of sales

Question 12

Advantages of marketing economies of scale

Answer 12

• lower marketing costs pu
• competitive advantage, lower marketing costs can help reduce prices or improve profitability

Question 13

Disadvantages of marketing economies of scale

Answer 13

• High Upfront Costs – Large marketing campaigns require significant investment, which may not always lead to higher sales.
• Brand Dilution – Overexposure can weaken a brand’s unique identity and reduce its impact

Question 14

what is technical economies of scale

Answer 14

Investing in advanced machinery and technology allows businesses to improve efficiency and lower unit costs as production scales up.

Question 15

what are advantages of technical economies of scale

Answer 15

• improved product quality
• lower production costs- advanced machinery and tech increase efficiency reducing CPU

Question 16

what are disadvantages technical economies of scale

Answer 16

• high initial investment, buying and maintain advanced machinery may be expensive
• Inflexibility – Specialized machinery may limit the ability to switch production to different products.

Question 17

what is managerial economies of scale

Answer 17

Hiring specialized managers improves efficiency, and their cost is spread over a larger output, reducing unit costs.

Question 18

advantages of managerial economies of scale

Answer 18

• specialist should be able to work more efficiently and effectively

Question 19

disadvantages of managerial economies of scale

Answer 19

• higher costs, hiring experienced manages increase labour costs

Question 20

why does economies of scale matter

Answer 20

Lower costs – Reduces the cost per unit as production increases.
Higher profits – Saves money, leading to more profit.

Question 21

What is market size

Answer 21

Total sales of all business’ the market

Question 22

What is market share

Answer 22

a business’ sales as a percentage of total market sales

Question 23

Market share formula

Answer 23

Sales of business/Total market sales x 100

Question 24

What is market growth

Answer 24

change in the size of the market over time

Question 25

Market Growth formula

Answer 25

Change/original x 100

Question 26

what does market growth help indicate to the business

Answer 26

Expansion opportunities – Shows potential for the business to grow and increase sales. Demand trends – Reveals if customer interest is rising, indicating more potential customers.

Question 27

what does market size help indicate to the business

Answer 27

Potential demand – Shows how many customers may be interested in the product. Growth opportunities – Helps identify if the market is expanding or shrinking.

Question 28

what does market share help indicate to the business

Answer 28

Competitive position – Shows how a business compares to its competitors in terms of sales. Brand strength – Reflects customer loyalty and brand recognition.