1.1.1 The Market

Question 1

Market

Answer 1

• buyers &sellers
• exchange goods/services
• exchange of money at a set price

production
product
promotion 
price 
place/people

Question 2

marketing

Answer 2

the department tasked with targeting the right product for the right target market using the right combination of price promotion product and place (4Ps)

Question 3

4 Ps

Answer 3

price
promotion
product
place

Question 4

marketing strategy

Answer 4

plan of how you are going to achieve your marketing objective
SMART

Question 5

mass market

Answer 5

products or services
targeted at whole market e.g mars bar

people: generic/wider pop
product: wide, low quality
promotion: mass media
price: competitive
production: high output, low cost EOS

Question 6

ADV of mass market

Answer 6

1-wide TM = less risk
2-EOS
3-cheaper unit production cost (large)
4-large vol of sales = high revenue, invest in R&D

Question 7

DIS of mass market

Answer 7

1-competitive = differentiate
2-not flexible in production (demand changes) high volume
3-homogeneous (all same) = differentiate = market cost

Question 8

ADV of niche market

Answer 8

• premium price = profit
• less competition
• specific knowledge/skills
• smaller customer easier to target (loyalty)
• small scale production (flexible/follow trend)

Question 9

DIS of niche market

Answer 9

• higher unit cost = No EOS
• risk of overdependence on single market/product
• risk = demand not constant (vulnerable to market changes)
• high skill staff
• small market = less demand

Question 10

market size

Answer 10

total value or volume of sales in market
can be measured in monetary terms (e.g. £20million)
or by amount sold (e.g. 1 million cars)

Question 11

market size formulae

Answer 11

number of units sold x price

Question 12

market share

Answer 12

proportion of total market sales a firm has

sales of one firm divided by total market sales x 100

Question 13

3 things market share influenced by

Answer 13

1-marketing focus
2-economic situation
3-competitors actions

Question 14

dynamic market

Answer 14

constantly changing,

seller respond to the changing needs of buyers improving existing or introducing new ones

Question 15

5 reasons why are markets dynamic

Answer 15

1-dynamic environment 
2-social trends 
3-changes in technology 
4-competitive environment 
5-consumer tastes 

fails to keep up with trends = lose competitiveness

Question 16

other market

Answer 16

relatively slow moving e.g. confectionary

Question 17

stable market

Answer 17

pace of change is slow,
market size and share are fairly constant little variation in price
(innovation: rare, minor changes to existing products

Question 18

markets have changed/how they change

Answer 18

technological changes (internet)

how:
digital economy
changes consumer tastes

Question 19

online retailing

Answer 19

process of buying & selling goods and services over the internet (e-commerce)

Question 20

ADVS and DIS of impact of consumer of online retailing

Answer 20

ADV:

• convenient - breaks geographical location barrier
• wider range (greater choice
• wider availability (new products/services)
• more price transparency

DIS:

• intangible product
• delivery issues
• fraud

Question 21

ADVS and DIS of impact of business of online retailing

Answer 21

ADV:

• 24/7 sales always online
• increase demand - wider target market
• reduced rent payments
• small can reach global market (fast for growth)
• cheaper to run

DIS:

• more competitors (less barriers to entry)
• increased delivery, storage costs
• may have to reduce price
• specialist to set up &maintain website

Question 22

digital economy

Answer 22

economy built on technologies (internet facilitates this use of technology)

Question 23

3 main areas of digital economy

Answer 23

1. supporting infrastructure
2. e-business
3. e-commerce

Question 24

government innovation

Answer 24

increasing legislation in an industry - alter way marker operates
(automobile market affected - laws reducing carbon emissions)

Question 25

Brand

Answer 25

product produced by one business using a specific business creation of an identity for the business distinguishes that firm and product (other firms) consumer have perception of what to expect trademark not copied -name, shape, symbol, colour, logo, images, celebrity endorsement -build loyalty & repeat business as well as adding value =higher prices

Question 26

branding

Answer 26

add value charge higher prices brand loyalty continue to buy

Question 27

3 Benefits of branding

Answer 27

1. brand extension (new products willing to try new products on brand loyalty) 2. brand value 3. brand personality (take on persona, certain human characteristics)

Question 28

How do businesses respond to changes in market? | 3 ways

Answer 28

1. Offensive (increases sales/develop new markets) 2. Defensive (react to competition & maintain market share) 3. Mixture

Question 29

market growth

Answer 29

- percentage increase in size of market | - change in size of market divided by original size x100

Question 30

marketing

Answer 30

- action/process of promotion & selling products or services - market research and advertising - how business connects with customer (include 4Ps)

Question 31

5 ways competition affects market

Answer 31

1. price a business is able to charge 2. buying power of customer 3. selling power of supplier 4. availability of substitutes 5. willingness and ability of new firms to enter

Question 32

degree of competition

Answer 32

- number of firms that exist in a market | - range from a monopoly (one firm dominates industry) where there are any buyers and sellers

Question 33

product innovation

Answer 33

- occurs when new technologies make it possible to create completely new products - increase sales / whole new markets = rapid growth -being innovative = growth

Question 34

process innovation

Answer 34

- using new technology to improve production methods - cost reduced without loss in quality - through distribution channel, stock control, supply chains

Question 35

risk

Answer 35

(calculated) probability/possibility that things will go wrong (calculated/weigh up)

Question 36

situations where businesses may have to assess risk:

Answer 36

help/safety = risk product breaches regulations weigh up risk of new product by market research whether to diversify use cost benefit analysis / benchmarking (match to the best) risk making business investment risk MR will pay off

Question 37

uncertainty

Answer 37

unpredictable and uncontrollable events that affect a business - about sales success for new product launch - effect of launching price war against competition - external events - economic variables - how government may react to FDI

Question 38

to reach equilibrium

Answer 38

D =S | excess supply when D

Question 39

risk

Answer 39

calculate probability/possibility that things will go wrong | calculated/weigh up

Question 40

situations where business need to assess risk

Answer 40

health/safety new product MR. (Payoff). diversify use cost benefit analysis, benchmarking (match to best) making business inv

Question 41

uncertainty

Answer 41

unpredictable and uncontrollable events that affect business e.g. industrial action (strikes) ``` sales success for new product launch effect of launching price war against comp external events economic variables how governments may react to FDI ```

Question 42

strategies to minimise risk and uncertainty

Answer 42

``` sales forecasting techniques (JIC) decision trees ensure liquidity "safe" working capital, acid test/current ration market research contingency plans/scenario plans RISK= loyal customer base developed broaden product portfolio ```

Question 43

uncertainty strategies

Answer 43

excess cash supplies decrease number of receivables and no of receivable days given increase payable days to suppliers diversify foster agility in decision making

Question 44

risk strategies

Answer 44

take calculated risk diversify = spread risk look for increased returns to account for risk be persistent