1.1.1 - the market

Question 1

characteristics of mass markets

Answer 1

• generic products which are broadly similar in form and function
• huge markets
• typically businesses will have a lower market share

Question 2

characteristics of niche markets

Answer 2

• specialist products and services
• smaller markets
• businesses are more likely to have larger market shares

Question 3

benefits of mass markets

Answer 3

• huge potential numbers of customers
• higher production levels allow economies of scale
• can use mass media advertising

Question 4

benefits of niche markets

Answer 4

• meeting consumer needs more precisely meaning higher prices can be charged
• higher profit margins
• easier to enter for firms with limited financial resources

Question 4

dynamic markets - online retailing

Answer 4

• continued growth in online retailing has varied between different markets (e.g. grown significantly in clothing, but done the opposite in books)
• history has shown retailers who fail to switch to online retailing often fail completely
• it is vital to ensure your product or service is available to buy wherever consumers want to buy it

Question 5

dynamic markets - how markets change

Answer 5

• markets change as a result of major external influences: political, economic, social, technological, legal and environmental (PESTLE)

Question 6

dynamic markets - innovation and market growth

Answer 6

• innovation is a major cause of change within markets
• competing firms continually try to develop new products/services that differ from rivals, which can lead to shifts in customer loyalties
• one innovation is successful, other companies may be forced to adapt their offerings to keep up with rivals
• many companies will try to come up with their own innovations to try to benefit by leading change in the market

Question 7

dynamic markets - adapting to change

Answer 7

• market research and an understanding of general trends is vital to successfully adapt to change
• identifying subtle changes in what consumers are looking for allows businesses to adapt their products to better suit these needs
  changing earlier than rivals provides a major source of competitive advantage

Question 8

how competition affects the market

Answer 8

• competition stimulates most change and development within business
• e.g. the rivalry between Apple and Samsung

Question 9

impact of increased levels of competition

Answer 9

• pressure to drive down costs
• pressure to maintain competitive prices
• pressure to develop innovative products and services
• pressure to maintain high-quality products and services

Question 10

what is the difference between risk and uncertainty?

Answer 10

• risk is quantifiable and can be identified
• uncertainties are unpredictable and are factors that can cause risk