the market

Question 1

define mass markets

Answer 1

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

Question 2

characteristics of a mass market

Answer 2

• Customers form the majority in the market
• Customer needs and wants are more “general” & less “specific”
• Associated with higher production output and capacity (economies of scale)
• Success usually associated with low-cost operation, heavy promotion, widespread distribution or market leading brands

Question 3

define niche market

Answer 3

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

Question 4

advantages of niche market

Answer 4

• Less competition- clear focus - target particular customers (often easier to find and reach too)
• Builds up specialist skill and knowledge = market expertise
  Can often charge a higher price – customers are prepared to pay for expertise
• Profit margins often higher
• Customers tend to be more loyal

Question 5

disadvantages of niche market

Answer 5

• Lack of “economies of scale”
• Risk of over dependence on a
  single product or market
• Likely to attract competition if successful
• Vulnerable to market changes

Question 6

define market share

Answer 6

Market share shows the proportion of sales that a
business makes within a market compared to its competitors.

Question 7

whats the market share equation

Answer 7

Market share =
Revenue generated by firm/
Total revenue within the market x 100

Question 8

whats the market size equation

Answer 8

Market size=Number of units sold x Average selling price

Question 9

how do businesses combat competitiveness

Answer 9

strong branding

Question 10

what does strong branding achieve

Answer 10

consumers awareness of their product, which generates brand loyalty if another business enters the market

Question 11

features of a strong brand

Answer 11

• differentiate the product from rivals
• create customer loyalty
• help product recognition
• develop an image
• charge a premium price when brand is strong

Question 12

what is a dynamic market

Answer 12

a market that is continuously and rapidly changing

Question 13

factors leading to change in markets

Answer 13

1. Seasonal factors
2. Consumer tastes
3. Consumer attitudes
4. Government regulations
5. The availability of new technologies
6. New competitors entering the market
7. Changes in business structure and outsourcing

Question 14

what must businesses recognise

Answer 14

trends

Question 15

what is a trend

Answer 15

the general direction in
which things tend to move.

Question 16

why is it important for businesses to review and analyse trends

Answer 16

1. Make better decisions
2. Modify forecasts and set realistic targets in response to a trend
3. Anticipate and deliver the right resources to the right places at the right time
4. Recognise opportunities for innovation and improvement on its product or service
5. Develop a strategic vision and formulate alternative futures for its product or service

Question 17

what is a popular branch of e-commerce`

Answer 17

online retailing

Question 18

positives of online retailing

Answer 18

1. convenient for people who want to shop from home
   2.easier to gather personal info to target more products
2. many costs avoided (staff,rent,etc)
   4.lower marketing costs
3. can reach more customers
   6.open 24/7
4. greater flexibility
5. distance isnt a issue

Question 19

in what ways do markets change

Answer 19

1. size of market
2. nature of markets
3. new markets

Question 20

why may existing or new markets grow or occur

Answer 20

1. economic growth
2. innovation
3. social changes
4. changes in legislation
5. demographic changes

Question 21

what happens if businesses do not adapt to market changes

Answer 21

likely to lose market share or at worst collapse

Question 22

what would help businesses to adapt to market changes

Answer 22

1. market research
2. investment
3. continuous improvement in the increasingly competitive environment
4. develop a niche

Question 23

define competition

Answer 23

the rivalry that exists between businesses in a market

Question 24

affect of competition on businesses

Answer 24

under some pressure to encourage people to buy their product

Question 25

what methods will businesses use to encourage people to buy their product

Answer 25

• lowering prices
• making their product appear different to rivals
• offering better quality products
• using more powerful or attractive advertisement
• offering extras such as high quality customer service

Question 26

disadvantages of these methods

Answer 26

time consuming
expensive
generally lower profit

Question 27

affect of competition on consumers

Answer 27

generally benefit from more choice and lower costs.

Question 28

affect on customers if there was no competition

Answer 28

may be exploited due to restricted choice and high prices. businesses will lack incentive to innovate.

Question 29

define risk

Answer 29

owners take risks where the outcomes are unknown

Question 30

why is setting up a business a risk

Answer 30

if it collapses the owners lose their money

Question 31

define uncertainty

Answer 31

businesses operate in markets subject to external influences meaning the events are completely out of the businesses control

Question 32

what consequences can uncertainty have

Answer 32

financial ones

Question 33

why are all businesses operating in a state of uncertainty and whats the effect of it

Answer 33

the influences are difficult to predict so it makes decision making harder.