Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business paper one > Markets > Flashcards

Markets Flashcards

1
Q

Define competition

A

The number of firms that are operating in the same market, they are competing to sell similar products to the same target market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define a market

A

A place where buyers and sellers come together to exchange goods or services, usually involving an exchange of money at a set price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define competitive advantage

A

A feature of a business that allows it to perform more successfully than others in the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

State the strategies of competition

A

New product development, Changing or improving existing products, promotions, changing prices, improving distribution channels and improving customer service (training staff)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

State the 5 types of markets

A

Local-Global, Mass-Niche, Trade-Consumer, Product-Service, Seasonal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Comment on product targeting, segmentation, appeal, availability and advertising in mass markets

A

Products are targeted at a wide range of people
The market is not segmented
Appeals to a wide range of customers
Widely available through a range of markets
Mass media used to advertise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Comment on gap filling, target market, promotion and price changes in niche markets

A

Identifies small and currently unsatisfied gaps
Target market is well defined with distinct characteristics
Promotion is targeted at a small subsection of the whole market
Often charge higher prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Discuss the logistics of trade markets

A

Where businesses are selling to other businesses, the technical specification of the product and service is likely to be more important than the physical environment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Discuss the logistics of consumer markets

A

Where businesses sell to the public, the product and the price are of equal importance to the physical environment but more important than place (it doesn’t matter what channels the product went through to reach the consumer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is market size

A

The total value or volume of sales in the market, number of units sold multiplied by selling price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is market share

A

The proportion of total market share that a firm has, sales of one firm divided by total market sales multiplied by 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are market trends

A

The overall changed in the market, (growing, static or declining) which businesses are gaining or loosing market share

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is market segmentation

A

When the market is split into subgroups of consumers with similar characteristics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the 4 types of market segmentation

A

Demographic, geographic, income and behavioral

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Describe demographic segmentation

A

Identifies subgroups of the population based on their demographic profile or characteristics, looking at the social and economic characteristics of individuals and households

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the categories of demographic segmentation

A

Age, gender, level of education, race, religion, family size, stage in life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Define geographic segmentation

A

Defines market categories based on where people live, people from different places have different characteristics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are the categories of geographic segmentation

A

Warmer and colder regions, taste and tradition, infrastructure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Define income segmentation

A

Identifying subgroups of the market based on their level of income and profession

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Explain socio-economic groupings (income segmentation)

A

A - Higher managerial (chief executives and directors)
B - Intermediate managerial (accountants and doctors)
C1 - Supervisory, clerical or junior professional (teachers)
C2 - Skilled manual (Plumbers)
D - Semi and unskilled workers (window cleaners)
E - Pensioners, casual workers, students and unemployed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Define behavioral segmentation

A

Characterizes subgroups based on the behavioral patterns of the consumer rather than their characteristics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the characteristics of behavioral segmentation

A

Reasons for making purchases, frequency of purchase, time of purchase, brand loyalty, method of purchase and triggers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Explain the impact of market segmentation

A

Advertising can be targeted so spending on advertising is more effective, profitability of customers can be identified, avoid less profitable markets, easier to launch new products, greater variety of goods and services in the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Define competitive environment

A

The degree of competition in the market and the buying and selling power of customers and suppliers within the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Describe a monopoly

A

When one firm dominates the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Describe an oligopoly

A

When a few firms dominate the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Describe monopolistic competition

A

When there are many firms in the market but there is some form of product differentiation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What assumptions is the model of perfect competition based on

A

Large number of producers, identical products, freedom of entry and exit and readily available information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Describe producers in the context of perfect competition

A

Each firm is relatively small in size and sell to a large number of buyers, all producers are price takers and so cannot influence price, each firm can sell all of its output at the current market price therefor it would not lower its prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Describe homogeneous products in the context of perfect competition

A

Buyers cannot tell the difference between products from different firms, there is no branding and brand loyalty does not exist, firms cannot raise their prices beyond competitors, in reality firms will sell unique products

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Describe freedom of entry and exit in the context of perfect competition

A

Firms are free to enter or exit the market if they wish to do so, therefor entry costs are very low or even non existent, firms can move into the market if they see that profits are higher than usual, the opportunity to charge higher prices is restricted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Describe readily available information in the context of perfect competition

A

Perfect knowledge exists, all economic targets (buyers) have a comprehensive understanding of all the factors within a market, all buyers have all the info about prices and availability of goods and services in the market, all sellers know how to produce goods and services so produce the same quality of output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Define imperfect competition

A

A type of market structure that exhibits some but not all elements of perfect competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What differences does imperfect competition have

A

Less firms in the market, some form of product differentiation, some barriers to entry and exit, demand curve is downward sloping, suppliers can influence prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Define price leaders (monopoly)

A

They can charge high prices but these are often restricted by government regulation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Is new product development effected by competitors in a monopoly

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

How do monopolies inform and persuade customers

A

Promotion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

How do monopolies increase sales revenue

A

Increasing the market size

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

How do the government define monopolies

A

Any company that has more than 25 percent market share

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Why are monopolies regulated by the government

A

They can exploit customers by charging high prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

What barriers to entry exist in a monopoly

A

High capital costs, economies of scale, legal barriers (only pharmacies can sell prescription drugs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What is a pure monopoly

A

One firm exists in the industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What is a duopoly

A

There are only two firms in the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

What competitive strategy is prominent in a duopoly

A

Non - price competition like promotion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What is collusion

A

Mostly in duopolies where agreements are made to restrict competition, this is illegal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What is an oligopoly

A

Where there are only a few firms in a market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Why is it crucial for oligopolies to pay attention to competitors

A

If one firm lowers prices the rest will follow suit and the market as a whole will lose value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What are the characteristics of an oligopoly

A

Do not compete on price in the long term, do compete on price in the short term, spend heavily on new product development, branding is critical and large marketing budgets are common, firms must ensure that products are accessible to be successful

49
Q

Where does monopolistic competition exist

A

Where there are a large number of firms in the market selling differentiated products, this leads to a small degree of monopolistic power as each firm offers something different to consumers

50
Q

Describe barriers to entry in the context of monopolistic competition

A

Very low which creates very strong competition

51
Q

Give a few examples of monopolistic competition

A

Hairdressing, restaurants and the health and beauty industry

52
Q

When do barriers to entry exist

A

When firms that are within an industry are protected from competition from outside the industry, these obstacles may occur naturally or be man made through intervention

53
Q

Give 3 barriers to entry

A

Advertising, economies of scale and financial

54
Q

Define product differentiation

A

When firms make their product different to the competition by adapting the actual product in some way or distinguishing the product through advertising and branding

55
Q

Define USP

A

Something that distinguishes a firms product from those of its competitors and can allow a firm to charge a premium price

56
Q

State competition policy

A

A monopoly exists where there is only one firm in the market.
The government refer to any company that has at least 25 percent market share as having monopoly powers.
Market power is the ability of a firm to set prices above those that would be charged if there were competition.
Monopolies can exploit consumers by charging higher prices.
Therefor, monopolies are regulated in order to protect the customer.
The objective is to achieve free and fair competition.

57
Q

Define demand

A

The amount society is willing to able to buy at a set price at a given point in time

58
Q

Define a normal good

A

A good where if the prices rise, demand will fall and vice versa, there is a negative correlation

59
Q

How is the relationship between price and quantity demanded determined

A

By constructing a demand curve

60
Q

What is a demand curve

A

A graphical representation of the relationship between price and quantity demanded

61
Q

What are the axis of a demand curve

A

Y is price and X is quantity

62
Q

What are the factors leading to a change in demand

A

Change in price (movement along)
Change in other factors (shift)

63
Q

What are the non price factors that change demand

A

Changes in price of substitutes and complimentary goods, changes in consumer income, fashion taste and preferences, advertising and branding, demographics, external shocks, seasonality

64
Q

Why do substitute goods affect demand

A

It acts as an alternative and therefor creates competition, if the price of good A increases the demand of good B will increase, there is a positive correlation

65
Q

Why do complimentary products affect demand

A

They are bought alongside a good or service, if the price of good A increases the demand for good B will decrease (negative correlation)

66
Q

What happens to demand when consumer income increases

A

Demand increases

67
Q

What effect does increased income have on the demand of necessities

A

It’s not really affected because they are essential and would be purchased regardless of income

68
Q

What effect does income have on the demand for luxuries

A

If income increases customers may be able to afford more luxuries causing an increase in demand

69
Q

What effect does income have on the demand for inferior goods

A

If income increases demand may decrease as customers switch to being able to afford a better quality product

70
Q

Define advertising

A

A promotional method that involves the use of media to communicate with existing and potential consumers with a purpose of creating awareness and desire

71
Q

Define branding

A

A promotional method that involves the creation of an identity for a business that distinguishes the firm and its products from competitors

72
Q

Define the term demographic factors

A

The statistical characteristics of the population

73
Q

Give examples of demographic factors

A

Age, gender and ethnic mix

74
Q

What effect has migration had on demand

A

Increased the demand for a wide range of goods and services such as housing, public transport and healthcare

75
Q

Define external shocks

A

Unexpected events that are outside of the businesses control but have a direct impact on the level of demand

76
Q

Define seasonality

A

The fluctuation in demand depending on the time of year

77
Q

Why does seasonality exist

A

Changes in the weather and public holidays

78
Q

What causes a demand curve shift

A

If the change in demand is caused by any factor other than price, an increase in demand is shown by a shift to the right and a decrease to the left

79
Q

Define supply

A

The amount of a good or service that producers are willing and able to sell at any given price

80
Q

Define producers

A

Those that create and supply goods and services to a market

81
Q

What happens to supply as price falls

A

Supply decreases

82
Q

What happens to supply as prices rise

A

Supply rises because profit margins are greater

83
Q

What are the axis on a supply curve

A

Y is price and X is quantity

84
Q

What happens to supply output if the cost of production increases

A

Some firms will reduce output because it becomes less profitable

85
Q

How have technological advances improved the cost of production

A

Large scale machinery allows fixe costs to be spread over greater output making the cost per unit cheaper, as tech improves firms find more profitability in supplying

86
Q

What is taxation

A

A charge placed on individuals and firms, governments use this money to finance their spending

87
Q

What are indirect taxes and the types

A

Taxes placed on goods and services produced by individuals or firms, VAT and duties

88
Q

What happens to the supply of a product if indirect taxes increase

A

It becomes more expensive to produce so the quantity supplied will decrease

89
Q

What are subsidies

A

Finance provided by the government to encourage suppliers to produce goods and services

90
Q

Name 3 external shocks that affect supply

A

Natural disasters, terrorist attacks and outbreaks of disease

91
Q

What causes a shift in the supply curve

A

Any factor other than price

92
Q

What is market equilibrium

A

The point at which demand is equal to supply, also known as the market clearing price

93
Q

Describe market clearing price

A

All buyers can get the exact amount that they want to buy at this price so there is no supply left over, any change in demand or supply will lead to a new market clearing price

94
Q

Give some causes of shifts in the supply curve

A

The impact of changing costs of production, technological progress, prices of other goods and services and government policies

95
Q

What does price elasticity of demand measure

A

How responsive demand is to a change in price

96
Q

What does price elastic demand mean

A

A change in price will lead to a more than proportional change in demand

97
Q

What does price inelastic demand mean

A

A change in price will lead to a less than proportional change in demand

98
Q

State the PED formula

A

Percentage change in demand divided by percentage change in price

99
Q

State the range of price inelastic demand

A

0 and -1

100
Q

State the range of price elastic demand

A

-1 and -1.4

101
Q

Explain how the availability of substitutes affects PED

A

The closer the substitutes and the more that are available, the higher the PED

102
Q

Explain the effect of price of competitor goods on PED

A

If the price of goods in competition with a product increases the PED is effected

103
Q

Explain the effect of time on PED

A

The longer the time period the higher the PED, Given more time other firms have the ability to produce similar products and customers have more chance of adapting their buying habits

104
Q

How does branding affect PED

A

Firms spend time and money building brand image, they build brand loyalty and can then charge higher prices as the PED is lower

105
Q

How does income affect PED

A

If consumers incomes are higher then the issue of price becomes less important to the customer and its easier for firms to raise prices as the PED is lower

106
Q

How does the nature of a good affect PED

A

A luxury good will be price elastic as demand will be more sensitive to changes in price, a necessity good will be price inelastic as demand is less sensitive to changes in price

107
Q

How does raising and lowering selling price affect price elastic demand products

A

Raising will decrease revenue, lowering will increase revenue

108
Q

How does raising and lowering selling price affect price inelastic demand products

A

Raising will increase revenue, lowering will decrease revenue

109
Q

What are some issues with forecasting PED

A

Constantly changes in a dynamic world, hard to measure because it changes over different price ranges, competitors do not stand still and tastes and fashion are always changing

110
Q

What is income elasticity of demand

A

A measure of the responsiveness of demand to a change in income

111
Q

What is the type of good that has a demand increase when income increases

A

Normal goods

112
Q

Do normal goods have a positive or negative income elasticity of demand

A

Positive

113
Q

What type of good has a decrease in demand when income increases

A

Inferior goods

114
Q

Do inferior goods have a positive or negative income elasticity of demand

A

Negative

115
Q

State the formula for income elasticity of demand

A

Percentage change in quantity demanded divided by percentage change in income

116
Q

State the range of YED coefficient for income inelastic goods, what does this mean for a business

A

-1 to 1, demand changes at a lower proportion than the change in income

117
Q

State the range of YED coefficient for income elastic goods, what does this mean for the business

A

Less than -1 or greater than 1, demand changes at a higher proportion than the change in income

118
Q

What determines the income elasticity of demand for a product

A

Whether it is a luxury or necessity

Business paper one (38 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions