1.1.1 Markets

Question 1

What is a market?

Answer 1

Anywhere where buyers and sellers meet e.g Westfield

Question 2

Define ‘market research’?

Answer 2

The process of systematically gathering data from consumers which can be used to influence the business decisions

Question 3

What is market size?

Answer 3

The total sales value or sales volume in a given market

Question 4

What is a mass market?

Answer 4

• Where products are aimed at the largest (broadest) part of the market

Production usually happens on a large scale

Mass marketing occurs when businesses sell their products to most of the avalibale market

Question 5

What is a niche market?

Answer 5

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

Production usually happens on a small scale

Question 6

What are the characteristics of a mass market?

Answer 6

• Products are less unique as aimed at broader market segments
• Low average costs due to large scale of production- benefit from economies of scale
• Low prices lead to greater affordibility & higher sales volume
• Low prices lead to lower profit margins

e.g. Primark

Question 7

What are the characteristics of a niche market?

Answer 7

• Products more specialised & unique as aimed at narrow market segments
• High average costs due to small scale production
• High prices make products less affordable & lead to lower sales volume
• High prices can allow business to earn higher profit margin

e.g. Louis Vuitton

Question 8

What can the size of a market be measure through?

Answer 8

Sales volume or sales value

Question 9

What is sales volume?

Answer 9

The number of products sold
(i.e physical amount of products being sold)

Question 10

What is sales revenue?

Answer 10

Price X Quantity sold
(i.e the financial value of the units sold)

Question 11

How can you calculate market share?

Answer 11

Sales of a business/Total sales in the market X100

Question 12

What is a brand?

Answer 12

• A name, image or logo which helps one product/service stand out from it’s competitors

Branding is one of the key ways businesses achieve product differentiation

Question 13

Define ‘product differentiation’.

Answer 13

The process of distinguishing a product or service from competitors products in the market

Question 14

Why are brands so good?

Answer 14

• Brands add value, often making product/service more desirable to consumers
• Businesses operating in mass markets use brands to stand out from competitors
• Brands influence the position of a business within its market- stong brands are able to charge higher prices than weaker brands

Question 15

What is meant by a business ‘adding value’?

Answer 15

The process by which firms increase the price that the consumer is willing to pay

Question 16

What is meant by a dynamic market?

Answer 16

A market that is a subject to rapid or continuous changes

e.g. the mobile phone market- landline-Iphone 15

Question 17

What are the 4 areas to consider when examining dynamic markets?

Answer 17

• Online retailing
• How markets change
• Innovation and market growth
• Adapting to change

Question 18

What is online retailing?

Answer 18

Selling products via the internet

Question 19

What are the advantages & disadvanatages of online retailing?

Answer 19

Advantages:
* Provides business access to more consumers, including internationally
* Enables longer trading hours as the business is open 24/7
* Cheaper to run as it lowers fixed and variable costs compared to bricks and mortar retailers
* Businesses can collect data by tracking consumer behaviour which helps with primary market research

Disadvantages:
* May be high costs for website development, maintenance, and promotion
* High levels of competition mean that it will be expensive to make a website stand out
* There is a lack of personal contact with customers

Question 20

How markets change

What changes cause markets to change & become dynamic?

Answer 20

• Changing consumer tastes and preferences
• Changing demographics
• Amount of competition e.g. international trade means larger market sizes but also more competition
• Changing legislation

Question 21

Innovation and market growth

What does product innovation involve?

Answer 21

The adaptation or improvement of existing products
e.g. improved camera on new iphone

Question 22

Innovation and market growth

What does process innovation involve?

Answer 22

the adaptation or improvement of existing processes
e.g. just in time stock control

Question 23

Innovation and market growth

What is market growth?

Answer 23

measurement of the change in the entire market, expressed as a percentage of original size

Question 24

Innovation and market growth

What can market growth be caused by?

Answer 24

• Increasing population sizes can increase demand in certain markets
• Increasing incomes can increase demand in certain markets
• Changing tastes and preferences can cause the market to grow
  e.g. the growth in the electric car market

Question 25

Adapting to change

What strategies are there to adapt to change?

Answer 25

• Meet customer needs, by carrying out market research and communicating with customers
• Invest in staff training, new products and processes
• Innovate so as to gain the first mover advantage

Question 26

When does competition occur?

Answer 26

When at least 2 businesses are providing good/services to the same target market

Question 27

What is direct & indirect competition?

Answer 27

Direct competition-Occurs when businesses are targeting the same customers with the same product as a competitor e.g. iphone

Indirect competition-When firms sell different products but compete with each other for the customer disposable income e.g. cinema & theatre companies

Question 28

How can competition beneift a customer?

Answer 28

• Businesses offer lower prices
• Businesses produce better quality products
• Businesses provide better customer service

Question 29

What is the difference between risk & uncertainty?

Answer 29

Risks can be calculated & prepared for
Uncertainties cannot as they are unexpected events

e.g. of risk- loss of staff e.g of uncertainty-will energy prices rise?