1A.1

Question 1

What is a niche market

Answer 1

Subset of the main market and addresses a specialist need. e.g toothpaste for sensitive teeth

Question 2

What is a mass market

Answer 2

The market aimed at a general population. e.g regular toothpaste

Question 3

What are homogenous products

Answer 3

Similar products that compete in a market. e.g. different brands of yoghurt

Question 4

Mass market characteristics

Answer 4

A product is marketed to all consumers in the same way. Consumers are not brand loyal in this market, they choose a car based on features and price.

Question 5

Example of a mass market

Answer 5

The car market is an example of a mass market.

Question 6

Advantages of operating in a mass-market

Answer 6

-Large scale production means economies of scale and lower average unit costs.
-Mass marketing is straightforward as everyone is equally targeted.
-Large volumes of sales means high rev

Question 7

Disadvantages of operating in a mass market

Answer 7

-Lots of competition
-Homogenous products need to be differentiated through marketing which can be expensive.
-High volume productions may not be flexible enough to keep up with changes in demand.

Question 8

Example of a niche market

Answer 8

Super cars, ferrari.

Question 9

Benefits of operating in a niche market

Answer 9

-Charge premium price
-Small scale production can be flexible and follow trends.
-Less competition

Question 10

Drawbacks of operating in a niche market

Answer 10

-Very risky as demand may not be constant.
-Higher unit costs, so no economies of scale.
-smaller market size, so fewer potential customers.

Question 11

What is the market size

Answer 11

The total of all sales of all the producers in that market.

Question 12

What is a dynamic market

Answer 12

One that is subject to rapid continuous changes.

Question 13

Example of a dynamic market

Answer 13

Online retailing is a dynamic market because it is constantly changing, developing, expanding and offering customers new products and new ways to shop.

Question 14

Advantages of online retailing

Answer 14

-Cheaper for retailer.
-Open 24/7
- Dont have to pay shop workers salarys
-Can sell to a wider number of customers
-orders taken automatically
-flexible, owner can be anywhere in the world.

Question 15

Disadvantages of online retailing

Answer 15

-issues with sending goods back
-Problems with fraud
-very competitive market.

Question 16

How do competitive markets benefit consumers

Answer 16

More competition means a business needs to be very efficient, more competition means the business needs to listen to consumers needs and wants and constantly strive to meet those needs rather than being product orientated.

Question 17

What is risk

Answer 17

The possibility of a business will have lower than anticipated profits or experience a loss rather than taking a profit.

Question 18

How does risk link to job security

Answer 18

When a person starts a business they leave behind a secure job, meaning they may suffer from stress. The risk of business failure means the owner may not be able to pay bills. e.g mortgage.

Question 19

What is uncertainty

Answer 19

When business are unable to predict external shocks or future events.

Question 20

Uncertainty affect on households

Answer 20

Households face with uncertainty may spend less and save. If company is take over by another, employees may feel uncertain if next years pay will be lower and may save.