Component 1 Booklet 3 Flashcards
(51 cards)
What is economies of scale?
As the business grows the cost per unit falls
What are inferior goods?
A good that decreases in demand as a consumers income rises and rises in demand as consumer income falls
Example-Payday loans
What is Market Size?
The total number of sales of all businesses in the market
What is a Service Market?
It offers a service and is intangible therefore you can’t touch,taste,smell or see it you experience it instead
Example-insurance
What are normal goods
A good that increases in demand as consumer income rises and falls when consumer income decreases and price remains constant.
Example-Most every day goods-Chocolate
What are luxury goods?
Similar to normal goods but are expensive and often scarce.
Increases in demand as consumer income rises and decreases when it falls
Example-high end sports car
What are monopolies?
Key characteristics
- single producer/seller
- large barriers to entry
- 25% or more market share
- they were much more common 30 years ago than now as there used to only be really one gas supplier,telephone supplier etc
What is a Product Market?
This is tangible therefore you can see,taste,touch,smell it
And can be:
- consumer
- trade
- commodities
What is a trade market?
Sellers target their goods/services at other businesses
Example:Colleges buying stationary
What is a consumer market?
Sellers target goods/services at the end user(usually is the general public)
Example-The Cereal Market
What is a Mass Market?
Sellers target a whole market in the same way
Example-Cars
What is a Niche Market?
Sellers target a smaller segment of a larger market where customers have specific needs/wants
What is a global market?
Buyers are targeted by businesses based anywhere in the world(either via e commerce or direct selling)
What is a Local Market?
Buyers are targeted by locally based businesses usually based on where they live,work or socialise
Why is competition healthy to have within markets?
- drives up standards and quality
- keeps prices down for consumers
- gives the buyer a wider range of choice
- can force innovation
What is competition?
The level of rivalry between different sellers seeking the same buyers at the same time.
What is a Market?
Where buyers and sellers interact(directly or indirectly) to trade goods,services or money.
What is Oligopolistic Competition?
Key characteristics
- a few dominants in the market
- strong brand identity
- prices stable over long periods
- Barriers to entry exist
-many large industries are oligopolistic in nature.Example-Supermarkets or Department stores
What is Monopolistic Competition?
Key characteristics
- large number of small businesses in competition
- few barriers to entry
- products similar but still differentiate from each other
- each business tries to offer something different but are all essentially competing for the same customers.
What is Perfect Competition?
Key characteristics
- Large number of businesses competing
- No ones business is large enough to influence others
- no market leader/price maker
- no barriers to entry/exit
What is a seasonal market?
•Goods/services where there are large variations in sales based on the time of year
Example-Christmas
What are Market Trends?
Changes that have or are occurring in the market
Why is market share so important for a business?
- The greater the share the more likely the stability of the brands performance in a market place
- A product with a low share is vunrable to things like pricing policies of competitors,promotions by competitor firms and loyalty to stronger brands.
How can businesses work on increasing their market share?
- sell a wider range of products
- improve quality of products
- more promotional offers/advertising
- increase number of stores
- take over/merge with another company
- innovation(differentiate from competitors)
- strengthen customer relations.E.G:loyalty cards
