Markets

Question 1

What is a market ?

Answer 1

Any place that buyers and sellers will come together to exchange goods or services - normally an exchange of money at a set price.

Question 2

Define the nature of the market.

Answer 2

Markets take numerous forms e.g. local, national, physical or electronic.

Question 3

What are the types of markets ?

Answer 3

1. Local/global - small geographical area or across the world
2. Mass/niche - large or small target market
3. Trade/consumer - selling to other businesses or private individuals
4. Product/service - physical and tangible or intangible
5. Seasonal - sales peak at certain times of the year.

Question 4

What are mass markets ?

Answer 4

Products targeted at a wide range of people where the market is not segmented and products are available through a wide range of markets.

Question 5

What are niche markets ?

Answer 5

Identifying small, currently unsatisfied gaps in the market where the target market is well defined with distinct characteristics and can often charge higher prices.

Question 6

What is the formula for market size ?

Answer 6

Number of units sold x price

Question 7

What is the formula for market share ?

Answer 7

Sales of one firm/total market sales x 100

Question 8

What is market segmentation ?

Answer 8

When the market is split into subgroups of consumers with similar characteristics helping to identify different types of consumer and different wants and needs - demographic, geographic, income, behavioural.

Question 9

What is demographic segmentation ?

Answer 9

Identifies subgroups based on demographic profiles or characteristics - age, gender, level of education, race, religion, family size, stage in life.

Question 10

What is geographical segmentation ?

Answer 10

Market categories based on where people live e.g. cities, regions, cities, neighbourhoods.

Question 11

What is income segmentation ?

Answer 11

Based on levels of income and profession - socio-economic grouping:
A. Higher managerial e.g. directors
B. Intermediate managerial e.g. accountants, doctors
C1. Supervisory, clerical, junior professionals e.g. teachers
C2. Skilled manual e.g. plumbers
D. Semi and unskilled workers e.g. window cleaners
E. Pensioners, casual workers, students, unemplooyed

Question 12

What is behavioural segmentation ?

Answer 12

Characterises subgroups based on patterns of the consumer rather than characteristics - reason for purchase, frequency, time of purchase, brand loyalty, method of purchase, triggers.

Question 13

Benefits of market segmentation.

Answer 13

1. Advertising can be targeted making the spending more effective.
2. Most profitable and least profitable customers can be identified.
3. Least profitable markets can be avoided.
4. Becomes easier to identify and launch new products.
5. Helps the firm improve existing products and service.
6. Able to meet specific needs.
7. Greater variety of goods and services.