The Market (1.1.1)

Question 1

What is a market?

Answer 1

Any place where buyers and sellers can meet

Question 2

What are some examples of markets?

Answer 2

amazon or shopping mall for example

Question 3

What is the aim of marketing?

Answer 3

To help identify, anticipate and satisfy consumer needs and wants profitably

Question 4

What is the difference between needs and wants? + e.g.

Answer 4

Needs- Considered essential e.g. shelter or food
Wants- Desires which are non-essential, even if consumers consider them to be essential e.g. Nike trainers

Question 5

What is Market Research?

Answer 5

Its the process of systematically gathering data from consumers which can be used to influence business decisions. Essential in helping businesses to identify products and services they can develop in response to customer needs and wants

Question 6

What are the two types of markets?

Answer 6

Niche and Mass Markets

Question 7

What is a Niche Market +e.g.

Answer 7

A Niche Market one that is small and is specialized for a particular product or service that has unique needs. E.g. Pets/Fitness

Question 8

Who does Niche marketing aim to please?

Answer 8

Aimed at satisfying the demand of a small group of consumers within the wider market. Production usually happens on a smaller scale

Question 9

What are the characteristics of a Niche Market?

Answer 9

-Products more specialised/ unique and aimed at narrow market segments
-High average costs due to small scale production (no economies of scale)
-High prices=less affordable=lower sales volumes
-High prices = higher profit margins

Question 10

What are the advantages of a Niche Market? (5 Advantages)

Answer 10

-Can change your price to be more expensive (premium pricing)
-Know what customers to target as specific products
-Low Competition
-High Brand Loyalty
-High Market Share (not many similar=USP)

Question 11

What are the Disadvantages of a Niche Market? (5 Disadvantages)

Answer 11

-Lower revenue
-Less Sales
-Limited expansion
-Less bulk buying discount
-Eagle eyed competition

Question 12

What is a real-life example of a business aiming its business at Niche Market?

Answer 12

Louis Vuitton is an example of a fashion company that aims its products at a niche market

Question 13

What is a Mass Market?

Answer 13

Mass Market is the market for goods that are produced in large quantities aimed at broad market segments. Mass Production

Question 14

What are Market Segments?

Answer 14

Groups of consumers who share similar characteristics e.g. age, lifestyle etc…

Question 15

What are the characteristics of Mass Markets?

Answer 15

-Products are less unique as aimed at broader market segments
-Low average costs of production as economies of scale
-Low prices= greater affordability= higher sales volume
-Low prices= lower profit margins

Question 16

What are the advantages of a Mass Market? (4 Advantages)

Answer 16

-Higher Revenue/Sales
-Brand awareness
-Bulk Buying discount
-Low unit costs

Question 17

What are the Disadvantages of a Mass Market?(4 Disadvantages)

Answer 17

-If you raise prices people are less likely to buy (price sensitive)
-High Competition
-Low Brand Loyalty
-Variety of Customers

Question 18

What is a real-life example of a business aiming its business at Mass Market?

Answer 18

Primark is an example of a clothing company that focuses its products on the mass market

Question 19

Real-life Example of business that moved from Niche to Mass Market and why?

Answer 19

Urban Outfitters has recently started to move more to a Mass Market style because its started to grow more and expand so more common shops and has also started changing its unique brands more. This has meant its started to become more similar to a Niche Market. This can be good because Urban Outfitters can get more sales and revenue however it does loose the USP of the business and could lead to loss of brand loyal customers.

Question 20

What is Market Size?

Answer 20

Total amount of money people spend on a product in a specific market

Question 21

What can the size of the market be measured through?

Answer 21

Sales volume (Quantity of products sold) or sales value (Total Revenue=PXQ sold)

Question 22

What is Market Share?

Answer 22

Proportion of total sales of a product/ service compared to the market as a whole e.g. Tesco has 25% MS of UK grocery market

Question 23

What is the equation for Market Share?

Answer 23

Sales of a business/ Total sales in the market
x100

Question 24

If the UK coffee shop market was worth £4.6bn and the sales of Starbucks coffee were £328m in 2022 what would the market share of Starbucks be to 2dp?

Answer 24

£3.28m/£4.6bn
x100= 7.13% (2dp)

Question 25

What does brand mean?

Answer 25

It's a name, image or logo which helps one product or service stand out from its competitors. Branding is one of the key ways businesses achieve product differentiation

Question 26

What can brands do?

Answer 26

-Add value= more desirable to consumers -Allow business to stand out from competition -Strong brands can charge higher prices -Product differentiation

Question 27

What is a Dynamic Market?

Answer 27

A Market that rapidly changes to suit its environment. Change is inevitable as so businesses need to adapt if they want to survive in the long run.

Question 28

What is an example of a Dynamic Market? (2 Examples)

Answer 28

-Phone Market is constantly changing to suit consumers tastes. - McDonalds food is constantly changing to suit changes in tastes and dietary changes (vegan/veggie) It can make it more expensive but but could have a good increase on sales due to more options and gives business a USP for Customers which can be popular.

Question 29

When does competition occur?

Answer 29

When at least two businesses are providing goods/services to the same target market. The more businesses in the market, the more intense the competition

Question 30

What are the two types of competition?

Answer 30

Direct and Indirect Competition

Question 31

What is Direct Competition? +e.g.

Answer 31

Using Same Product to target Same Customers E.g. Hellman's and Heinz Ketchup

Question 32

What is Indirect Competition?

Answer 32

Firms sell Different Products to the Same Customers E.g. Mayo and Brown Sauce

Question 33

What does competition force you as a business to do? (4 Reasons)

Answer 33

It forces you to: -Improve your Product/Service -Improve your Productivity/Efficiency -Spend more on Promotion -Lower your price

Question 34

What are the methods of improving your Product/Service? (5 Methods)

Answer 34

-Convenience -Branding -Design -USP Quality

Question 35

What are the methods of improving your Productivity/Efficiency? (5 Methods)

Answer 35

-Training Staff -Financial Motivation -Empowerment -Specialization -Higher Skilled Staff

Question 36

What are the Methods of Promotion? (5 Methods)

Answer 36

-Advertising -Sponsorship -Social Media -Loyalty Schemes -Celebrity Endorsement

Question 37

What does lowering your price do for a business?

Answer 37

-Attracts more budget-friendly customers=Increased Sales -Increased sales volume may lead to strong word of mouth=Better brand awarness

Question 38

What benefits for customers does competition result in?

Answer 38

-Lower prices -Better quality products -Better customer service

Question 39

What does the absence of competition cause?

Answer 39

Reduces business incentives to: -Innovate -Be efficient -Offer lower prices

Question 40

What is the difference between a risk and an uncertainty?

Answer 40

- Risk is a potential threat to business success. They can be internal or external. Can be measured and prepared for using risk management -Uncertainty is when an outcome is difficult to predict

Question 41

What are some examples of Risk and Uncertainty?

Answer 41

Risk: -Technical failures due to breakdown of equip -Cyber security threats -Loss of key staff -Currency fluctuations Uncertainty: -Businesses continue facing uncertainty after Brexit -Is there going to be a recession? -Will energy prices continue to rise? -How will rivals react to product launch?