Theme 1 Flashcards
(82 cards)
Mass market
Large market, many similar products offered by competitors, sells into the largest part of the market
Niche market
Small specialised market, where customers have specific needs and wants
Advantages of targeting a niche market
Less competition, clear focus , builds up specialist skills, can charge higher price, customers loyal
Disadvantage of targeting niche
Less opportunity for economies of scale, likely to attract competition if successful, vulnerable to market change
Implications of dynamic markets
Greater need for innovation, have to adapt to change quickly, can lead to market growth
Risk
The possibility that things will go wrong, risks can be planned for and can be assessed
Uncertainty
Unpredictable and uncontrollable events
Product orientation
Develops products on what is it good doing and focuses on design performance and quality
Market orientation
Responds to customers wants and needs, focuses on meeting customer preferences
Product orientation evaluation
Increased economies of scale, focus on what it does best
Market orientation evaluation
Higher chance of success, increased customer loyalty and satisfaction
Product differentiation
Customers perceive a distinct difference between you product and competitors
Product differentiation evaluation
Competitive advantage, ideally hard to copy, strengthen customer loyalty, allow higher price, higher profit margins
Requirements for product differentiation
Capable of delivering, not easily copied, profitable, distinctive
Added value
The difference between a price of the finished product and the cost of the inputs involved in making it
Demand
The amount that customers are willing and able to buy at a given price in a liven period of time
Demand law
As price decreases demand increases
Factors leading to a change in demand
Change in consumer income, fashion tastes and preferences, demographics, external shocks, seasonal, change in price of substitutes and complementary goods
Supply
Amount of goods or service a producer is willing and able to give
Supply law
Higher price means higher supply
Factors leading to a change of supply
Changes in cost of production, introduction of new technology, indirect taxes, government subsidies, external shocks
Interaction of supply and demand
As demand increases supply increases
Equilibrium
Demand and supply are equal
Price elasticity of demand definition
Measures the extent to which the quantity demanded of a product or service is affected by a change in price
