What is a mass market?
the market that is aimed at the general population and product is sold to all customers in the same way e.g. colgate toothpaste
What is a niche market?
a subset of the main market that addresses a specialist need - caters to a particular segment of the market that is not being met by other providers e.g. sensodyne toothpaste (sensitive teeth)
Mass market (PROS)?
- large scale production means EOS and lower AC
- mass marketing straightforward as everyone is targeted equally
- large volume of sales means high revenue which can be used for R&D
Mass market (CONS)?
- lots of competition
- homogenous: similar products need to be differentiated = expensive
- high volume production is not flexible to changes in demand
Niche market (PROS)?
- profitable markets to be in as can charge premium price
- easier to target customers
- small scale production can be flexible and follow trends
- less competition than in the mass market
Niche market (CONS)?
- very risky as demand may not be consistent
- higher unit costs so no EOS
- profits can often signal more competitors to enter the market
What is market size?
total of all the sales of all the producers in the market:
volume of sales (quantity of products sold)
value (total amount spent by customers)
What is market share?
proportion (%) of a market that has been taken by a business, product or brand
(sales of x) / (total sales in whole market) x100
What is a dynamic market?
one that is subject to rapid or continuous change e.g. shoes - as fashion tastes change rapidly, products are made to satisfy these needs
How do markets change?
- social trends
- technological changes
- competitive environment
- consumer tastes
What is online retailing?
the process of buying and selling goods and services over the internet (e-commerce)
Why is online retailing dynamic?
constantly changing, developing, expanding and offering customers to new products and ways to shop
Online retailing (PROS)?
- 24/7 shopping
- lower overhead costs
- access to wider market, reach international markets easily
- easy and flexible
- opportunities for fast growth
Online retailing (CONS)?
- some customers still prefer to purchase from store
- issues with returns/exchange inconvenience can put off customers
- very competitive market
- issues with online security/fraud/scam/viruses
What is market growth?
the percentage (%) increase in the size of the market
(change in size of market) / (original size) x100
What is innovation?
when a new idea or invention is launched into the market normally with views of financial gains
How does competition affect the market?
- business needs to be efficient
- needs to listen consumers, be more market orientated
- produce good quality product/service
- must offer lots of promotions to persuade consumers to switch
What is risk?
possibility that a business will have lower than anticipated profits or experience loss rather than profit
What is uncertainty?
when businesses are unable to predict external shocks or future events, overtime this can affect spending decisions
What is risk influenced by?
- raw materials
- overall economic climate
- government laws
What is a brand?
a product produced by one business using a specific name, it is a trademark that cannot be copied
What is branding?
the creation of an identity for the business that distinguishes that firm and its products from other firms
- add value to a product allowing firms to charge higher prices
- customer loyalty and repeat purchase
- brand extension: adding new products to a recognised brand name
What is product orientation?
the product is the most important factor when providing products for the market - innovate designs and put it our onto the market
What is market orientation?
the customer is the most important factor, business is sensitive to customer requirements
What is primary research?
original data gathered first hand by the researcher e.g. questionnaires, interviews, loyalty cards etc.
What is secondary research?
pre-existing research that can be found anywhere e.g. annual reports, government sources etc.
What is market research?
collection and analysis of data to inform a business about its market
What is quantitative data?
numerical data - allows to display information into charts, good for presenting
What is qualitative data?
opinionated data - people’s thoughts and feelings
Market research (PROS)?
- informed decision making
- develop a marketing plan
- deal with change in the market place
- become more market orientated
Market research (CONS)?
- validity (inaccurate/misleading) - sample size
- reliability (non-specific to organisation)
- bias (untrusted)
Use of websites for market research?
pop-ups used to asked customers questions and collect emails to carry out surveys
Use of social networks for market research?
searching for trends using hashtags to see whats emerging
Use of databases for market research?
use data from loyalty schemes to build customer databases - info used to target customer purchases
What is market segmentation?
a market split into different segments to enable a business to better target its products e.g. demographics, psychographics etc.
What is market mapping?
to identify a gap in the market, useful for s business to constructs a diagram of where competitors are
What is competitive advantage?
a way that the business make its products or services appear superior to the competition to the target market - achieves profits above average in that industry
Ways to achieve competitive advantage?
- added value
- customer service
What is product differentiation?
where a product is different from competition in some way, customers must be able to perceive the difference and may be willing to pay a premium price
Methods of product differentiation?
- reputation (small local businesses)
- customer service (free guarantee)
- value for money (Lidl/Aldi)
- product feature (making it different)
What is adding value?
different between the price that is charged to the customer and the input costs used to create the product/service
Methods of adding value?
- design: innovate to make product unique
- production: achieving quality and efficiency, adds value to raw materials
- marketing: creating an image that makes product stand out
Benefits of adding value?
- customer loyalty
- charge higher prices (more profits)
- protection against competitors offering lower prices (worth paying for)
What is demand?
the amount that customers are willing and able to buy at each given price
Price affecting demand?
- extension (when price falls)
- contraction (when prices rise)
Non-price factors affecting demand?
- changes in consumer income (luxury rise/inferior fall)
- fashion, tastes and preferences
- advertising and branding (only thing company can control to demand)
- complementary goods
- substitute goods
- external shocks