Theme 1.1.1 - The Market

Question 1

What is a USP?

Answer 1

A Unique Selling Point

Question 2

What is the definition of the market?

Answer 2

Where buyers meet sellers

Question 3

What is the definition of market share?

Answer 3

Market share explains how the overall market is split between existing competitors

Question 4

What are the two methods of measuring market share?

Answer 4

• The number of sales
• The value of sales

Question 5

What is market share a good indicator of?

Answer 5

Competitive advantage

Question 6

What is the definition of market size?

Answer 6

Market size indicates the potential sales for a firm

Question 7

How is market size usually measured?

Answer 7

Usually measured in terms of both volume (units) and value (sales)

Question 8

What is niche marketing?

Answer 8

Niche marketing is where a business targets a smaller segment of a larger market, here customers have specific wants and needs

Question 9

What is mass marketing?

Answer 9

Mass marketing is where a business sells into the largest part of the market, where there are many similar products offered by competitors

Question 10

What are the advantages of niche marketing?

Answer 10

• Less competition
• Have a clear focus as it targets particular customers, which can be cheaper
• Builds up specialist skills, allowing the company to gain market expertise
• Can often charge more for their product as customers are willing to pay a higher price for their expertise, leading to higher profit margins

Question 11

What are the disadvantages of niche marketing?

Answer 11

• Risk of only depending on single product/market
• If successful, more businesses ay join that market, creating competition
• May be changes in the market, causing them to be less successful as time goes on
• Cannot utilise/take advantage of economies of scale

Question 12

What are the advantages of mass marketing?

Answer 12

• Large customer base: have access to a large customer base, which can result in higher sales and profits
• Economies of scale: products can be produced and distributed at a large scale at a discounted cost due to bulk-buying - meaning lower production costs and higher profit margins
• Brand recognition: appealing to a broad audience, meaning strong recognition and customer loyalty

Question 13

What are the disadvantages of mass marketing?

Answer 13

• More competition: from other businesses vying for the same customers
• Less personalisation: may not appeal to customers with specific wants and needs
• Lower profit margins: may sell in larger volumes but profit margins may be lower due to the need keep prices affordable

Question 14

What is the definition of a dynamic market?

Answer 14

A dynamic market is a market that undergoes continual and rapid changes over time

Question 15

List the reasons as to why markets change over time

Answer 15

• Demographics
• Economy
• Social factors
• Ethics/environment
• Competition
• Technology/innovation

Question 16

What is the difference between RISK and UNCERTAINTY?

Answer 16

RISK is the possibility that things will go wrong and can be assess managed
UNCERTAINTY is the unpredictable and uncontrollable events hat affect a business