Business theme 1

characteristics of a niche market

• small

• limited number of competitors

characteristics of a mass market

• larger

• whole market (contains niches)

what might a brand be used for

• develop image

• differentiate

• brand loyalty

• potential premium price

what is a dynamic market

markets that change over time

reasons for market growth

• from economic growth

• innovation

• social changes

• changes in legislation

how can businesses adapt to change

• develop a niche

• market research

• flexibility - open more hours

• investment

what is a risk

• an action taken by the owner where the outcome is unknown

what is an uncertainty

• externalities in the economy that are out of control

what are the two types of orientation

product orientated and market orientated

what data to collect info on a consumers needs and wants

qualitative data

what data to collect info on demand for the product

quantitative data

what are methods of primary research

• questionaries

• interviews

• focus groups

what are methods of secondary research

• internal data - existing reports within business

• other businesses reports

• other forms of existing data

what are some limitations of market research

• sampling bias - only on a sample of market

• human behaviour - relies on honesty

what is market segmentation

dividing a market up into similar needs - car market

what is demographic segmentation

division of markets through age, gender, income, class and ethnicity

what are the benefits to market segmentation

• allows business to create different products for different customer groups - revenue increase

• avoid wasting finances on promotional resources that target wrong audience

what does a market map show

position of companies based off factors

disadvantages of market mapping

• only compares two attributes

• can be expensive to obtain

advantages for market mapping

• identify gaps in the market

potential issues with market mapping

• only measure 2 features

• can be expensive to gather data

how can a businesses gain competitive advantage

• high quality product

• good promotion

• econ of scale - cheap product

• good customer service

how can value be added to products

• customer service

• bundling - package holidays

what is a USP

unique selling point

what is demand

demand is the amount a consumer is willing and able to pay at any given price

what are some factors effecting demand

• price of substitutes

• price of complements

• changes in fashion and tastes

• external shocks

• seasonality

what is an inferior good

good which demand rises when income falls

what is a normal good

good will rise in demand when income rises

what is supply

is the amount of product which suppliers will offer at a given market price

what may lead to a change in supply

• changes in the cost of production

• new technology

• subsidies

• external factors - wars

what is the market clearing price

the price where supply and demand are equal

what is excess demand

where demand is greater than supply creating shortages of a good within a market

what is excess supply

where supply is greater than demand leading to unsold goods in a market

what is the total revenue equation

price x quantity sold

what is price elastic demand