Business M 4.1

Concentration Ratio

indicator of the degree of competition in an industry.

Calculation —> sum of market share held by the largest specific number of firms in the industry

Ethical code of practice

refers to guidelines that help businesses to act in a moral way —> accepting what society deems as right or wrong

Market concentration

Measures the degree of competitiveness that exists within a market by calculating the market share of the largest few firms in industry

Market growth

rate at which the size of a market is increasing, typically expressed as a percentage incrase per year

Market leadership

the position of a business which has the largest market share in a given market

Market orientation

marketing approach adopted by business that are outward looking by focusing on making products that they can sell rather than selling products they can make

Market share

measures an organisation’s portion if the total value of sales revenue in the industry

Market size

the magnitude of an industry —> measured in terms of the value of sales revenue from all the businesses

Marketing

Management process of predicting, identifying and meeting the needs and wants of customers, in a profitable way mostly

Marketing objectives

specific marketing goals of an organisation —> greater market share, leadership, more sale revenue

Marketing strategies

medium to long term plans to achieve the marketing objectives

Production orientation

inwards looking approach —> focus on selling products that they can make rather than making products that they can sell

Market growth rate calculation

current size - original size divided by original size

Why is market share important to a business?

• Shows how strong the business is in compared to competitors

• Higher market share means more sales and revenue

• gives the business a greater influence over the market

what are the benefits of being a market leader?

• strong brand recognition

• Economies of scale

• influence over the market —> competitors may have to react to the leader’s decisions and changes

• Bargaining power —> suppliers may offer better prices because the business buy in bulk

How do ethics influence marketing practices

• avoid false or misleading advertising

• protect customers’ private data

• Avoid targeting vulnerable groups

• Honesty