1.1.1 The market

How is a mass market advertised?

Marketed to all customers in the same way

Made easy to adapt to different languages

What are the pros of being in a mass market?

Economies of scale

Marketing is straight forward

Lots of sales means high revenue

Lots of money to go into research and development

What are the cons of being in a mass market?

Competition

Homogenous products must be differentiated through marketing (expensive)

Not flexible with changes in demand

What are the pros of being in a niche market?

Charge higher

Easier to target customers

Less competition

Flexible

Follow trend

What are the cons of being in a niche market?

Risky since demand changes

No economies of scale

Fewer customers

What are the characteristics of niche markets?

Small range of products (risky ventures)

Each product makes lots of profit

This encourages people to enter the market

How can market size be measured?

Volume of sales / quantity of products sold

Total amount spent by customers

What is the equation for market share?

Company sales / total market sales x 100

What is a dynamic market?

A market that is subject to rapid and continuous changes

Why might a market change?

Consumer preferences (changes in fashion or technological advances)

Competitors can leave or join the market

New products or processes emerge (could be good or bad)

Ways that customers shop changes

Changes in legislation (affects products sold)

What are the pros of online retailing?

Shop at any time

Orders are taken automatically without staff

Reach international markets

Low overheads

Stock level can change

Easy to set up

Flexible

Opportunity for fast growth

What are the cons of online retailing?

Issues with sending goods back

Very competitive

Security worries for customers

Need IT skills

Fraud risk

Competitors are aware of products/prices

What is direct competition?

2+ businesses selling similar products that appeal to the same group of customers

what is indirect competition?

2+ businesses selling different products that appeal to the same group of customers

How can businesses gain a competitive advantage through place/distribution?

Be easy/easier for customers to access their product to competitors

Sell online/ through apps

Be aware of what competitors are doing

What is risk?

The possibility a business will have lower than anticipated profits or experience a loss rather than taking a profit

What is uncertainty?

When a business is unable to predict external shocks or future events

What is risk influenced by?

Raw material costs

Competition

The overall economic climate

Government laws e.g. minimum wage

What does a risk bring to a business?

Lack of job security

It’s bad if you have unlimited liability

(Most businesses fail from bad cashflow management)