UNIT 1 C1: The Market

Business IAL edexcel UNIT 1!!!!! a) Characteristics Mass n Niche Market b) Dynamic Markets + why they change n influences c) Competition impacts d) Risk n Uncertainty

Marketing Activities (the mix)

Marketing involves:
- identifying the needs and wants of consumers
- designing products to meet ends
- understand competition threats
- raising awareness on a prod
- charging at the right price
- persuading customers to buy
- convenience of prod (location n stuff)

Define mass market

A mass market is when a business focuses on a large majority of the market, usually involving high volume production. Sold at the same time and way.

Characteristics of mass market

sold to all customers in the same way
large scale
produce at lower scale
heavy promotion
wide availability n substitutes

Pros n Cons of Mass Market

PROS
- large economies of scale = low average unit cost
- straightforward marketing (every1 is targeted)
- large volume of sales = high revenue
- less affected by change of taste/trend

CONS
- lots of competition
- homogenous prods need to be differentiated through marketing instead of UPS thfr expensive
- low profit margin (relies on low price for customers)
- low adaptability (doesnt rlly listen to customer)

Define Niche market

a small and specialised market targeted at specific consumers for specialist needs

Characteristics of niche market

- 'opposite' of mass marketing
- small market segment n consumer target group (of specific needs)
- usually a small firm
- avoids competition

PROS and CONS of niche market

PROS
- easier marketing/goal as it is a focus on specific groups n needs
- little to no competition (+survive better)
- can charge at premium price therefore high profit margin (if no comp)
- less spent on marketing

CONS
- very small, if large comp enters they cannot compete as they are easy to overrun
- Dependent on a single niche product thfr risky
- Demands may not be constant
- small economies of scale

Define economies of scale

cost advantages as a result of an increase in the scale of business operations, these efficiencies result in lower costs per unit produced and in turn a lower price for the consumer

Define Market Size

the total level of sales of all producers within a market

Value and volume in market size

Value: total spent by customers - more spent = bigger market size

Volume: physical quantity of products sold and produced

Define Market Share

The percentage proportion a business owns in the market calculated by their total sales divided by the market's total share

Why is knowledge of market share important?

- indicates a business market leader that will influence oth business
- indicates success or failure of a business in the market

Branding

Way to differentiate themselves in a market through colours, labels, slogans, names.

- creates customer loyalty
- product recognition
- develops an image
- charge at prem price if brand becomes strong

Define Dynamic Market

A market that is in a rapidly changing business environment

Define online retailing

a constantly changing, developing, expanding market (e-commerce) due to the development of the internet. offers customers new products and new ways to shop.

Why do markets change?

- size of market (growing or declining?)
- change in consumer buying habits
- changes in trends + demands
- new markets
- external shocks

Reasons for Market Growth

1) Economic growth (inc income = more money to spend)
2) Innovation (creating new wants n needs through new prods/services)
3) New laws (either expand or reduce market size) eg; ban in tabacco??? cig market will decline
4) Demographic changes

Adapting to change?

if a business fails to adapt to changing market = lose market share, businesses need to be;
- flexible
- develop a niche
- invest in R&D n market research
- make continuous improvement n dev

Competition affect on BUSINESS

- puts them under pressure
- force to lower prices = reduce profit margin
- focus on USP
- offer a better quality prod
- have more powerful n attractive ads
- to be efficient to reduce waste

Competition affect on CONSUMERS

- goods sold at lower price
- businesses listen to their demands n needs
- lots of choices n substitutes
- get to enjoy good quality products

Define Risk

action with unknown outcome and a possibility of a lower than expected profit or loss (Eg; lack of job security, financial risk)

Define uncertainty

unable to predict external shocks or future events that is beyond control of business