Business Topic 2: Identifying a Business Opportunity edexcel economics and business 1.2 3.0 / 5 based on 1 rating ? BusinessASAll boards Created by: Ben PhillipsCreated on: 21-04-11 16:21 Niche vs Mass Marketing Advantages of Mass Marketing: Large range of potential customers Marketing economies of scale Profit margins may be low but profits are still high Products aimed at everyone so easier to market products Cash flow is steady and regular Disadvantages of Mass Marketing: High profits will attract competitors to the market May be difficult to meet consumer needs because the market is so large May be difficult to notice changes in the market because of size, so may lose market share. 1 of 7 Niche vs Mass Marketing Advantages of niche marketing: Ability to focus on consumer needs and wants and the ability to react quickly to changes. Marketing return is high because advertising is well targeted. Little competition so can charge high prices. Small firms can gain advantage by entering the market first Can gain high market share. Can gain customer loyalty Even better with a patent. Disadvantages of niche marketing: Very specialised so Product Life Cycle could be very short Could attract larger firms Sales will be low which could be a problem if costs rise. 2 of 7 The Influence of the Internet Niche businesses can now operate globally because of the internet Niche markets are growing quickly. Market:Anywhere where buyers and sellers meet Can exist on the internet, emails, telephone lines Consumer markets:Where consumers interact with businesses E.g. Retail outlet Industrial market: Business organizations sell to other businesses Not to a final consumer Businesses use what they've bought to make other products Commodity markets: Buying and selling products from the primary sector of industry (HQ in MEDC, factories in LEDCs) 3 of 7 Supply Factors that affect the amount that a firm should supply: Price Costs Physical constraints Factors influencing supply: Price Technology Price that can be reached in the market place. State of the economy Physical constraints: Demand vs 4 of 7 How does market structure affect business? Charecteristics of a highly competitive market: many firms with a small market share Price takers homogenous products low prices Productive efficiency: Firms have to accept market price. Keep up with new development Operate at minimum cost of production. Allocative efficiency: When resources are distributed amongst uses that meets the requirement of the customer to the greatest possible extent 5 of 7 Reducing competition Predatory pricing Collusion Branding Control of suppliers Use of patents 6 of 7 The Long Tail Looks at niche strategy such as Amazon, that sell a large number of unique items in relatively small quantities Taking advantage of less popular products ITunes- electronic rather than physical storage space 7 of 7
Comments
No comments have yet been made