- Created by: KaiMJ
- Created on: 31-01-19 14:12
Mass Market - a very large market in which products with mass appeal are targeted.
- Same products to all customers.
- A large number of customers.
- Economies of scale.
- Large competition.
- A lot of marketing.
E.g. Coca-Cola spent $3.3 billion on marketing in 2013.
Niche Market - a smaller market, usually within a large market or industry.
- Small customer group.
- Low competition.
- Focus on the needs of the customer.
- Can charge premium prices. (This is because there is low competition.)
- May attract competition. (Usually when the market is performing well.)
- Larger firms may enter the market and overrun small firms.
- Small firms that exist in a single niche are most vulnerable.
E.g. Zumiez, a firm that provides products for extreme sports.
Two ways of measuring a market's size:
- Value - Total amount spent by consumers in the market.
- Volume - Total quantity of products produced and sold.
Market Share - the proportion of total sales in a particular market for which one or more businesses or brands are responsible.
Calculated with: Sales of a business / Total sales in the market x 100%
Reasons for calculating market share:
- An indication of the market leader
- Can follow the leader.
- Stay as the leader.
- Develop strategies or objectives. E.g. Increase Market share by 5% in 2 years.
Brand Name - a method of identification used by businesses to allow consumers to identify it's goods and services and to differentiate the business from its competitors.
- Customer loyalty.
- Product recognition.
- Develops an image.
- Premium prices when the brand is strong.
Supreme can charge premium prices for simplistic clothing.
- Most markets change over time.
- They grow, shrink, fragment, emerge or completely disappear.
- Failure to adapt in a dynamic market can cause a firm to collapse.
- Firms must learn to adapt to survive.
E.g. Kodak relied on film cameras even after digital photography was invented, causing them to be forced into liquidation.
Online Retailing/E-Tailing - the retailing of goods online.
E-Commerce - conducting business transactions online.
Benefits of online retailing:
- Rapid growth.
- Retailers market goods to consumers who prefer to shop at home.
- Easier to gather information on consumers and promote relevant goods.
- Selling costs such as staff, rent and other store overheads are avoided. (Can allow lower prices.)
- Marketing costs are lower. (Cheaper to e-mail 1000 customers promotions then send it through the post.)
- Reaches more customers.
- Open 24/7.
- More flexible. (Can be updated instantly and as frequently as necassary.)
- Is accessable to everyone.
How Markets Change
- The size of markets.
- Growth. E.g. The global packaging market had a growth of 1% in 2012 from 2011. Forecasters believe that growth will reach 3% or even 4% in 2018.
- Decline. E.g. The market for coal in the UK has fallen since 1970.
- The nature of markets.
- Many markets are in a state of flux, this is where the structure and nature of the market is constantly changing.
- Products are constantly updated, modified and re-launched. This is a result of new entrants into the market and existing firms wideneing their ranges and extending their lines. E.g. In the 1960s the restaurant market in the UK was dominated by UK cuisine but now holds an extremely large and diverse range of cuisine.
- New Markets.
- A majority of new markets arriving from the 'emerging economies'.
- New products are another source of new markets. E.g. In the 1970s no one owned a mobile phone but now a mobile phone can be considered an essential.
Adapting to Change
- Businesses need to be prepared for change.
- Businesses can develop a flexible culture. (For example, a firm could train its employees to be able to adapt to change.)
- Market research.
- Businesses can track development in the market such as the changing needs and wants of customers.
- Businesses are more likely to survive if they invest in new product development.
- Continuous improvement.
- Businesses need to continuously improve to survive, efficiency, customer service, new products, etc.
- Develop a niche.
- Businesses can survive in markets by developing a niche.
Affects of Competition
- Competition puts businesses under pressure forcing them to use a range of methods to attract customers:
- Lower prices.
- Higher quality.
- USPs such as good customer service.
- Businesses may even use strategies to remove competition such as a takeover.
- Businesses may use strategies to create obstacles for competition.
- Competition allows for more choice for consumers and the benefits of strategies above.
Risk and Uncertainty
- Owners take risks when running a business, they commit resources that could be lost.
- Investment into product development is considered a risk.
E.g. In 2014, Amazon launched the mobile phone call the Amazon Fire Phone which failed and went from $199 to $0.99.
- The markets that businesses operate are subject to external influences:
- New competition.
- Consumer tastes.
- Natural disasters.
- The economy.
- Not all of the consequences of uncertainty are negative, technological advances can be beneficial to a business.