The market - a place were buyers and sellers meet in order to exchange goods and services.
Markeing - the managerial process of identifying, anticipating and satisying customer wants and needs profitably.
Market share - a businesses total sales within the market as a percentage
formaula - (sales / total sales) x 100
Market growth - increase in total sales within the market
formula - (change in sales / original 1 sales) x 100
Mass market - large unspecialised market where the products are aimed at the whole market.
- large target audience
- huge amounts of market research available
- more competitiveness can lead to higher levels of efficiency as firms try to become more price competitive
- economies of scale
- increased brand awareness
- high start up capital costs in order to compete e.g. advertising
- high amounts of competition
- vulnerable to changes in demand
- harder to meet specific needs
Niche market - small targeted / specialised market which allows the supplier to meet the individual needs of the customers.
- less competition
- higher consumer satisfaction - repeat customers/ brand loyalty
- meets the market demand easier
- threat from larger potential competitors
- specialisation leads to smaller profits
- prone to changes in trends
Brand - a unique company image that differentiates from the rest of the market / other suppliers.
- can portray quality
- consumers know what to expect
- brand importance can exceed the importance of the price
- can be used to add value
Market research - the collection and analysis of data and information about consumers, competitors and suppliers to inform a business about its market.
Primary research - data collected first hand about the market that didn't exist before.
Secondary research - data collected by someone else about the market / data that already existed.
Quantitative research - statistical data that looks at the amount of items sold.
Qualitative research - non-statistical data that looks at why the customers buy the products.
Segmentation - the breaking down of a large homogeneous market into smaller easily identifiable sections that have similar wants, needs and demand characteristics.
Demand - the amount a customer is willing and able to buy at a given price.
Factors affecting demand:
- price of complementary goods
- price of substitute goods
Supply - the amount a producer is willing and able to sell to the market at a given price in a given time period.
Factors affecting supply;
- changes in cost of production e.g. increase in the price of raw materials
- changes in technology
- external shocks
- government subsidies
Price elasticity of demand (PED) - a measure of how quantity demanded reacts to a change in price.
formula - %change in QD / %change in price
PED < 1 = inelastic
PED > 1 = elastic
factors that affect PED:
- degree of product differentiation
- branding and loyalty
- necessity / is is addictive
Income elasticity of demand (YED) - a measure of how quantity demanded reacts to a change in income.