Unit 1 condensed study notes

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Unit 1 

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.

 advantages: 

  • 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 

disadvantegs:

  • 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.

advantages:

  • less competition
  • higher consumer satisfaction - repeat customers/ brand loyalty
  • meets the market demand easier

disadvantages:

  • 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
  • trends
  • seasons
  • income
  • laws

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
  • laws
  • 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.

formula…

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