Please enable JavaScript.
Coggle requires JavaScript to display documents.
Unit 1 - The market :star: - Coggle Diagram
Unit 1 - The market
:star:
Mass market
= A very large market in which products with mass appeal are targeted
:check: businesses can produce large quantities at a lower unit cost by exploiting economies of scale
:check: numbers of consumers in these markets are huge, possibly billions if products are marketed globally
:red_cross: businesses may have to spend a lot of money on market research which will increase business cost.
:red_cross: very high competition
Niche market
= a smaller marker, usually within a large market or industry.
:check: lot easier to focus the needs of customers, this will help improve brand image and customer loyalty
:red_cross: unable to support many competition firms, if a large firm enters the niche market, the small firm might find it difficult to stay competitive.
:check: able to charge premium prices as there is less competition
:red_cross: vulnerable since they are not spreading risk, if they lose a grip on their market share, they will collapse because they do not have backup products
Dynamic market
= markets fo not remain the same overtime
Innovation and market growth factors
- 1. social changes, 2. innovation, 3. demographic changes (population gets bigger)
How should a business adapt to changes in the market
- 1. flexibility, 2. market research, 3. investment, 4. continuous improvement
Online retailing
is selling goods online and they can target those who are unable to get out of their houses. They can also reach international customers. However, not everyone has access to the internet. It is cheaper than a physical store but Skilled IT employee may have to be recruited to avoid fraud which will increase business cost
How market changes
- 1. size of markets, 2. the nature of markets (possible for consumer spending pattern to change), 3. new markets (businesses can supply more of their output to growing global markets)
How competition affects the market
Businesses
=
lowering prices
making their products appear different to those of rivals
offering better quality products
offering 'extras' such as high quality customer service.
Customers
=
consumers generally benefit more because high competition means they have variety of choices for different products
a businesses with little or no competition might raise prices and restrict choices.
The difference between risk and uncertainty
Risk
= owners take risks meaning they take actions where the outcomes are unknown. They invest their own money to the business without knowing if it will succeed or not.
Uncertainty
= Events are completely beyond the control of businesses such as a new competitors might enter the market with a superior product. However, introduction of technologies allowed many opportunities for businesses
Markets and marketing
Markets
= a set of arrangement that allows buyers and sellers to communicate and trade in a particular range of goods and services
Marketing
= a management process involved in identifying and satisfying consumers requirements profitably.
Market share
= sales of a business / total sales in the market X 100
Value
= total amount spent by customers buying products.
Volume
= physical quantity of products that are sold and produced