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Market and Market Forces
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A look at what is a market, with advantages and disadvantages of a niche and mass market.
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Market Definition and Examples: Mass Market A market is a place where buyers and sellers exchange goods and
services for a fee.
There are different types of markets: Advantages Disadvantages
Mass Market:
Consumer goods/services: The finished good are sold to the Cost effective due to economies of scale. This leads to Limited appeal: Not everyone thinks alike, so the product may
consumer. They are durable that last for a while i.e. clothes, falling unit costs which in turn maximise profits for the only suit one demographic of a geographical area. This limits
phones and cars. They can also be consumable/ non- company. the sales potential and reduces the company’s profits.
durable-> Use it right away i.e. food, credit and drinks. They Sales potential is higher as there is a wider market to be Competition is fierce as there is many competitors in the one
are described as intangible: which are non-physical items
reached and a larger customer base in available. Thus market making it hard to break into to and establish a brand
like a service, movie and phone contracts.
Capital goods: Large items: Businesses buy items e.g. land, increasing sales and profits. This maximises income. name. Also if you set prices to high there are many alternatives
raw materials, machinery and use them it the production of so customers can easily swap between companies.
other goods. Market research and advertising costs are lower. This The product is too general and lacks the specific needs of
Labour Market: Your skills that are available for reduces the overall costs incurred by the company and customers. This once again reduces the potential sales as the
employment. They can be in demand. Number of people maximises the company’s profits. product lacks a unique or particular feature.
employed/ in unemployment. Their skill desirability.
Employer buys labour and employees sell labour.
Mass market: Wide range of customer available for the same
product that is standard. Niche Market
Niche market: This is a small sub-segment of a large/mass
market. With a limited amount of customers. The product is
not standard; it has been modified to meet the unique Advantages Disadvantages
needs of the small group of customers. It will have unique Lower levels of competition. The market is exclusive and only Even though the level of competition is small within the niche market
features. serves a small customer base. This lower level of competition can the competition experienced is ruthless. If you don’t have the skills
lead to increased sales and larger profit maximisation. This small and experience it makes it harder to break the market and become
customer base also makes it easier to get to know the customer established. This means the money invested in the company is lost as
Market and Market and is easier to develop a product. competition is ruthless.
Forces Can set premium prices as the product has taken time and more However, there is greater difficulty gaining high profit levels as the
effort increasing profits. The product is modified and meets market is smaller. This means the business is operating on tight profit
specific needs of the customer hence a higher price can be margins and if custom is lost the business could begin to make losses.
E-Commerce: This is a market that involves people charged and per unit, profit levels are higher.
using electronic devices to buy and sell goods online The service is more personal which customers prefer and However, this custom is easy to lose as the premium prices may turn
e.g. laptops and smart phones. In 2012, every £1 of become accustom to meaning they will return as the service customers away as they may find better value for money elsewhere in
every £10 spent in the UK was done through e- supplied was of a high standard. This means that the customer the market. Also it is dangerous to offer this one product as larger
commerce, this figure is meant to grow by 2016. Over base obtained is secure and business operations can continue as rivals are likely to diversify and have a wider product portfolio. These
90% of all businesses now have a website; this means there is money coming in to the business via regular custom. larger businesses could, therefore reduce their price to such a low
more people are likely to use e-commerce. level that the small business cannot compete. The business service
does not suffice in an attempt to retain the customer base.
*See e-commerce sheet
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