Business
Studies
Revision Booklet
Theme 1
,Market = Place where buyers and seller come together to exchange goods/services for money.
Risk = when the outcome is known (odds known) – why? = opportunities. Actions = give up jobs/borrow additional funds. (e.g. opportunities)
Uncertainty = Potential outcomes are unknown – external factors – everchanging market (e.g. external threats such as COVID)
Risk vs Reward –
Risks: using own money, unemployment, low return, start-up costs
Reward: could make millions, learn new skills, new chain, or idea
Types of Market:
- Consumer goods market – individual customers e.g. shops
- Service markets – e.g. repairs (electrician/barber)
- Financial markets – financial securities and derivatives at low transaction costs – e.g. loan shark/shares
- Commodities market – primary economic sector trading – e.g. oils/fuels
- Other markets – other exchange areas: e.g. housing/livestock
Mass Markets – Products/services sold/advertised to everyone at the same time in the same way – e.g. utilities/soap - MASS.
+ affordable, more jobs, replicas, brand awareness, potential high revenue
- large risk, brand loyalty, appealing, high competition, high volume of production.
Marketing strategy for mass markets = market to consumer all over world in same way – Large quantities produced = lower average costs =
more profit.
Niche Markets – Subset of normal market, cater for specific consumer needs and wants – e.g. Sensodyne toothpaste (sensitive teeth)/Rolex.
+ charge premium price, personalisable, less competition, easier to target consumers.
- no guaranteed demand, specific, risky, smaller target audience.
Marketing strategy for mass markets = smaller subset = specific products, small turnover putts off larger firms, inelastic demand = higher
prices
Individual markets – allows customers to personalise products, target them as individuals -e.g. bespoke greeting cards.
Market size – can be measured through:
- Volume of sales/quantity produced & sold.
- Value – total spent by customers.
Market Share – proportion (%) of market that is held by a business/product/brand (see formulas sheet for formulas
Dynamic Market – one that is subject to rapid or continuous changes (e.g. internet/shoes/cars) – exist as consumer tastes/preferences are
constantly changing.
Dynamic Markets can… - GIANTS SOMETIMES FRY ELLIS’ DOUGHNUTS
- Grow (apple/amazon)
, - Shrink (VHS’/DVDS)
- Fragment (tv channels/apps)
- Emerge (VR/Flying Cars)
- Disappear – (BHS/Thomas Cook)
Online Retailing –
+ Open 24/7, fast growth, easy set-up, low overheads, quick orders
- Not suitable for all ages, hackers/fraud, returning products
Market Growth – refers to an increase in sales in the total market.
Competitive Market – has many businesses trying to win the same customers – A monopoly exists when one firm had 25% or more of the
market share.
Competition helps improve –
- Price – several competitors mean lower pricing – pricing can never be fixed across the market.
- Product Range – more products = more promotion = encourages repeat custom.
- Customer Service – better service improves customer satisfaction – encourage repeat custom.
Market Orientated – approach means a business reacts to what customers want. (most popular)
+ more interest, more profit, some items cannot really go wrong, versatile products (suitable for lots of customers, minimal marketing
- risk reputation if fails, risk, time consuming, substitute products, large customer base
Product Orientated – approach means business develops products based on innovating/what it is good at making/doing rather than what the
customer wants.
Asset Led – both market and product led.
Market Research – gathering info based on potential consumers – can provide info based on buying habits, lifestyle, and perceptions of actual
and potential consumers.
Info is collected and use for –
- Identify business opportunities.
- Identify patterns – consumer behaviour – forecast demand.
- Identify competitors.
Primary data/research – new non-existing data collected – specific purpose. (e.g. questionnaires/focus groups)
+ up-to-date data obtained, competitors do not have access to findings, directly relevant.
- time consuming, expensive, results may be misleading/not a true representation
Secondary data/research – second-hand data gathered by someone else for another purpose at another time. (e.g. newspapers and
magazines)
+ quick and easy to collect, wide range available.
- not reliable, not up to date, not relevant
Focus groups = small n.o of people brough together to express opinions on a specific product.
Internal data – (sales figures, annual reports, past customer data, past surveys)
External data – (government stats, competitors, trade publications)
Quantitative data – statistical facts, numerical analysis, concerned with quantities.
Qualitative data – gives insight into the thoughts and opinions of people, concerned with quality of opinions.
Sampling – most likely to gives a representation of whole market – methods are: -
- Random – every member has equal chance.
- Quota – certain number of people with same characteristics interviewed.
- Cluster – market split into areas – sampling occurs in these areas.
Uses of IT to support market research –
- Company Websites = access to online surveys, online transactions, cheap, customer reviews.
- Social Networking = cost effective, fast, easy, see emerging trends, gain info through observation.
- Databases = can be uploaded, can search & sort info, can perform calculations.
Market Segmentation – breaking down a large market info subgroups or sections that are likely to respond to products in difference ways.
Purpose – gather info for grouping & target specific customers.
Market Segmentation –
- Demographic – age/gender/income/class
- Geographic – location
