Business Theme 1 Flashcard
Market: a place where the transaction of goods and services happens between a
consumer and a business.
Mass Market: a market that is broadly segmented, where the needs and wants of
consumers are general. for e.g. Ford and Toyota
+ large market size compared to a niche market, easily exploit EOS by targeting high
volumes of consumers, achieve high demand
+ less risky compared to niche markets as the general needs of consumers are
targeted.
- increased competition, intensive rivalry such as price wars from MNCs can easily
exploit, unable to survive
- unable to develop a USP and make the product unique, restriction in achieving
premium pricing
Niche markets: a market that is specifically segmented where the needs and wants of
consumers are specific. for e.g. Rolls Royce and Tesla
+ Develop a USP, differentiated product, premium pricing, price inelastic goods, CA and
CE
+ reduced competition, more power over the market, more control, less focus on the
rival's actions, may increase the price to encourage profitability, maximise revenue.
- very small market size, unable to achieve EOS, the cost can be significant if unable to
achieve demand
- Increase R and D required, high capital required, riskier compared to mass market,
high chance of business failure and vulnerable to tastes and preferences of consumers,
the sudden change may be required such as to meet special needs.
Market size: the total value or volume of sales that a particular market holds. Allows
businesses to find out how big or small the market size is and whether it’s worth
operating in it.
Business Theme 1 Flashcard 1
, Market share: the proportion of total sales or revenue that a particular firm holds in a
market over a period of time.
Brand: a name, logo, slogan or design that plays a crucial role in the identity of a
particular firm. It allows consumers to clearly recognise and distinguish between firms.
thousands of brands exist across markets but its strength depends on what market the
firm operates and the objective of whom needs to be targeted.
Dynamic Market: a market where the business environment is constantly changing due
to regular variations in consumers’ tastes and preferences, legislation, technology,
competition and the economy.
+ forces the business to focus on continuous improvement, operate efficiently and
competitively
+ Develop a USP by targeting special needs, finding the gap, premium pricing, price
inelastic product, prolonging the product life cycle, CA and CE, and more power over
the market.
- incredibly costly as intense R and D are required, constant adaptation to changes,
time-consuming and expertise is needed, costly, high chance of business failure.
- increased competition, and intense rivalry, push the firm to try something new,
bargaining power of consumers, low pricing demanded, the importance of cost
leadership (porters strategic matrix and Kay’s distinctive capabilities procedures), risk
and uncertainty
Online retailing: carrying out business transactions online, consumers can buy the
product by the use of the internet through multiple devices such as the phone, tablets,
laptops etc…
+ Consumers can shop 24/7, quick and easy, convenient, better satisfaction from
consumers, consumer loyalty, repeat purchases, reduced initial cost needed, suitable
for start-up
+ Target a wider range of audience, breaking geographical barriers, increased
consumers may be targeted, more potential for increasing sales revenue, more market
share, more power in the market
Business Theme 1 Flashcard 2
, + can track the consumers buying behaviours easily by the use of cookies, allows the
firm to make effective decisions such as what sort of new product is needed to meet the
needs or is adding value required, adapt better to change, allows to stay competitive
- increased maintenance cost, high security is needed as payment needs to be secure,
may be costly to some extent in the long run, not suitable for rapid growth achievement
- unable to provide exclusivity and tailored customer service, some consumers may
lack the confidence to shop online as they may not trust the product and the service that
a firm can provide, reduced demand achieved.
- increased competition, competing against a wider audience may mean effective
promotion and advertising is needed, which can increase expenditure, rivals may copy
your USP, loss of CA and CE, business failure
The reason behind the market change?
Changes in PESTLE, consumer preferences or globalization influence the demand
and supply dynamics.
Innovation: when the firm aims to provide unique features or a completely new product
that attracts a range of consumers in the hope of financial success.
Market growth: the sudden increase in the value, volume or size of the market in a
given period of time which may have been influenced by factors such as high market
demand due to changes in PESTLE… Opportunity for the business to maximise sales
revenue and market share.
Adapting to change
being flexible with the operation (better financial management, resources or staffing)
constant market research, finding gaps in the market, assessing rivals’ actions
investment in technology for a better product, people and efficient operation
continuous improvement, continuing to do better and enhancing the good reputation
Business Theme 1 Flashcard 3
, How competition affects the market?
Low competition means businesses can implement premium pricing, fewer
incentives/ discounts required, dominate the market and afford inefficiencies.
Consumers are disadvantaged by fewer choices, high prices and poor service.
High competition means businesses need to implement competitive prices, more
incentives/ discounts and innovation required, and more efficiencies. Consumers
are advantaged by more choices, good value for money and excellent products.
Risk vs Uncertainty
Risk: business is aware of the outcome when implementing high-risk ideas and
decisions.
Uncertainty: no guarantee or control of the outcome due to the ever-changing
environment associated with external factors (political. legal, economic or social)
Market research: the process involved in gathering data that relates to the firm's
operation, can be primary or secondary market research and consist of both quantitative
and qualitative data.
Product orientation: when the firm approaches the development of a product based on
its specialisation and what they are really good at, strong emphasis is put on the quality
of the product and the USP rather than the needs of consumers.
+ Develop a sustainable competitive advantage through a developed USP, premium
pricing and consumer loyalty, and repeat purchases.
+ Provide exclusivity and excellent customer service to the consumers, likely to attract
high consumer demand and make the product price inelastic, extend the product life
cycle, CASH COW
+ Exploit competition by developing a strong USP and differentiated product, rivalry
may be eliminated, dominate the market
Business Theme 1 Flashcard 4
