1.1.1 the market - syllabus candidates should be able to: define mass & niche markets; calculate...
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1.1.1 The market - syllabus
Candidates should be able to:• Define mass & niche markets; calculate market
size & market share; assess the value of brands• Explain what a dynamic market means.
Describe the impact of online retailing, and how markets change. Assess the importance of innovation and calculate market growth. Evaluate how markets adapt to change
• Assess how competition affects the market• Differentiate between risk and uncertainty
Definitions
What is marketing?•
What is a market (in terms of marketing)?•
Definitions: niche marketing
What is niche marketing?
E.g.
Niche marketing - advantages
Niche marketing - disadvantages
Definitions: mass marketing and generic brands
What is mass marketing?
The ideal is to create a generic brand, what does this mean?
E.g.
Mass marketing
Many businesses start selling _____ products but as they grow they expand into the _____ marketE.g.
Mass marketing - advantages
What are the advantages of mass marketing?
NOTE: mass marketing does NOT have to mean ______ prices e.g.
Mass marketing - disadvantages
What are the disadvantages of mass marketing?•
Niche versus mass marketing – which is best?
Which is best out of niche or mass marketing?
It is now easier for niche firms to operate in a global market – why?
Using data to understand markets
A business will want to know initially three key pieces of information about its market:
1. market s____
2. market g_________
3. market s_________
In the UK, large firms within a market may be referred to the CMA (Competition and
Markets Authority) and so market size and market share are vital.
Market sizeWhat is market size?
How can it be measured?
Summary
Market size is the measurement of the size of total _______ for a whole market either
in terms on money (v______) or in terms of numbers sold (v________)
Market share
Market share is the proportion of the total market accounted for by one product or one
firm. What is the formula?
E.g. if the total market has sales of £625,000 and firm A has sales of £50,000 its market
share is
Market growthMarkets often change in value (hopefully increase), market growth measures the
change.
The formula is:
E.g. a firm had sales of £300,000 last year and £425,000 this year, then the market growth
is:
Changing market size or market shareWhich can firms change - market size or
share?
What impact might government have?
What other factors could affect market size?
Dynamic marketsDynamic markets are where the market is ________________________________.
E.g.
What is the impact of failing to adapt?
Dynamic markets and online retailing
What is the impact of online retailing?
The affect varies by i__________________ e.g. supermarket sales are relatively low (4.4%
of the UK grocery market in 2014) whereas ASOS online sales were £8.3m in 2003, £975m
in 2014 and forecast £2,500m in 2020!
Work out ASOS’ market growth from 2003 to 2014
Who are the biggest on-line retailers?
What are the benefits for firms of online retailing?
How do markets change?Market size may change – grow (e.g. packaging
market is forecast to grow 3% a year); shrink (e.g. UK coal industry is declining as consumers
_________________________)
The nature of markets may change – e.g. UK restaurants. In the 1960s the industry was
dominated by _________________, now it is _____________________________________
New markets may appear - e.g. growth in BRIC countries or new products such as
___________________________________
Why do markets change?Economic growth –
Technology e.g.
Innovation – see next slide
Social and demographic changes –
Fashion/trends/health issues e.g. sales of ethical food rose from £1.35b in 2000 to £7.7b in 2012.
What was the market growth?
Changes in legislation – e.g.
What is innovation?Innovation means bringing a new idea to life
It often emerges through technological development and may create new markets e.g.
Innovation may be used to supply products in new locations e.g. supermarkets with
Innovation may be used to raise finance e.g.
How should firms adapt to change?Firms need:
F__________ – recognise need for change (Tesco?!), train staff
Market research –
Investment – spend on
Continuous improvement – increased efficiency will lower costs
Niche – a declining market may
How does competition affect the market?How does competition affect businesses?
What might they do?
How does competition affect customers?
Risk versus uncertaintyRisks occurs as firms take actions where the
outcomes are unknown. E.g. approx. _________ UK firms fail each year Established firms take risks too, Amazon lost
$___million on the Amazon Fire Phone (mobile)
Uncertainty occurs as businesses are subject to external influences which are beyond their
control. E.g. These are hard to predict.
Risk can be q_________ but uncertainty cannot