A-LEVEL BUSINESSLesson Objective:

To understand more about Theme 1

Intro• You need to be able to retain a lot of information over the

course of this A-Level, therefore it is essential that you keep good and organised notes

• I would recommend purchasing some revision cards – these will prove very useful for key terms! And a folder with dividers in so that you can keep all notes organised – you will need to refer back to this years work in Year 13

Theme 1 – Marketing and People• I will be teaching you Theme 1 – Marketing and People

• You will sit a 1hr 30min exam on this at the end of Year 12, at the end of this exam there will be a 20 mark question on Theme 2• You have to be able to link the knowledge from Theme 1 with me,

to what you are learning in Theme 2 with Mrs Murphy

The Market• Businesses make money by selling their goods and

services in markets

• Historically markets were where buyers and sellers would meet to exchange goods. However today it is possible to trade goods and services without buyers and sellers meeting. • Trading can be done over the phone, through newspapers, through

mail order and the internet

The market• However good a product is, understanding the market is

important. If you don’t understand the market you are operating in, the harder it is to be successful

• KEY TERM• A market is any medium in which buyers and sellers

interact and agree to trade at a price, either face to face or online

• Medium is used to describe the market as many markets are virtual (amazon, ebay etc…)

Online retailing• E-commerce or online retailing has increased dramatically

in recent years.

• This has had a huge impact on local high streets, with many experiencing a loss of trade and subsequently resulting in many shops closing

• Task• Complete the online retailing task sheet – on the V drive

V drive>BIW>A Level Bus>Theme 1

• You have 15 minutes – remember to write in full sentences and explain all points thoroughly

Some examples of markets• Consumer goods markets – where products such as

food, cosmetics and magazines are sold• Markets for services – this can include services for

individuals, such as hairdressing, or business services, such as auditing

• The housing market – where people buy, sell and let property

• Commodity markets – where raw materials such as oil, copper, wheat and coffee are traded

• Financial markets – where currencies and financial products are traded

Mass markets and niche markets• Markets come in all shapes and sizes

• Ranging from the very small and local, to huge and global

• The size of a market is determined mainly by the number of buyers

• The more buyers within a market, the more businesses will want to join and make profit

Key Terms

A Niche market is a small part of the overall market that has certain special characteristics; these may include providing a specialised or luxury product or service. Niche marketing is used when a business

focuses on a narrow or small market segment

A Mass market is, as its name implies, a very large market with a high sales volume. Mass marketing occurs when one standardised product is aimed at the largest groups of consumers for that particular

product or service

Mass Markets• This is when a business sells the same products to all

consumers and markets them in the same way. This is often used for fast-moving consumer goods, such as crisps, breakfast cereals, computer software and Coca-Cola

• The number of customers in these markets is huge and often the products are sold globally – this means that businesses can produce large quantities at a lower unit cost, due to economies of scale – this can result in higher sales and higher profits

• However – there is a lot more competition and businesses may spend a lot of money on marketing.

Mass marketing

Mass marketing

Leads to

High Sales

Whic

h

leads

to

Mass Production

Which

leads to

Lower costs and

higher profits

When carried out effectively, mass marketing can be highly profitable

Niche Markets• A niche market is a very small segment of a much bigger

market. It is a segment that has sometimes gone ‘untouched’ by larger businesses. This is the complete opposite of mass marketing

• Niche marketing involves selling to a small customer group, sometimes with specific needs. Niche marketing involves identifying the needs of the consumers that make up this niche and designing a specialised product or service to meet their needs.

• Sometimes there is no competition in a niche market, which means it may be possible to charge a premium price, however there is very little room for expansion

Niche markets• Often sell their products in low volumes, as a result their

prices are often higher than the mass market alternative – you pay more for a specialised/unique product

• Niche market operators often distribute their products through specialist retailers, or direct to the consumer via the internet

• Many new niche market businesses fail because the revenue generated from their niche market business is not high enough to cover the costs of operating

Markets• Markets often contain both mass market producers and

niche producers• For example the car market contains mass market manufacturers

such as Ford, Toyota and Volkswagen, as well as niche manufacturers such as Ferrari, McClaren and Rolls-Royce

• Some niche producers do make the transition to become mass market producers – the most famous example is Apple. Producing on a small scale can make niche producers vulnerable to economic downturns and changes in consumer tastes. Successful niche producers can often be taken over by bigger businesses

Characteristics of successful products

• Characteristics of successful products within each market differs

Mass Markets Niche Markets

Long-lasting, wide appeal that spans age groups and gender. E.G. Heinz Ketchup

Strong appeal to a limited audience. E.G. Mars Bounty or Irn-Bru

The breadth of appeal comes from the smoothness of the product or service; it has no rough edges or things to dislike. E.G. Coca-Cola or Dairy Milk

May be a ‘marmite’ characteristic that some love and others hate. E.G. Bounty – those who love it may be especially loyal

Usually a successful mass market product will be the market leader, but not charge too high a price premium

A niche market product probably has higher unit costs than a mass market one, but is able to charge a premium because of its distinctiveness

Digital Economy• The rise of the digital economy has also affected both

niche and mass markets.

• Niche markets have grown in number as businesses can now have access to a vast number of potential customers that previously would have been unaware of their existence. As a result some mass markets have declined, for example in the music and entertainment sectors

Mass Vs Niche Task…• David Algunik, a Canadian emergency room doctor,

designed a product called a Banana Guard

• Complete the Banana Guard question on Moodle

• EXAM TIP• In examinations it Is helpful to give examples when explaining the

meaning of business terms and concepts. Relevant examples support your answer and show that you understand the meaning of the term or concept.

• It is also important to use information in the case study in the question to support your answer.

Extended writing task…• Choose one of the following markets;

• Woman’s fashion retailing• Computer console software• Chocolate bars

• For the market of your choice, evaluate whether sales are dominated by mass market or niche market products/brands

• 20 marks

• To be completed for homework – must include evidence to support your points