L1 - Markets

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  • WHAT ARE MARKETS
    • they are groups of people and businesses that buy products or services from other businesses
    • there are lots of markets and these are usually broken unto smaller markets
    • TYPES OF MARKETS
      • housing
      • groceries
      • financial
      • fast foods
      • crude oil
      • precious metals
    • all activities involved to sell products that market profitably are:
      • understanding customer wants and needs
      • designing products to meet these needs
      • understanding market dynamics
      • developing successful products
      • promoting the business and products
    • size affects how businesses manage the market. the three market sizes are:
      • mass
        • targets all possible customers with the same or very similar products
        • common for food, drinks, cars
        • needs expensive large scale production facilities
        • gives huge cost reduction, lower prices and large sales volume
        • highly competitive and needs mass market promotion like TV or radio
      • niche
        • targets a small market segment with a specialised product but charges a premium price
        • quality is crucial and production is small scale
        • low volume but higher profit fewer competitors
        • low customer numbers mean higher risk of failure if one changes supplier
        • promotion uses specialist media and can use direct marketing
        • larger businesses can push smaller businesses out
      • individual
        • relies upon technology e.g. the internet
        • targets individual customers and offer tailor made products
        • products include greeting cards specific to the customer but prices are very high
    • online markets
      • the biggest changes in the last 40 years
      • called e-retail or e-commerce and most businesses now sell online
      • likely to continue to grow and there are many benefits
    • brands depend upon heavily on advertising and used in mass markets with lots of competition to:
      • differentiate products from rivals
      • create customer loyalty
      • support product recognition
      • develop an image
      • charge a premium price
    • there are two common methods to assess market size:
      • value
        • the amount spent by all cusotmers
      • volume
        • the amount of products sold
    • market share is the amount of market a business controls. it influences strategy and they can set a target to increase the market share.

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