The market

Mass market:

- When a business sells the same products to all consumers and markets them in the same way.

- Huge number of costumers meaning businesses can produce large quantities at a lower unit cost exploiting economies of scale - resulting in higher sales and profits.

- Often a lot of competition so businesses may spend a lot of money on marketing.

Niche market:

- A small, specialised market for a particular product/ service and a small costumer group.

- Avoids competition so much easier to focus on the needs of the customer and able to charge premium prices.

- Easier to be overrun by a large business which enters the market.

- Business relying on a single niche market may be vulnerable because their risk isn't spread so if they lose their chosen market the may collapse as they won't have back-up products/markets.

- SIZE: calculates by the total sales of all businesses in the market.

• Value: total amount spent by customers buying products.
• Volume: physical quantity of products produced and sold.

- SHARE: the proportion of a particular market that is held by a business.

• (Sales of the business/total sales in the market) x 100

- BRANDS:

• Businesses try to establish themselves in markets by giving their products a brand name which distinguishes them from others.
• Important in mass markets where there is lots of competition.
• It can be used to creater customer loyalty, develop an image and charge higher prices.

E-tailing involves ordering goods through the Internet and taking delivery at home.

- Benefits to businesses: 

• They can serve customers 24/7.
• They can offer their goods to a much wider market.
• Lower costs: rent, sales staff, less bureaucracy...
• Marketing is cheaper.
• Easier to gather personal information from customer which is used for future offers and promotions.
• Greater flexobily as online store can be updated regularly.

- Benefits to consumers:

• Cheaper.
• Huge amount of choice.
• They can shop 24/7 from anywhere they want to.

Size:

- Some markets stay quite stable over a period of time (basic products).

- Most markets are likely to grow as population grows and emerging economies develop.

- Some are in decline because the need for a product ceases to exist.

Nature:

- Many markets change constantly as consumer spending patterns change and people desire to buy more 'upmarket' brands-

- Social media influences consumer behaviour: people attempt to match whatever others buy.

New markets:

- These appear as 'emerging economies' develop and completely new products are launched.

- Economic growth:

• Global living standards tend to rise over time meaning world's population has more money to spend so businesses can supply more of their ouput to growing global markets.
• As people get wealthier, they will demand different types of goods.

- Innovation:

• Businesses can create new wants and needs and meet them with new products.
• Technological development has created brand-new markets.
• New businesses can also take advantage of other's failures.

- Social changes

- Changes in legislation: for example, environmental legislation has helped to stimulate growth in renewable energies.

- Demographic changes: in most countries population is ageing meaning markets such as healthcare and carehomes will grow.

- Flexibility: 

• Creating a culture of flexibility: staff  trained in a variety of skills and asked to change tasks and this might help businesses to serve customers effectively when changes occur.

- Market research:

• Businesses can keep in touch with market developments by undertaking regular market research aimed at customers.
• Communication with customers: constant to be aware if changes in needs and tastes.

- Investment:

• Business that invest in new product development likely to survive longer as, even though it's expensive, a new product could lift sales and help win market share.
• Investment also necessary in training and machinery.

- Continuous improvement: improved efficiency, excellent customer service, new product ideas encouraged. 

BUSINESSES

- They have to encourage customers to buy their products over those of rivals by lowering prices, offering better quality products... These methods cost money and reduce profit but are necessary.

- Makes running a business challeging so large businesses might try to reduce it by purchasing a rival in the market of making it difficult for others to enter the market. However, there is legislation to prevent unfair practices.

CONSUMERS: 

- They generally benefit: lower prices, better-quality products, more choice...

- A lack of competition can mean consumers are exploited as a business may rise prices or restrict choice as they lack the iniciative to innovate.

RISK:

- Owners take risks as they take actions where the outcomes are unknown and they commit resources that could be lost.

- E.g: they invest their own momney in a business which might not succeed or spend money on ventures which might not go well.

UNCERTAINTY: 

- Businesses often subject to events that are completely beyond their control and could have financial impacts. E.g. a new competitor entering the market with a superior products or a change in customer's tastes.

- This makes decision making more difficult, particularly when investing for the future.