The Market (Theme 1 Edexcel A Level Business)
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These revision notes cover 'The Market', which is the first topic within 'Meeting Customer Needs' in Theme 1 of Edexcel A Level Business.
Specification topic reference: 1.1.1 Edexcel Business.
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What is a ‘market’?
- All the buyers and sellers that trade a particular type of product in a particular place.
What’s the difference between mass markets and niche markets?
- Mass market: aimed at a large group of buyers.
- Advantage: can benefit from economies of scale – the products sold in mass markets can be cheaper to produce.
- Disadvantage: high level of competition.
- Niche market: aimed at a specific group of buyers. Products will often have specialised features.
- Advantages: less competition, easier to build customer loyalty, higher quality products.
- Disadvantages: more at risk of changes within the market, e.g. changing consumer tastes; can’t benefit from economies of scale.
What’s the difference between market size and market share?
- Market size: total value of sales in a market over a certain time period (e.g. a year).
- Market share: the proportion of the total market that the business holds - their sales as a proportion of the total market size.
- Mass market businesses: large market size; small market share.
- Niche market businesses: small market size; larger market share.
What is branding and why is it important?
- Branding distinguishes businesses from other businesses within the same market.
- Particularly important for mass market businesses to have strong branding to stand out from competitors.
What are dynamic markets?
- Markets that rapidly change due to:
- Consumer preferences changing;
- Seasonal variation;
- Economic conditions;
- Innovation within the market;
- Environmental regulations changing;
- Changes in legislation.
How has online retailing changed how markets operate?
- Beneficial changes:
- Open 24/7;
- Access to global market;
- Can target broader segments of the market;
- More convenient/efficient/faster for customers;
- Customers can compare prices.
- Drawbacks:
- Technical faults;
- Security issues; potential for fraud; hacking etc;
- Can’t see or try on the product;
- May be difficult to build up customer loyalty.
How might competition affect the market?
- Direct competition: two firms selling similar products that appeal to the same type of customers.
- Indirect competition: businesses that sell different products to the same type of customers, e.g. tea and coffee, or different types of restaurants.
How might competition affect a business’s marketing mix?
- Pricing: firms in a competitive market would have to ensure their products are priced competitively.
- Products: have to come up with innovative new products; make sure the products are high quality for the price; come up with distinctive product features.
- Place: increase convenience, e.g. set up stores near customers. Or make the product available online; free delivery etc.
- Promotion: promotional deals e.g. BOGOF, PR, word of mouth, persuasive advertising, celebrity endorsement.
What’s the difference between risk and uncertainty?
- Risk: the probabilities of different outcomes can be calculated/estimated.
- Uncertainties: unknown events, e.g. a pandemic.
Please feel free to leave a comment below if there's anything you'd like clarifying!
Tag: Edexcel Specification A Level Business.
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The Market (Theme 1 Edexcel A Level Business)