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 _____
market
E.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 size
What 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 growth
Markets often change in value (hopefully
increase), market growth measures the
change.
The formula is:
𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒
𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙
× 100
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 share
Which can firms change - market size or
share?
What impact might government have?
What other factors could affect market size?
Dynamic markets
Dynamic 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 uncertainty
• Risks 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