Business 1.1
What is a market?
Where businesses that provide the same products/services can interact with the buyers of the products/services.
What are the 3 types of markets?
National Markets.
Local Markets.
Electronic Markets.
What are National Markets?
A market that has shops all over the country and therefore provide for a large number of customers. These shops sell similar/the same products/services. Most high street retailers are in the national market.
EG: WHSmith
What are Local Markets?
A local market is made up of small business that target relatively nearby customers.
EG: Building companies, roofing companies and plumbing usually provide for people who live near them.
What are Electronic Markets?
An electronic market sell intangible products online. Businesses in this market may have customers from all over the world, this makes it a very competitive market.
Whats a Mass Market?
Found in most markets. Provide for a large number of customers by selling a large range of products/services. Businesses compete in the mass market to become the market leader and earn the largest market share.
Whats a Niche Market?
Provide for a specific group of customers by selling specific or unique products/services. Smaller number of sales, so buy less raw materials, so dont get bulk discounts, so their products usually cost more. Their products can usually be found only at a small number of shops. Niche markets can eventually grow.
How is market size & growth measured by value and volume?
The number of products sold is the growth rate (volume). The revenue made through sales is the value measurement. Economic factors can also impact a markets growth or size.
What is market share and how is it measured?
Market share is the amount of a market that a business owns and has control over.
It is measured through volume or value.
The higher percentage of market share that a business owns, the more successful it is.
What are 3 ways businesses can increase market share?
Sell branded products.
Sell high quality, reliable products to attract and keep customers.
Sell products online to increase customers.
What is Direct Competition?
When multiple businesses sell the same products to the same group of customers.
EG: coca cola and pepsi
What is indirect competition?
When multiple businesses sell similar products to the same group of customers.
EG: A customer having to choose between multiple fast food places is indirect competition.
Why is competition more extreme in well established markets?
Established markets have existing businesses which will have loyal customers who always choose the same business over its competitors. This makes it hard for new businesses to gain customers and market share because the competition against the existing businesses is so strong.
Why is competition less extreme in a new market?
Businesses in a new market have less competition because there will be no existing businesses and therefore every business will have the same opportunities.
What is a risk in business?
A risk is something that the business owner is aware of in advance and can have multiple likelt outcomes that need to be considered in the business decision making.
Larger businesses usually have less risk because they have a larger market share and are often in multiple markets so they have more money and other markets to fall back on.
EG: Its a risk to invest in a new store because it may not get the number of customers it needs to sustain itself.
Whats an Uncertainty in business?
An uncertainty is affected by external factors that are difficult to plan and prepare for and that the business cant control.
EG: Environmental factors, such as tornadoes or floods, could be an uncertainty depending on the business's location.