Unit 1 condensed study notes

Unit 1 

The market - a place were buyers and sellers meet in order to exchange goods and services.

Markeing - the managerial process of identifying, anticipating and satisying customer wants and needs profitably.

Market share - a businesses total sales within the market as a percentage

     formaula - (sales / total sales) x 100

Market growth - increase in total sales within the market

    formula - (change in sales / original 1 sales) x 100

Mass market - large unspecialised market where the products are aimed at the whole market.

 advantages: 

• large target audience
• huge amounts of market research available 
• more competitiveness can lead to higher levels of efficiency as firms try to become more price competitive
• economies of scale
• increased brand awareness 

disadvantegs:

• high start up capital costs in order to compete e.g. advertising
• high amounts of competition 
• vulnerable to changes in demand
• harder to meet specific needs

Niche market - small targeted / specialised market which allows the supplier to meet the individual needs of the customers.

advantages:

• less competition
• higher consumer satisfaction - repeat customers/ brand loyalty
• meets the market demand easier

disadvantages:

• threat from larger potential competitors 
• specialisation leads to smaller profits
• prone to changes in trends

Brand - a unique company image that differentiates from the rest of the market / other suppliers.

• can portray quality
• consumers know what to expect
• brand importance can exceed the importance of the price
• can be used to add value

Market research - the collection and analysis of data and information about consumers, competitors and suppliers to inform a business about its market.

Primary research - data collected first hand about the market that didn't exist before.

Secondary research - data collected by someone else about the market / data that already existed.

Quantitative research - statistical data  that looks at the amount of items sold.

Qualitative research - non-statistical data that looks at why the customers buy the products.

Segmentation - the breaking down of a large homogeneous market into smaller easily identifiable sections that have similar wants, needs and demand characteristics.

Demand - the amount a customer is willing and able to buy at a given price.

Factors affecting demand:

• price of complementary goods
• price of substitute goods
• trends
• seasons
• income
• laws

Supply - the amount a producer is willing and able to sell to the market at a given price in a given time period.

Factors affecting supply;

• changes in cost of production e.g. increase in the price of raw materials
• laws
• changes in technology
• external shocks
• government subsidies

Price elasticity of demand (PED) - a measure of how quantity demanded reacts to a change in price.

formula - %change in QD / %change in price

PED < 1 = inelastic 

PED > 1 = elastic

factors that affect PED:

• degree of product differentiation
• branding and loyalty
• necessity / is is addictive

Income elasticity of demand (YED) - a measure of how quantity demanded reacts to a change in income.

formula…