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

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 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