1. The Price Mechanism Discussion point pg 54 – tablet computers
Consider the following points
What attracts businesses to this market?
What attracts consumers to make a purchase, and which tablet to choose?

2. The Price Mechanism
Is an economic model that helps to explain the allocation of resources between different possible uses.
We have already looked at scarcity and opportunity cost as well as consumer sovereignty, all of these link to this.
Price Mechanism functions
Signalling – prices give signals to producers and consumers
Rationing – only those willing and able to pay the price get the products
Incentives – profitability motivates firms, value for money motivates consumers

3. Mass Markets
Some products are used by most people and are bought and sold in large quantities, quite often these products are homogenous (uniform, almost identical), e.g. sugar, milk, bananas. These items are sold in mass markets.
Competition in mass markets tends to be done using price, so firms are always looking for ways to reduce costs and prices.

4. Niche Markets
Are smaller and tend to work differently. They are specialised segments of the larger market.

5. Segmentation

6. Competitive Advantage
Market Segments
Characteristics of products/customers are subdivided into market segments
Product:
Price, speed, safety, size, appearance
Customer:
Age, gender, location, social class, income, behaviour (spending habits), psychological

7. Market Mapping
Diagram that shows the range of possible positions for 2 features of a product.
It is also known as Market Positioning, as you are positioning your product/business against competitors

8. Market Mapping
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9. Market Mapping
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10. Homework Task Investigate two markets that are segmented
Draw market mapping diagrams to show how the market is segmented - think carefully about how you label the axis

11. Understanding the consumer
If firms are to be competitive, they must understand their customers – it is essential they collect market research to help them do this
Primary research will collect data first hand
Surveys
Focus groups
Observations
Experiments, test marketing
Secondary research will look at data already collected
Reports
Internet
Government data

12. Quantitative or Qualitative?
Quantitative data looks at numerical data, factual statistics
Qualitative research looks at opinions and feelings

13. How to gain a competitive advantage
competitive advantage means having an edge over the rivals
List all the ways in which a business could seek to gain a competitive advantage over its rival

14. How to gain a competitive advantage
Compare your list with those in figure 13.3 on page 69.

15. How to gain a competitive advantage
Exam style questions pg 72, Q2, 3 & 4