Theme 1 – 1.1.

1 – The Market
A –level Business studies - Edexcel
What is a
market?
A market is anywhere that a
business can sell its products or
services. For example, a market
could be a street market, an
online marketplace or something
bigger like the UK market
Mass market – A market
aimed at the general
population. E.g. Toothpaste
Niche market – Subset of
the main market and
addresses a specialist need
E.g. Wedding cakes
Operating in the
mass market
Pros
- Large scale production means
economies of scale lower
average unit cost
- -Very simple as everyone is
targeted equally
- Large volumes of sales means
high revenue
- High revenue can be put into
Cons
- Lots of competition
- Products need
differentiation, which
can be costly
- High volume production
not flexible to demand
changes.
 Cons
Operating in the - Very risky as demand
can be unpredictable
niche market and not constant.
Pros - Higher cost per unit
- Premium prices can be required.
charged
- Targeting customers is easier
- Small scale production can be
flexible and follow trends
- Less competitive then the
mass market.

Online re-tailing
(E-tailing)
Pros
- Reduced costs; using e-tailing
can reduce costs for a
business in many ways, such
as a store doesn’t have to be
rented and less workers have
to be employed.
- A much larger group of
customers can be reached
Cons
- A barrier can be created
between a business and
their customers, making
building customer
relations harder.
- It can be very hard to
stand out and be seen
online because there
are so many other
online
shops, marketing can
be
 Different markets are
Market Size likely going to differ in
size. For example, the sale
The size of a market can be of savoury snacks is likely
measured through the volume: to be less then the sales of
The physical quantity of footwear in the same year
products which are produced in the UK market.
and sold.
Market size can also be
measured by the value: the total
spent by customers in the
market.
 Measurements of market
Market share share may be important to
a business because it can
reveal who a market leader
The market share is the
is and can influence other
proportion (%) of a market that
companies to follow in
is taken by a business, product
their footsteps.
or a brand. This is calculated by
=
Sales of x / total sales in whole
market * 100
Currently in the UK the market
leader for supermarkets is Tesco

Dynamic
markets
A dynamic market is a market
that is subject to rapid or
continuous changes. E.g. shoes.
Most markets globally fall under
this category. For example,
where there was once a huge
market for cassettes, there is no
longer one at all.
Failure to adapt in a
dynamic market can lead
to collapse of a business.
For example, when digital
photography emerged in
the 1980’s. Kodak, failing
to adapt and relying on
sales from film cameras,
went into liquidation.

Product and
market orientation
Product orientation- The product
is the most important factor
when providing products for a
market. E.g. Apple Inc. Apple
released a new iPhone without
an aux port and customer did not
like this, however they still
bought the product.
Market orientation – The
consumer is the most
important factor when
providing for the market,
the business has a
sensitivity to the customers
requirements. For example,
Amazon, who anticipate
what customers will and
won’t like
and adjust their services
accordingly. With amazon
locker for customers
Market Growth
Markets will probably grow over
time, rapidly or slowly. Negative
changes in a market is known as
negative growth.
Economic growth – Living
standards rise and fall in the UK
and worldwide, if customers
have more disposable incomes
they’re likely to spend more and
vice versa. Businesses adjust
their portfolio according to the
market they’re targeting.
Changes in legislation –
New laws have to potential
to disrupt markets, for
example, environmental
legislation has helped
foster growth for ‘green
goods’, a ban on tobacco
advertising may have led
to a reduced market size
for tobacco.

Key terms
Brand name- A name, term,
symbol, symbol or other feature
that allows consumers to identify
goods and services of a business
and to differentiate them from
those of competitors.
Market – A set of arrangements
that allows buyers and sellers to
communicate and trade in a
particular rage of goods and
Marketing – A
management process
involved in identifying,
anticipating and satisfying
consumer requirements
profitably.
E-commerce – Conducting
business transactions
online.
 4. What is the process of
Questions suiting your product to the
market/ customer called?
5. Give 3 reasons that a
1. What’s the difference market might grow
between a mass market and a
niche market.
2. What is a negative and a
positive of selling in a mass
and niche market?
3. If the stuffed animal market
in 2020 in the UK was £40
million, and Build a Bear
 Answers 3. 7500000 / 40000000
Accept any correct answer, including: *100 = 18.75%
1. A mass market is not tailored 4. Market Orientation
to a specific market and is 5. Increased demand,
designed for everyone, changes in living standard,
whereas a niche market is social changes.
designed with a specific
market in mind.
2. Products for a niche market
can be riskier because of
uncertainty of sales. However
they tend to sell for a
premium price. Products for a