Edexcel A-level Business Theme 1

1.1 Meeting Customer Needs

1.1.1 The Market

Markets: places where buyers and sellers meet to buy products and services e.g. e-commerce, m-
commerce, in physical shops, mail order or over the phone
Definition Characteristics Market size and share Examples
Marketing: a range of activities that’s helps a business sell its products (not just selling) e.g. designing
Niche A smaller market, Individual needs are identified and met which Small numbers of customers Sibling gin, Wholefoods,
usually within a can be easy to achieve due to little or no and market share Lush products, charging the right price, identifying needs and wants, understanding the threats from
large market or competition. Lots of small firms in niche competitors
industry – often industries. If no competition can charge
with specific needs premium prices
Brand name: a name, term, sign, symbol, design or any feature that allows consumers to identify the
Mass A very large market A business sells it products to customers in the Huge numbers of customers goods and services of a business and to differentiate them from those of competitors
in which products same way. Can benefit from economies of (possibly billions if sold FMCG e.g. Cocoa Cola,
with mass appeal scale (very low costs per unit). Lots of globally). Gaining market share Walkers Crisps,
are targeted competition, so lots of £ spent on advertising can be extremely competitive Cadburys Dairy Milk
KEY CALCULATIONS
Market share in VOLUME or VALUE
Sales of a business X 100
Benefits include: Total sales in the market
E-commerce, m- • Easier to shop from anywhere
• Easier to gather personal information
commerce and e- RISK: weighing up whether a decision is worth it or not
so better marketing in the future
tailing and UNCERTAINTY: external influences affect a business which they cannot control e.g. consumer tastes, new technology, natural
• Lower overheads
containerisation have • Lower marketing costs disasters, the economy going into a recession
changed the way the • Reach ore customers
world buys and sells • Open 24/7
• Greater flexibility
Markets change over time e.g. Therefore must ADAPT to
 New markets emerge change by:
through INNOVATION e.g.  Being FLEXIBLE
How competition affects the market smartphones  Using MARKET RESEARCH
BUSINESSES may be put under pressure, so have to encourage customers to buy their  New markets emerge well
products over rivals including: Some markets are dynamic
through economies growing  INVESTING in new product
(fast moving / changing) e.g.
• Lowering process e.g. BRIC & MINT development or processes
fashion, technology. Failure  Social changes such as
• Offering better quality products  CONTINUALLY IMPROVING
to recognise this could end
• Using more powerful or attractive advertising or promotions women having children later small changes every day have
up with the business failing
• Offering extras e.g. high-quality customer service in life a big long term impact
e.g. Kodak  Changes in legislation making  DEVELOPING A NICHE or a
These all costs money and can reduce the amount of profit made
it easier or harder to operate USP – don’t get ‘stuck in the
CUSTOMERS generally benefit from increased competition though more choice and fairer in markets PROTECTIONISM middle’ – this is why House
pricing. Without competition customers can be exploited by businesses (MONOPOLIES)  Demographic changes e.g. of Fraser and Prezzo have
e.g. the Post Office aging population in the UK shut many stores