Download The Market: Types, Size File

Is there a market for the business
idea?
Unit 1 - Business Studies
AS Level
Learning Objectives
• To be able to discuss the following terms with
confidence; market size, market niche, market
segmentation analysis
• To be able to answer past paper questions
based on the topics
Starter
• What kind of watch do you wear?
•
•
•
•
Do you wear the same watch as:
1) the person next to you
2) your parent
3) me?
• Why do you think that is?
Market size
• Size of the market can be measured in a variety of
ways:
• Number of customers (perhaps per year, per
month) a restaurant will look at number of
“covers” a night
• % of market share in terms of volume for
example a business may look at amount sold,
3,000 units sold this month
• £££ market size in terms of turnover or potential
turnover.
Market niche vs mass market
• Niche market is a small
segment of the
population who have a
similar set of wants,
needs and
characteristics.
• Example: Walking boots
• Mass market is a
product that is
advertised to and aimed
at EVERYONE
• Example: Toothpaste,
cinema / films etc
Market Niche characteristics
• A small market with unique characteristics
• Tend to demand higher prices – more unique
products – attracts a niche demographic
• Fewer consumers / better quality
For example sky diving equipment – only needed by a small market therefore niche
Products – which attract high prices for the specialist equipment
Market segmentation
• Are you…
– Male
– Female
• Are you
– 17-19 years old
– Older
– Younger
There are some products
which are gender specific –
can you think of some
There are some products
that are age specific – any
thoughts?
Segmentation
• Classification of • Demographic
consumers or
• Political viewpoint
customers into
• Ethnic origin
categories
• Culture
• Lifestage (e.g.
• Age
parent of toddler
• Lifestyle
/retired)
• Gender
• Interests / hobbies
• Location
• Socio-economic
Glossary – how’s your vocab?
1. Market mapping…
2. Niche marketing…
3. Adding value…
4. Market sampling…
5. Market segment…
6. Risk-taking…
7. Non-ethical…
• Press escape key to view answers
Sample question 1
In April 2006, The Daily Telegraph reported that ‘Polish food
shops and restaurants are continuing to open up and thrive on
Britain’s high streets’. This trend continued to 2009.
The establishment of Polish food shops and restaurants in
Britain is evidence of
A market mapping
B niche marketing
C adding value
D market sampling
[4]
Answer question 1
Correct answer is B – niche marketing
- Definition of niche marketing (1)
- Because the Polish population of UK will be relatively small (1)
- Who have different tastes in food and other products (1)
- Market mapping and market sampling are techniques to support
product positioning (1)
- Adding value is providing a product or service with an increment
to provide customers with more for their money (1)
Any acceptable answer which shows selective knowledge/application
and/or development
NB up to 2 marks out of 3 may be gained for part (b) if part (a) is
incorrect.
Maximum 2 marks for explaining why distracters are incorrect.
Sample question 2
B&Q and Jewson serve different segments of the
market for building and decorating products.
Which of the following is not a market segment for
the above businesses?
A Do It Yourself (DIY) enthusiasts
B Self-employed electricians
C Homebase stores
D Private sector landlords
[4]
Answer question 2
Correct answer is C Homebase stores
- Market segmentation is how you classify people within a
market according to age, gender, lifestyle, etc (1 mark)
- Market segments share same characteristics, e.g. same age
bracket (1 mark)
- DIY enthusiasts, landlords and electricians will probably get
supplies from B&Q/Jewson because of a regular need (1
mark)
- but Homebase stores is a retailer/distribution
channel/competitor of DIY products, not a type of buyer (1
mark)
Sample question 3
Sue Russell decided that she would leave her job at
Denby Potteries (UK) Ltd in order to set up her own
business.
Which of the following is the most likely explanation for
Sue’s decision to set up her own business?
A To develop a niche market
B To reduce risk-taking
C For non-ethical reasons
D To work independently
[4]
Answer question 3
Correct answer d – to work independently
- Defines niche market or non-ethical (1 mark)
- Risk taking is naturally increased because she will be running her own
business (1 mark) and no longer have the security of employment (1 mark)
- Denby Potteries Ltd is a private sector business (1 mark) and so is unlikely to
be too concerned with social and environmental benefits (1 mark)
- Denby may already provide products for a niche market (1 mark) but Sue
could not be in a position to actually develop the market (1 mark)
- This decision might enable Sue to earn more money (1 mark) than she
received as a salary when employed (1 mark)
- Other reasons for selling in business, e.g. something new, make more money
(1 mark)
Sample question 4
In December 2009, it was reported that Ferrero
chocolates, imported from Italy, are available only
in niche shops in India.
Which of the following is not true about niche
markets?
A Prices tend to be high
B Supply tends to be low
C The number of consumers tends to be low
D Effective demand tends to be high
[4]
Answer question 4
Correct answer is D Effective demand tends to
be high
3(b) - Niche markets are small markets with
distinctive specialist requirements (1 mark)
- Therefore there will be fewer consumers (1
mark)
- Prices tend to be high because the products
being sold are either specialist or distinctive
quality (1 mark)