GCSE & A Level Revision Notes

GCSE Business Studies

The market

All about markets and how they change – so what products and services are available in the market and how and why this changes over time. Think holidays and how Guggy didn’t go on an aeroplane until she was 18 and now there are many different types of holidays (short breaks, skiing, safaris) and most people go abroad rather than to the English sea-side.

Markets and marketing

  • Businesses make money by selling their goods and services in markets

  • Examples:

  • the housing market – where people buy and sell houses

  • the consumer goods market – where products such as food, cosmetics and magazines are sold.

Marketing

Marketing is the range of activities that help a business to sell its products by:

  • working out what consumers want

  • designing products that match what the consumer want

  • understanding the threats from competitors

  • telling consumers about your products / improving awareness of your product with the public

  • checking what price to sell at

  • persuading customers to buy your products

  • making products available in convenient locations

The characteristics of mass markets and niche markets

  1. Mass market is a huge number of customers – so soft drinks, crisps, breakfast cereals – so loads of competition so loads of advertising (ie soft drinks market)

  2. Niche is a small market – like the lacrosse stick market (hurrah!) – limited competition. Companies who sell in a niche market specialise – in a niche market there are a smaller number of consumers (fewer people want to buy a lacrosse stick than people who want to buy a can of Coca Cola)

Market size

The size of a market can be shown in

  1. value – so the total amount spent on fast food or holidays in £

  2. volume – the number of holidays sold or burgers sold rather than the amount by value.

Market share

If there are 1,000,000 burgers sold in London every year and McDonalds sell 200,000 then McDonalds have a 20% market share

Market share is a good measure of how you are doing and how much scope there is to sell more / win more business in the market from your competitors.

Brands

Apple, Google are brands. Brands attract loyalty, help with product recognition, develop an image and enable companies to charge more (ie Chanel)

Dynamic markets

Lots of markets change – so the market for personal music has changed from records, to cassettes to CDs to downloaded music.

Digital cameras is another example

If you don’t adapt in a dynamic market you will fail (ie Kodak)

Online retailing / e-commerce

Example – Amazon, Asos (love it!!)

Benefits – pretty obvious…

  • good for people who hate going shopping (me)

  • good for getting information about customers so they can be targeted in future (Asos must know what you like by now…)

  • reduced costs (you don’t have to have a shop)

  • you can reach lots of customers (emails to customers)

  • ability to reach customers all over the world through one website

  • open 24/7

  • much more flexible for seller and buyer and maybe more efficient (looking on a website is quicker than wandering around a shop)

think about on line grocery retailing / deliveries and comparison websites (for insurance, flights and energy prices) as good examples of the way that the internet has changed markets.

How markets change

  1. size – so the size of the milk market hasn’t changed but the mobile phone has

  2. nature of the market – so in the UK the restaurant market has changed hugely – it used to be all fish and chips and greasy spoons, then fast food and now Indian and Chinese take aways, gastro pubs etc

  3. new markets – so Brazil, India, Russia and China have more consumers who may want phones etc

Innovation and market growth

Why would a market grow?

  1. economic growth – if people have more money the market for a product may grow

  2. innovation – products that get better are attractive to consumers (flat screen telly)

  3. social change – less people smoke now / people get their news on line so sales of newspapers and magazines have reduced

  4. change in legislation – renewable energy / solar panels are now preferred to coal by governments as they are more environmentally friendly so governments give subsidies to encourage people to use them

  5. demographic change – people are living longer / more old people so things like stair lifts and care homes are more available now.

Adapting to change

Businesses must adapt to remain competitive

They can do this by

  • being flexible in what is sold and how – you might need flexible staff

  • market research – see what the competition are doing and adapt to beat them

  • investment – so invest to come up with a better product (ie BMW)

  • continuous improvement – so become more efficient to save costs / reduce prices

  • develop a niche – so do something different for a particular type of consumer

How competition affects the market

  1. Businesses competition puts businesses under some pressure in order to beat the competition a company might
  • lower prices

  • make their product appear different to the competition

= offer better quality products

= advertise more

  • offer extras like better customer service

  • you might even buy one of your competitors

  1. Consumers

Consumers generally benefit from competition in a market because of wider choice, because competition generally means that businesses reduce their prices to win business. Governments don’t like monopolies (where there is only one company in a market) because they can charge what they like / can exploit their customers.

The difference between risk and uncertainty

They sound the same but they are not.

  1. risk is what people take when they are running a business – so you could lose money that you spend on setting up a business – if you decide to invest in a new product or spend money on advertising you may find that it doesn’t work and you lose what you have spent. That is the risk faced by all businesses.

  2. uncertainty is more external – things that can happen outside your business that you cannot control – so things like

  • a new competitor

  • a change in consumer taste

  • new technology (although that can be good too so lots of firms have benefitted from the internet)

  • change in the economic outlook (so if there are lots of people losing their jobs there is less money in the economy)

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