1.

THE
MARKET.
 The Market
 A market is defined as the sum total of all the buyers and
sellers in the area or region under consideration. The area
may be the earth, or countries, regions, states, or cities.
The market may be a physical entity, or may be virtual. It
may be local or global, perfect and imperfect. (What is Markets?
Definition of Markets, Markets Meaning - The Economic Times, 2022)
 A market is set up where two or more parties engage in
exchange of goods, services and information is called a
market. Ideally a market is a place where two or more parties are
involved in buying and selling. (What is a Market - Definition and Different types
of Markets, 2022)
 A market is a place where parties can gather to facilitate
the exchange of goods and services. The parties involved
are usually buyers and sellers. The market may be physical
like a retail outlet, where people meet face-to-face, or
virtual like an online market, where there is no direct
physical contact between buyers and sellers. (What Is a Market?,
 The Market
 Some examples of markets include:
 Consumer Goods Markets – where products such as foods,
cosmetics are sold.
 Market for Services – services for individuals, hairdressing,
auditing, banking, insurance
 The Housing Market – where people buy, sell and let property.
 Commodity Markets – where raw materials such as coper, gold,
wheat and coffee are traded.
 Financial Markets – where currencies and financial products are
traded (bills, bonds etc
 Labour Markets - also known as the job market, refers to
the supply of and demand for labor, in which employees
provide the supply and employers provide the demand. It
is a major component of any economy and is intricately
linked to markets for capital, goods, and services.
The Market
Marketing – involves a range of activities that help a business
sell its products.
Marketing is not just about selling; it involves:
 Identifying the needs and wants of consumers
 Designing products that meet these needs
 Understanding the threat posed by competitors
 Telling the customers about products
 Charging the right price
 Persuading customers to buy products
 Making products available in convenient locations
According to the Chartered Institute of Marketing, ‘ Marketing
is the management process responsible for identifying,
anticipating and satisfying customer requirements profitably’.
 The Characteristics of Mass Markets and Niche Markets
 Niche Market is a smaller market, usually within a large
market or industry. Niche marketing can be defined also as :
Where a business targets a smaller segment of a larger
market, where customers have specific needs and wants
 Targeting a product or service at a niche segment has several
advantages for a business (particularly a small business):
 Less competition – the firm is a "big fish in a small pond"
 Clear focus - target particular customers (often easier to find and
reach too)
 Builds up specialist skill and knowledge = market expertise
 Can often charge a higher price – customers are prepared to pay
for expertise
 Profit margins often higher
 Customers tend to be more loyal
 The Niche Market
 The main disadvantages of marketing to a niche
include:
 Lack of "economies of scale" (these are lower unit
costs that arise from operating at high production
volumes)
 Risk of over dependence on a single product or market
 Likely to attract competition if successful
 Vulnerable to market changes – all "eggs in one
basket“
Mass Markets are very large markets in
which products with mass appeal are
targeted.
 The Mass Market
Mass marketing can be defined as: Where a business sells into
the largest part of the market, where there are many similar
products on offer
The key features of a mass market are as follows:
 Customers form the majority in the market
 Customer needs and wants are more "general" & less
"specific"
 Associatedwith higher production output and capacity
(economies of scale)
 Success usually associated with low-cost operation, heavy
promotion, widespread distribution or market leading
brands
 The advantages of mass marketing include:
1. Cost efficiency
 Mass marketing is a cost-effective option when companies use
it to advertise products that consumers consider necessities.
Customized advertisements are often expensive compared to
mass marketing campaigns.
2. Large scope
 Mass marketing campaigns often reach wider audiences when
compared to niche marketing techniques. Whereas niche
marketing appeals to one specific type of customer, mass
marketing targets all consumers in a market.
3. Increased sales
 Because mass marketing appeals to the total population in
the market, companies that use this strategy may experience
a high number of sales.
 The advantages of mass marketing include:
4. Brand awareness
 Mass marketing can increase a company's brand awareness.
Customers that view a company's mass marketing campaign
several times or in a variety of places may have an easier
time recognizing the brand and its products.
5. Variety in channels
 Mass marketing allows a company to use similar messaging in
a variety of channels. A business might market to a general
audience through social media, radio, television and print
advertisements.
6. Time efficient
 Marketing teams can save time when using mass marketing
techniques. Mass marketing reduces the time spent on
advertisement creation by using the same campaign for each
type of customer.
 The Disadvantages of Mass Market are;
1. Customer experience
 A customer's experience with a mass marketing campaign may vary
depending on factors like their interests, demographics, needs and
geographical location. Consumers have different needs and desires, and a
single marketing campaign may not fulfill the wishes of each customer.
2. Inefficient for small businesses
 Mass marketing may be an inefficient strategy for small businesses. While
it's a cost-effective option for large companies, mass marketing can be
expensive for small businesses. Small businesses that sell unique
products or services may find more success with customized
advertisements that appeal to specific audiences.
3. Competition
 Companies that rely on mass marketing may face competition from
businesses that use targeted advertisements. Customers might prefer
customized marketing campaigns and specific products rather than a
single good or service that tries to appeal to an entire market.
Exam HINT!!
In examinations it is helpful to give
examples when explaining the meaning of
business terms and concepts.
Relevant examples support your answer and
show that you understand the meaning of
the term or concept.
It is also important to use information in the
case material in the question to support
your answer.
This approach will show your skills in

‘application’ in your answer.

The Concept of Market Size and Market Share
o The "market size" is made up of the total number of potential
buyers of a product or service within a given market, and the
total revenue that these sales may generate.
o The size of a market can be estimated or calculated by the total
sales of all businesses in the market.
o Market size is usually estimated in a number of ways;
o Value – this is the total amount spent by customers by
customers buying products. E.g. in 2014 the value of the
global fast food market (burgers/ sandwiches, chicken,
pasta/pizza, Asian/Latin American food, seafood and others)
was approximately US$459,000 million. It was expected to
reach approximately US$645,000 million by 2020
o Volume – this is the physical quantity of products that are
produced and sold. e.g. the market size for China’s domestic
air travel was 487,960 in 2016,(measured by the number of
passengers carried per year)
The Concept of Market Size and Market Share
o The Market Share or market penetration is the term used to
describe the proportion of a particular market that is held by
a business, a product, a brand or a number of businesses or
products.
o Market share is shown as a percentage. The market share of
a business can be calculated as;
o Market Share*100
o The measurement of market share is important because;
o It might indicate a business that is a market leader. This could
influence other companies to follow the leader or influence the
leader to maintain its position.
o It might influence the strategy or objectives of a business. A
business that has a small market share may set a target of
increasing its share by 5% over a period of time.
o It may also be an indication of the success or failure of a
BRANDS
A brand name is a name, term, sign, symbol, design or any
other feature that allows consumers to identify the goods
and services of a business and to differentiate them from
those of competitors.
 Products are given brands to distinguish them from other
products in the market. Branding is particularly important
in mass markets where lots of products are competing for a
share of the market.
USES OF BRANDING
I. Differentiate the product from those of rivals
II. Create customer loyalty
III. Help product recognition
IV. Charge a premium price when the brand becomes strong.
DYNAMIC MARKETS
 Mostmarkets do not remain the same over time – they tend to
be dynamic, which means they are likely to change.
 Theymay grow, shrink, fragment, emerge or completely
disappear.
 Dynamic markets an have a huge impact on businesses. A
failure to adapt in a dynamic market can lead to the collapse of
a business.

ONLINE RETAILING
 Online retailing or e-tailing is the retailing of goods online. It is
a popular branch of e-commerce (the use of electronic systems
to sell goods and services)
 E-
tailing involves shoppers ordering goods online and taking
delivery at home. Amazon, Alibaba are specialists e-tailers.
 Growth in online retailing is rapid and expected to continue into
the future.
BENEFITS OF ONLINE RETAILING
i. Retailers can market their goods to people who prefer
to shop from home or who find it difficult to get to
traditional shops.
ii. It is easier to gather personal information from
customers so that they can be targeted with other
products and offers in the future.
iii. Selling costs such as sales staff, rent and other store
overheads can be avoided. The savings may be
substantial and allow e-tailers to charge lower prices
iv. Marketing costs will also be lower.
v. Online retailers can reach more customers.
vi. An online retailer is open 24/7.
vii. E-tailing provides greater flexibility.
EVALUATIVE NOTE!
A development in online retailing is the increasing
popularity of comparison websites.
 These websites provide shoppers with search engines that
can filter and compare products based on price, features
and other criteria. Most comparison shopping sites
compare prices from many different retailers, but do not
sell products themselves.
 They also tend to specialise in particular product groups.
 These comparison websites have been criticized for;
 Not giving the best deals
 Has fees and if you don’t pay they do not include your
products
 The lack personal touch
 Focuses on costs only.
 Some advantages of using Price Comparison websites
 include;
The consumer can save money
The customer may save money as checking quotes with a comparison
website allows many different providers to be searched at once enabling
the lowest price available to be selected.
 They are so convenient
Price comparison sites are easy and convenient to use as once the
details are entered, the quotes can be saved rather than manually
gathering quotes from multiple providers through phone or individual
provider websites.
 They broaden your research
Price comparison sites may highlight less well-known companies which
are not household names as being the best value for money and big
money savings for consumers.
 They can remind you about future dates
Price comparison sites can email the consumer the following year
reminding them to use the comparison websites again to search for the
How Markets Change
Markets change in a number of ways;
 TheSize of Markets: It can remain stable for a period of
time. However, majority of markets are likely to grow. Yet
some markets decline. Markets often decline because the
need for a product ceases to exist.
 The Nature of Markets: Many markets are in state of flux.
This means that the structure and the nature of the market
is subject to constant change. It is also possible for
consumer spending patterns to change. Social media is
influencing consumer behaviour as people attempt to
match the spending habits of their peers.
 NewMarkets: New markets are always developing. The
emerging economies are a big source of new markets.
These include BRICS, MINT among others.
INNOVATION AND MARKET
GROWTH
Markets can grow over time- some rapidly, some more slowly.
Growth in existing markets and new markets may occur for the
following reasons;
 Economic Growth: Global living standards tend to rise over time,
the world’s population has more money to spend. Businesses
increase supply more of their output to the growing global
markets.
 Innovation:Businesses can grow their markets through the
process of innovation –create new wants and needs and meet them
with new products. A lot of innovation emerges through
technological research and development. The arrival of
smartphones, tablets, the internet, 3D printing, driverless cars,
wearable tech and space travel have all created brand-new
markets that did not exist before the technological breakthroughs.
Other forms of innovation include; clever marketing techniques to
develop new wants, supply products in new locations, new
businesses can cash in on the inadequacies of others.
.

 Social changes : Changes in society can have a big

impact on markets. E.g. decline in number of
marriages, an increase in the proportion of working
women and the growth in the number of one-
parent families have increased the market size for
childcare and housing.
 Changes in Legislation: New laws can affect
markets. E.g. environmental legislation has helped
stimulate growth in renewable energies and ‘green
goods’.
 Demographic changes: Changes in the structure of
the population can affect the size of markets.
HOW DO MARKETS ADAPT TO
CHANGE?
1. Flexibility – One way of preparing for change is to
develop a culture of flexibility within an
organisation – flexible working practices,
machinery and equipment, pricing and staff.
2. Market Research – keep in touch with
developments in the market.
3. Investment – those businesses that invest in new
product development are likely to survive for
longer in the market.
4. Continuous improvement in the increasingly
competitive environment – if new product ideas
are encouraged, they may gain a competitive
edge. A culture of continuous improvement can
How Competition Affects the
Market is the rivalry that exists between businesses
Competition
in a market. The existence of competition will have an
impact on both businesses and consumers in the market.
Businesses: Competition puts businesses under some
pressure. It means that they have to encourage customers
to buy their products in preference to those of rivals. They
will use a range of methods to attract customers. These
methods include;
 Lowering prices
 Making their products appear different to those of rivals
 Offering better quality products
 Using
more powerful or attractive advertising or
promotions
 Offering ‘extras’, such as high-quality customer service.
.

All the above methods cost money and

generally reduce the amount of profit a
business can make. Its necessary though to
use these methods to survive in the market.
Because competition makes running a
business more challenging and reduces the
profit potential, owners and managers might
try to reduce competition in the market. Some
ways of doing this is by;
Take over rivals
Create obstacles that make it difficult for
others to enter the market(barriers to entry)
.

Consumers: They generally benefit from

competition in markets. They;
Get more variety and choices of products
Better quality products
Lower prices
In the absence of competitors, consumers might;
Be exploited by raising prices and restricting
choice
The business will lack incentive to innovate –
no investment in new products.
The government ensures that competition exists
in markets.
THE DIFFERENCE BETWEEN RISK AND UNCERTAINTY
Risk - is the situation under which the decision
outcomes and their probabilities of occurrences are
known to the decision-maker.
Uncertainty - is the situation under which such
information is not available to the decision-maker.
Examples of risks are; Interest risk, Inflation risk,
Market risk, Business risk and Financial risk.
https://www.thestreet.com/markets/what-is-risk-149
09043
RISK & UNCERTAINTY
 Key Differences Between Risk and Uncertainty
The difference between risk and uncertainty can be drawn clearly on
the following grounds:
 The risk is defined as the situation of winning or losing something
worthy. Uncertainty is a condition where there is no knowledge
about the future events.
 Risk can be measured and quantified, through theoretical models.
Conversely, it is not possible to measure uncertainty in quantitative
terms, as the future events are unpredictable.
 The potential outcomes are known in risk, whereas in the case of
uncertainty, the outcomes are unknown.
 Risk can be controlled if proper measures are taken to control it. On
the other hand, uncertainty is beyond the control of the person or
enterprise, as the future is uncertain.
 Minimization of risk can be done, by taking necessary precautions.
As opposed to the uncertainty that cannot be minimised.
 In risk, probabilities are assigned to a set of circumstances which is
Risk & Uncertainty …..
 Very large proportion of new businesses,, perhaps
as high as 90%, do not survive beyond 5 years.
This is the reason owners take risks when running
a business. They commit resources that could be
lost.
 Some examples of uncertainties;
A new competitor might enter the market with a superior
product
 Consumer tastes might change as a result of new social
trend
 Government legislation
 New tech
 Economic cycle changes