ILO
a) Mass markets and niche markets
- characteristics
- market size and market share
- brands
b) Dynamic markets
- online retailing
- how markets change
- innovation and market growth
- adaprting to change
c) How competition affects the market
d) The difference between risk and uncertainty
a) Mass markets and niche markets
- characteristics
- market size and market share
- brands
b) Dynamic markets
- online retailing
- how markets change
- innovation and market growth
- adaprting to change
c) How competition affects the market
d) The difference between risk and uncertainty
Theories of corporate strategy
Mass market - differentiated
|
Mass market - cost leader
|
Niche market
|
Based on what we have discussed so far. Research a business of your choice and put together 1-2 PowerPoint slides on why that business has been so successful in their particular market.
Competitive advantage through distinctive capabilities - Kay
Architecture
|
|
|
Reputation
|
|
Innovation
What can a business innovate on?
How would it do this? Why would the R&D spending differ in the industries below? Do all businessess need to be innovative? |
|
Starter
Mass market: is the attempt to create products or services that have universal appeal. It aims the product at the whole market rather than just part of it.
Niche market: is a very small segment of a much larger market and addresses a specialist need.
Niche market: is a very small segment of a much larger market and addresses a specialist need.
Mass Market
Assess the benefits to Tesla of producing a car for the mass market? (10/12)
How are Tesla planning on operating in a Mass market?
What are the benefits this has for Tesla? |
What are the potential drawbacks to Tesla of being in this market?
|
Niche market
|
Explain the benefit to Barcroft animals, of operating in a Niche market? (4)
|
Mass V's Niche
Market size:
Market size can be measured in two ways: Volume of sales or physical quanity of products sold Value, total amount spent by customers e.g. £30 billion spent in the UK on fast food. |
Market share:
This means a proportion (%) of a market that is taken by a business, product or brand. Sales of x ____________________ X 100 Total sales in market |
Why are Aldi taking the approach discussed in the video?
What benefits will this have?
Are there any drawbacks to this method?
What benefits will this have?
Are there any drawbacks to this method?
Advantages
- Large scale production means economies of scale and lower average unit costs - Mass marketing is straightforward as everyone is equally targeted - Large volume of sales means high revenues - High revenues can be pumped into R&D |
Disadvantages
- Lots of competition - Homogenous products need to be differentiated thorough marketing which can be expensive - High volume production not flexible to demand changes |
•Pros
- Charge premium price - Easier to target customers - Small scale production can be flexible and follow trends - Less competition than in the mass markets |
•Cons
- Very risky as demand may not be constant - Higher unit costs so no economies of scale |
Economies of scale
Why can you now buy a high-performance laptop for just a few hundred pounds when a similar computer might have cost you over £2,000 a decade ago? Why is the average price of smartphones falling whilst the functions and performance level are always on the rise? How can IKEA profitably sell flat-pack furniture at what seem impossibly low prices? |
The answer is – economies of scale. Scale economies have brought down the unit costs of production and have fed through to lower prices for consumers. Most firms find that, as their production output increases, they can achieve lower costs per unit. This can be illustrated as follows: |
b) Dynamic markets
What are the benefits of online retailing to both customers and businesses?
What are the drawbacks of online retailing to both customers and businesses?
|
|
Advantages
•Shop is open round the clock •Orders can be taken automatically without the need for staff •Shop can reach international markets easily •Low overheads, no need for a shop premises •Stock can be easily withdrawn or updated to keep up with dynamic market changes in tastes •Easy to set up (ebay) •Flexible – owner can be anywhere in world •Opportunities for fast growth |
Disadvantages
•71% of customers still prefer to browse online then purchase from a shop* •Issues with sending goods back may put customers off •Issues with online security worries put off older customers not keen to share their bank details •Very competitive market, hard to drive traffic to sites •Owners need IT skills •Problems with fraud / spam / viruses •Competitors can be aware of owners business model, prices, activity |
How markets change
|
|
What is meant by a dynamic market? Why are markets dynamic? What does this mean for businesses? |
Innovation & market growth
|
|
What is innovation?
How have Dyson innovated? Why have Dyson used so much innovation? https://www.dailymail.co.uk/sciencetech/article-6258645/Sir-James-Dyson-unveils-new-Airwrap-curling-tong-minimises-risk-heat-damage.html What risks are there with so much innovation? |
Adapting to change
|
|
What changes are there that a company like Waterstones have had to adapt to?
How have they adapted to these changes? What are the potential drawbacks of adapting to this change? https://www.theguardian.com/books/2017/feb/03/balancing-the-books-how-waterstones-returned-to-profit |
|
Why did coca cola make the changes to create coca cola life? What benefits would this have for coca cola? What are the risks associated to this? |
http://m.retail-week.com/5053996.article
http://www.independent.co.uk/arts-entertainment/books/news/waterstones-to-open-its-first-new-store-in-six-years-9270045.html
http://www.independent.co.uk/arts-entertainment/books/news/waterstones-to-open-its-first-new-store-in-six-years-9270045.html
c) How competition affects the market
|
Think about what competition actually means
Is competition good or bad? How can it benefit the customers? How will it affect the business? |
Assess the impact of competition from MNC's on SME's as shown in the video? (10)
competition_wrigleys_vs_tridant.docx | |
File Size: | 12 kb |
File Type: | docx |
Read the following article:
Assess the impact that the new Cadbury's Tridant chewing gum may have on Wrigleys extra (10 marks)
Use your white boards to pick out TWO pieces of evidence
Assess the impact that the new Cadbury's Tridant chewing gum may have on Wrigleys extra (10 marks)
Use your white boards to pick out TWO pieces of evidence
d) The difference between risk and uncertainty
|
Risk – When the potential outcomes of a decision are known. Knowing these odds forms the basis of all games that are played. E.g card games, dice rolls, lottery, etc
Uncertainty - None of the outcomes are known in advance, found in complex systems such as a country’s economy |
Questions:
Were JLR taking any risks by selling their cars in Russia?
What happened in 2014 that had a massive impact on sales of JLR vehicles in Russia?
Could JLR have planned for this?
Risk
Restaurant insolvencies in the UK are rising at an alarming rate and much faster than pubs or hotels, according to a new report.
Research by consultants PricewaterhouseCoopers (PwC) found that restaurant insolvencies in the first quarter of 2009 rose by a third compared with the last quarter of 2008. Nearly 190 restaurant companies joined the insolvency register in the first three months of this year, which is much more than the total for pubs and hotels combined. The number of business failures in the restaurant sector has risen 70% since the beginning of last year, including high profile casualties such as Antony Worrall Thompson’s AWT Restaurants and Paul Rankin. Stephen Broome, director of hospitality and leisure at PwC, said despite high profile failures, the majority of collapsed restaurant businesses were smaller, often one-offs at the lower end of the market. “Lower numbers of customers are spending less on dining out, and this combined with over supply in some locations means it is no surprise that more restaurants are failing,” he warned. However, Broome added that the branded restaurant market was still doing well. https://www.thecaterer.com/articles/327456/restaurant-failures-rising-at-alarming-rate-say-experts |
Would you invest your life savings in opening a restaurant? If you still wanted to get into this industry, what other options could are there, which would pose less risk? When might it be worth risking opening a high risk independent restaurant? |