1-1-1-the-market

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An introduction to marketing

A market is any place where buyers and sellers can meet, e.g. amazon.co.uk or a shopping mall
Different markets have varying characteristics and are affected differently by changes
The aim of marketing is to help identify, anticipate and satisfy consumer needs and wants profitably
- Needs are considered essential, e.g. shelter or food
- Wants are desires that are non-essential, even if consumers consider them to be essential, e.g. Nike trainers
Market research is essential in helping businesses identify products and services they can develop in response to the needs and wants of their customers
- Market research is the process of systematically gathering data from consumers that can be used to influence business decisions

Mass markets and niche markets

The characteristics of markets

In mass markets, products are aimed at broad market segments; e.g. Kellogg’s Corn Flakes is an example of a breakfast cereal aimed at the mass market
- Market segments are groups of consumers who share similar characteristics, e.g. age, lifestyle
- Mass marketing occurs when businesses sell their products to most of the available market
- Production usually happens on a large scale
In niche markets, products are aimed at a subset of the larger market, e.g. gluten-free products
- Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market
- Production usually happens on a small scale

Characteristics of Mass Markets and Niche Markets

Mass Markets	Niche Markets
Products are less unique, as they are aimed at broad market segments Low average costs due to large-scale production economies of scale Low prices lead to greater affordability and higher sales volumes Low prices lead to lower profit margins Primark is an example of a clothing company that focuses its products on the mass market	Products are more specialised and unique, as they are aimed at narrow market segments High average costs due to small-scale production They do not benefit from economies of scale High prices make products less affordable and lead to lower sales volumes High prices can allow businesses to earn a higher profit margin Louis Vuitton is an example of a fashion company that aims its products at a niche market

Mass Markets

Niche Markets

Products are less unique, as they are aimed at broad market segments
Low average costs due to large-scale production economies of scale
Low prices lead to greater affordability and higher sales volumes
Low prices lead to lower profit margins
Primark is an example of a clothing company that focuses its products on the mass market

Products are more specialised and unique, as they are aimed at narrow market segments
High average costs due to small-scale production
- They do not benefit from economies of scale
High prices make products less affordable and lead to lower sales volumes
High prices can allow businesses to earn a higher profit margin
Louis Vuitton is an example of a fashion company that aims its products at a niche market

The size of a market can be measured through sales volume or sales value
- Sales volume is the number of products sold, i.e. the physical number of units sold
- Sales revenue = price × quantity sold, i.e. the financial value of the units sold
The market share that a business enjoys is the proportion of the total sales of a product/service compared to the market as a whole; e.g. Tesco has 26% of the UK grocery market
Market share can be calculated as follows:

$fraction numerator Sales space of space straight a space business over denominator Total space sales space in space the space market end fraction space cross times space 100$

Worked Example

In 2022, the UK coffee shop market was worth £4.6bn. Sales of Starbucks Coffee totalled £328m in 2022.

Using the data, calculate, to two decimal places, the market share of Starbucks Coffee in the coffee shop / café market. You are advised to show your workings.

[4]

Step 1: Identify the annual sales of Starbucks Coffee

$equals space £ 328 straight m space$

Step 2: Identify the total market sales in the coffee shop market

$equals space £ 4.6 bn$ [1]

Step 3: Substitute the figures into the formula

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Business_A-level_Edexcel

1-marketing-and-people

1-1-1-the-market

An introduction to marketing

Mass markets and niche markets

The characteristics of markets

Characteristics of Mass Markets and Niche Markets

Worked Example

Responses

Business_A-level_Edexcel

1-marketing-and-people

1-1-1-the-market

An introduction to marketing

Mass markets and niche markets

The characteristics of markets

Characteristics of Mass Markets and Niche Markets

Market size and market share

Responses