Question

Edexcel GCE Business Year 1 Worksheet 1 Theme 1: Marketing and People Meeting customer needs: 1.1.1 The market Homework & Assessment Worksheets Read the extract before answering the questions Extract A: The UK chocolate market in 2014 UK chocolate sales were £4.1bn. Of this Italian chocolate maker Ferrero had sales of approximately £164m. In June 2015 it bought UK chocolate retailer Thorntons. Ferrero operates in a dynamic market and is the fourth largest chocolate brand in the UK. It competes with larger brands Mondelez (Cadbury), Mars and Nestle (Kit-Kat) with smaller brand Lindt. Ferrero is looking to turn around the fortunes of Thorntons after a disappointing performance in the last six months of 2014. Sales were down by 8.2% and profits down 8.8%. Its 242 shops achieved a profit of £6.5m. In contrast, relative newcomer, Hotel Chocolat, achieved profits of £6.6m, in the same period, from just 81 shops. Thorntons announced plans to close between 40 and 80 of its stores. Thorntons has suffered from negative publicity. The BBC has reported on dirty floors, unattractive displays and a large number of discounted products. It was unsure of what market segment it was targeting, trying to sell chocolates in low cost stores and higher priced outlets. Based on its competitive rivalry with Hotel Chocolat the media has now dubbed Thorntons "Motel Chocolat". This implies that it is the poor relative of Hotel Chocolat. 1a. What is meant by dynamic markets? 1b. Using the data in the extract calculate the market share of Ferrero in 2014. 1c. Assess two likely effects of competition on the market for chocolates. (2) (4) (8) Total: 14 marks​

Answer 1

Dynamic markets refer to business environments that are characterized by constant change, evolution and high levels of competition. In such markets, factors such as consumer preferences, technology advancements continue to shift.

What happen in the Dynamic market

In a dynamic market, businesses face rapid fluctuations in demand, emerging trends and the entry of new competitors which can impact their operations and strategies. This dynamic nature requires companies to be agile and responsive, willing to adjust their product offerings, marketing approaches and business models as necessary to meet the evolving needs and preferences of consumers.

For example, in the UK chocolate market mentioned in the extract, Ferrero operates in a dynamic market where it competes with well-established brands like Mondelez, Mars and Nestle as well as newer entrants like Hotel Chocolat.

The market is constantly changing with shifts in consumer tastes, pricing strategies and retail dynamics making it of high need for companies like Ferrero to continuously adapt and seek opportunities for growth.