Lesson 2.1.1

2.1.1 Aspects of the Market Quiz: NCFE Business & Enterprise, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

This lesson explains what a market is and how a business studies it. It covers demand, growing and shrinking markets, trends that go viral, segmentation by demographics and income, the value of a unique selling point, and why firms offer a range of products.

Key points

  • A market brings together customers who want to buy and the rival firms competing to sell to them.
  • Demand is how much of a product customers want and are willing to pay for, not what a firm can make.
  • Market segmentation splits customers into groups with shared needs so marketing can be aimed at each one.
  • Demographics are factual details such as age, gender, income and job, whereas values and lifestyle are psychographics.
  • A unique selling point or better quality can justify a higher price and keep customers loyal.
  • Winning customers is easier in a growing market and costly in a shrinking one, where sales come from rivals.
  • A wide product range meets more tastes and spreads risk if one product falls out of favour.

Key terms

Market
The buyers of a type of product together with the firms competing to supply it.
Demand
The quantity of a product customers want and are willing and able to pay for.
Market segmentation
Dividing customers into groups that share characteristics, so marketing can target each group.
Demographics
Factual characteristics of customers, such as age, gender, income and occupation.
USP
A unique selling point: something that sets a product apart and gives a reason to choose it.
Product range
The set of different products a business sells to suit varied customer needs.

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The 20 questions

  1. In business, what does the term market actually mean?

    • Government regulators
    • Physical shop only
    • Buyers and sellers
    • Manufacturing plant

  2. Why might a business divide its customers into market segments?

    • Shared customer needs
    • Identical product prices
    • Equal regional sizes
    • Random customer choice

  3. Which of these is NOT a demographic way of describing a customer?

    • Customer age
    • Customer gender
    • Personal values
    • Annual income

  4. How does a strong USP help a firm compete in its market?

    • Removes all rivals
    • Guarantees lowest price
    • Eliminates advertising costs
    • Sets product apart

  5. What is the likely effect if a firm improves product quality?

    • Lower sales revenue
    • Reduced customer loyalty
    • Cheaper production costs
    • Higher price charged

  6. Why does a firm often sell a whole range of products?

    • Increases fixed costs
    • Reduces total revenue
    • Spreads business risk
    • Limits customer appeal

  7. In business terms, what does customer demand measure?

    • Total factory output
    • Desire to buy
    • Planned production levels
    • Goods held in stock

  8. What typically happens to demand when a product goes viral online?

    • Zero market change
    • Rapid short-term spike
    • Permanent high growth
    • Slow steady decline

  9. Why is customer demand often weak for life insurance products?

    • Excessive market supply
    • High daily utility
    • Reminds of death
    • Products are too cheap

  10. Why do firms prefer operating in a growing market?

    • Rivals stop trading
    • Costs automatically fall
    • No marketing needed
    • Easier winning buyers

  11. In business, what two groups make up a product market?

    • Managers and staff
    • Buyers and sellers
    • Owners and investors
    • Suppliers and banks

  12. What process splits a broad market into smaller customer groups?

    • Market segmentation
    • Quality assurance
    • Market skimming
    • Sales forecasting

  13. What does segmenting a market by income help a business determine?

    • Customer purchasing power
    • Daily stock volume
    • Preferred shop location
    • Staff wage rates

  14. What is the main threat when a rival cuts the price of a similar item?

    • Higher production costs
    • Lower supplier prices
    • Increased staff turnover
    • Falling sales revenue

  15. What happens to pricing potential when product quality improves?

    • Prices can rise
    • Prices stay identical
    • Prices must fall
    • Prices become illegal

  16. Why might a retail shop stock a wide range of products?

    • To suit varied tastes
    • To cut staff numbers
    • To stop all delivery
    • To reduce total tax

  17. In business terms, what does market demand require alongside desire?

    • Willingness to pay
    • Government approval
    • Celebrity endorsement
    • Free delivery options

  18. What business action is vital when a product trend suddenly goes viral?

    • Staff redundancies
    • Quick stock decisions
    • Immediate price cuts
    • Factory closures

  19. Why should a new bakery research market demand before opening?

    • To pay business rates
    • To design company logos
    • To check viable pricing
    • To hire shop staff

  20. Why is customer acquisition easier in a growing market?

    • Suppliers cut prices
    • Rivals stop trading
    • New buyers enter
    • Advertising becomes free

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