What is a market? – Flashcards
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Businesses sell to customers in markets.
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A market is any place where buyers and sellers meet to trade products - it could be a high street shop or a website.
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Markets are dynamic.
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This means that they are always changing. A business must be aware of market trends and evolving customer requirements caused by new fashions or changing economic conditions.
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Market research
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The first step is to gather information about customers needs, competitors and market trends. An entrepreneur can use the results of market research to produce competitive products. Market research involves gathering data about customers, competitors and market trends.
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The first step for a new business or product is to attract trial purchases.
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A new magazine may run special offers to get customers to try the first issue, hoping that repeat sales are generated. The magazine will soon close if customers fail to buy future issues. The aim of a special offer scheme is to convert trial purchases into repeat sales.
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Collecting market research
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Primary research (field research) involves gathering new data that has not been collected before. For example, surveys using questionnaires or interviews with groups of people in a focus group.
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Another example
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Secondary research (desk research) involves gathering existing data that has already been produced. For example, researching the internet, newspapers and company reports.
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Quantitative data
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Factual information is called quantitative data.
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Qualitative data
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Information collected about opinions and views is called qualitative data.
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Market Segments
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Most markets contain different groups of customers who share similar characteristics and buying habits. These collections of similar buyers make up distinct market segments.
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Breaking down a market into submarkets can lead to a business opportunity.
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For example, a magazine publisher can target a specialist journal at one group of customers of similar age, gender, class or income.
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Another tool used to help identify a business opportunity is a market map.
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A market map is a diagram that identifies all the products in the market using two key features.
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Competition in the market place can be good for customers. Governments encourage competition because it can help improve these factors:
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Price: If there are several retailers, each retailer will lower the price in an attempt to win customers. It is illegal for retailers to agree between themselves to fix a price. They must compete for business.
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Another factor
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Product range: In order to attract and satisfy customers, companies need to produce products that are superior to their competitors.
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Another factor
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Customer service: Retailers that provide customers with a helpful and friendly service will win their loyalty.
