Understanding Markets

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  • Understanding Markets
    • Definitions
      • A Market is where buyers meet sellers
      • Inferior goods - products that people turn to when they are less well off, and turn away when they are better off (basic food)
      • Luxury goods - products that people buy much more of when they are better off e.g jewellery
      • Normal Goods - Products or services for which sales change broadly in like with the economy
    • Physical VS Electronic
      • Electronic are more price cmpetitive
      • Electronic markets do not rely on physical location (footloose)
      • The market is easy and quite cheap to entre
    • Factors affecting demand
      • Price
        • The higher the price the less people are able to afford it
        • The higher the price the less 'good value' goods will seem to be
        • Sometimes cheaqpness ruins image for quality
      • Income
        • Average income levels rise per year. The more income people have the more they are able t spend
        • Unless the product is an "inferior good" (sainsburies basics products), demand should increase as income increases
      • Untitled
      • Actions of Competitors
        • If competitors launch a brilliant campaign then their sales are likely to go down
      • Seasonal Factors
    • Market Size and trends
      • Market size is measurement of all the companies within a market place measured by: 1) volume & 2) Value
      • Market size is essential in calculating market share which in turn indicates the success or failure of business
      • Market share is the proportion of the total market held by one company or product
    • Market Segmentation - the acknowledgement by companies that not all customers are the same
      • The Market can be broken down into smaller sections in which customers share common characteristics from the same age group to a shared love of Man U
      • Sucessful segmentation can increase customer satisfactionc


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