understanding markets

understanding marlkets notes

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UNIT 1 ­ Planning & financing a business
Starting a business Revision notes
UNDERSTANDING MARKETS
The market: A place where buyers & sellers come together
Geographical classification of markets:
Page | 1 Local markets; Closer to where people live
National markets: Across all or most of the country
International markets: Different countries e.g. within Europe
Physical & non-physical markets
Physical markets ­ actual place where buyers & sellers meet
Non-physical markets ­ telephone, internet, postal etc.
Other classifications of markets
Market segmentation
According to the level of competition in the market
The nature of the market
Firms need to know what market they are operating and
sometimes markets can be redefined and changed and additional
products and service and broaden the market businesses operate
in.
Demand: The amount product/service that consumers are willing
& able to buy at any given price over a period of time.
Factors influencing the demand for a product
Price this means that some products or services are very
sensitive to its value.
Income & wealth of consumers this means that people's
earnings are sensitive to the level of demand for the product or
service.
Tastes & fashion this means that what is in style will affect
the level of demand for the product or service.
Prices of other goods e.g. substitutes, complements this means
that if the price of a complementing product's demand increase so
will the product or service linked with it however, it could also be

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UNIT 1 ­ Planning & financing a business
Starting a business Revision notes
that it does not increase demand if it is a substitute i.e. coffee
and tea.
Demographic factors this means that the size of a population
or the trends in the population affect the level of demand for a
Page | 2 product or service.
Marketing & advertising this means that there is a relationship
between the amount of money spent on marketing and the demand
for the product.…read more

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UNIT 1 ­ Planning & financing a business
Starting a business Revision notes
What type of segmentation?
This depends on the business or the product
Benefits of market segmentation
Particular segment can be easily identified
Page | 3 Firm able to reach that segment easily
To increase market share
To assist new product development
To extend products into new markets
To identify ways of marketing a product
Drawbacks of market segmentation
Difficulty in identifying the most important segments for a
product
Reaching the chosen segment…read more

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UNIT 1 ­ Planning & financing a business
Starting a business Revision notes
Market growth: The percentage change in sales (volume or value)
over a period of time.…read more

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