What do you know about markets and prices, competition and spotting gaps and taking risks?
U-tube recording of topic. Click here for the revision lesson summary
All businesses operate in markets. A market as you know is any way all buyers and sellers are brought together. EBAY & Amazon are both online marketplaces, The Covered Market is a more physical and permanent one.A supermarket is a very large one and are normally operated by different companies trying to compete and attract customers and grow their MARKET SHARE.
Supply & Demand
Prices in a market are determined by the number of people who want to buy and the number who want to sell. The amount people want to BUY is called DEMAND and the amount SELLERS want to sell is called SUPPLY.
If too many sellers enter a market, then there will be too much supply. If there are many buyers in a market then it is not easy to increase supply, then usually the PRICE will be pushed up.
The demand graph shows how this works by clicking here
MARKETS generally operate by finding the PRICE where BUYERS and SELLERS agree on the amount to be EXCHANGED.
The importance of of SUPPLY and DEMAND to a business
As all business's operate in markets it is vital to get the price right. If the business is operating in a highly competitive market then the price will need to competitive to attract and retain the same customers. Sometimes markets are less competitive and if you are the only person supplying something you can usually ask a very high price.
A business can compete in one of two ways by :
PRICE COMPETITION where the business attracts customers by setting a particular price and by
NON PRICE COMPETITION where the business uses special promotions, special offers or better service to attract customers.
MASS or NICHE
Some markets are huge i.e food, clothes and cars whereas some markets are tiny like limited editions one off special hand made models. Niche markets usually attract a few customers who like quality products and great service and charge a lot whereas mass markets usually attract everyone and charge very little.
GAPS in the MARKET
All businesses look for changes and gaps in the market or they can try to find a GAP and fill it.Alternatively they could move into different markets. MARS confectionery make pet food, pasta sauce and coffee.
For the latest information about prices - click here and search for 'inflation' and 'retail price index'
- What forces in a market determine price?
- What is a virtual market?
- In which two ways can a business compete?
- What is a MASS market?
- What is a NICHE market?
- What is a gap in the market?
- Give an example of a competitive market? What makes it competitive?
- Explain why non price competition might be the way to compete in a highly competitive market?
Sources of business ideas click here
Risk and uncertinty click here
Gaps in the market click here
Identifying business opportunities click here
Effects on small firms of price changes click here
Calculated risk click here
Nine mark question
Suggest three possible problems with markets and new technology and evaluate ways to limit these problems
Enjoy and well done for using this to revise and deepen your knowledge