UNIT 1: UNDERSTANDING MARKETS

UNIT 1: UNDERSTANDING MARKETS

1. MARKET is palace where buyers and sellers get together to exchange products and services. Markets consist of customers, competitors and distributors

   • FREE MARKET is where the government makes no attempt to intervene through taxes, subsides or legislation
   • LOCAL MARKETS are where the two parties to a transaction are based within the same area in the same country
     • For example, hairdressers, plumbers
   • NATIONAL MARKETS are where the two parties to a transaction are based in different areas within the same county
   • INTERNATIONAL MARKETS are where the two parties to a transaction are based in different countries
   • BUSINESS TO BUSINESS markets are markets that involve businesses selling to other businesses.
   • BUSINESS TO CONSUMER markets are markets that involve businesses selling to the general public.

2. DEMAND is the quantity that customers are willing and able to purchase at a particular price over a given period of time

   • Factors like price of product and service, customers income, the cost of borrowing and seasonal factors would affect demand

3. MARKET SEGMENTATION involves dividing the market up into customer groups with similar needs and common characteristics, focuses on a particular segment in the market

   • GEOGRAPHIC involves dividing the population on the basis of where people live
   • DEMOGRAPHIC involves dividing the population according to a range of personal characteristics, for example, age, gender.
   • PSYCHOGRAPHIC involves classifying people according to psychological differences, for example, attitudes, beliefs etc
   • BEHAVIOURAL involves classifying people based on their actions, for example, end use of the product

4. MARKET SIZE is the total sales of all producers within a market,

   • Calculated by assessing whether the market is growing or declining, found through the internet and other sources

5. MARKET GROWTH is the percentage increase in the sales value of the total market

   • increase or decrease sales volume of total market / original sales value of total market X 100

6. MARKET SHARE is the sales , in terms of value, achieved by one particular business

   • product sales volume / total sales volume X 100