Features of Markets

Understanding Markets

A market in a business context is defined as a place where buyers and sellers meet to conduct transactions.
Product markets are where goods and services are traded, while resource markets are where organisations obtain necessary resources such as labour, capital and raw materials.
The size of a market is typically determined by the number of buyers and sellers present.
A market can be classified as being local, national or international in scope, depending on the geographic reach of the transactions.

The structure of a market refers to the number of firms operating in the market and the nature of competition between them.
Perfect competition is a market structure in which there are a large number of small firms, each selling identical products. Buyers and sellers have perfect information and there are no barriers to entry.
Monopolistic competition is a market structure comprised of many producers offering slightly differentiated products. There are few barriers to entry.
Oligopoly is a market structure in which a small number of large firms dominate the market. Barriers to entry in this market are high.
Monopoly is a market structure where there is only one firm, with substantial barriers to entry present.

Market dynamics are the various forces that influence the behaviour of sellers and buyers in a market.
Factors include supply and demand, pricing, and external economic conditions.
Markets are often affected by innovation and technological change, which can create new markets or alter existing ones.
Consumer behaviour and preferences, along with societal trends, can greatly influence market dynamics.

Market segmentation is the process of dividing a market into distinct subsets of consumers with common needs or characteristics.
Segmentation can be based on a range of factors, such as geographical location, demography, psychographics (attitude, lifestyle, personality) and behaviour.
Identifying different market segments can help businesses tailor their products, pricing and promotional strategies more effectively.

Market research involves gathering, interpreting, and utilizing information about a market, to assist with business decision-making.
Primary research involves gathering new data directly from original sources e.g. through surveys or interviews.
Secondary research involves gathering information that already exists, such as reports, market statistics, or previously conducted studies.
This research can help businesses understand their target market, competition, and potential market opportunities and threats.