1.1 Dynamic and Stable markets Flashcards
What is a dynamic market?
A market that is subject to rapid and fundamental change over a short period of time.
What is a stable market?
One in which the pace of change is slow, market size and market share are fairly consistent with little variation in price. Innovation is rare and may just consist of minor changes to existing products.
What is an example of a dynamic market?
Fashion and Technology
What is an example of a stable market?
Stationary and Cereal
What causes a dynamic market to change?
Changes in technology
Changes in consumer wants/needs
New competitors
Changes in income -> what people can afford + economic environment
Supply -> any changes may mean they have to switch to alternatives
A market can change in size how many in 3 ways what are they?
They can grow, stay the same and decline.
Give examples of growing markets.
Electric cars, technology, second hand clothing, vegan/ vegetarian food
Give examples of markets that are staying the same size.
Cereal, stationary, sweets
Give examples of declining markets
Petrol/ Diesel cars, physical books, newspaper.
What is the nature of a market.
Where markets are currently at e.g films used to be on CDs or VHS now they are on streaming service.
What are new markets?
Markets that are emerging or in the future, such as AI and hydrogen fuel.
What are some benefits of operating in a Dynamic Market?
Encourages constant innovations, as they need to constantly produce new products to appeal to more people.
The pressure also forces firms to improve.
If a firm moves quick enough they can get a first mover advantage.
What are some of the drawbacks of operating in a dynamic market?
Constantly need to invest into R+D which can create an opportunity cost as the money could have been spent elsewhere
Constantly need to invest into things like market research
If a firm fails to adapt fast enough they may loose competitiveness
Could lead to a lot of wasted resources
How can a firm be more flexible to adapt to new trends?
Buy machinary that can produce multiple things
Train your staff to produce multiple things
Gain flexable workers (part time) to adapt to changes in demand
What could a firm invest into to help itself in a dynamic market?
R+D to develop new products
New Machinery to make sure supply matches demand and produce multiple products
Train staff to improve efficiency
Market research to keep up to date with trends
