Market Conditions

Question 1

What are market conditions?

Answer 1

Market conditions are the size of the market, the business’s competitors, and the proportions of large and small businesses in the market

Question 2

What do market conditions consist of?

Answer 2

The number of competitors in the market
The number of consumers in the market (the size of the market)
The type of consumers (age, gender, income etc)
The amount of growth in the market
Other external conditions (economic, political, environmental etc)

Question 3

How can market conditions impact costs?

Answer 3

The cost of marketing will rise if there is more competition

The cost of innovating will rise if there is more competition

Fast market growth - The company will have to protect their market share (which costs) and they’ll have to improve their goods or services as the market continues to grow.

Question 4

How can market conditions impact demand?

Answer 4

Growing markets mean increasing level of demand
High consumer confidence leads to more demand
Increasing the number of competitors may lead to a company’s market share decreasing.