The Market, Market Size And Growth Flashcards
What is a market
Where buyers and sellers meet in order to establish price to exchange for goods and services.
Define market size
The total volume of sales in a market added together
How do you work out a businesses market share
Total number of sales from the business
————————————————— X100
Total number of sales in the market
What is competition
Competition is where firms compete over each other in order to increase there sales for a share in a market.
Market growth
The overall % increase in the size of the market over a certain period of time.
Why is market size important
Determines growth and survival strategies
Businesses could go into liquidation if there market becomes unviable.
More confidence in the market if its bigger.
Strategies to increase market growth
-Advertising
-Discounts
-Expansion - Opening new stores and facilities
Employing more workers
-Develop and improve products
Define monopoly
A monopoly is a market with one dominant seller which can likely dictate price. Usually has over 25% of the market share
Advantages of monopolies
One reliable producer
Allows customers confidence in their buying
Firm has more resources to reinvest back into the business, overall improving products
Disadvantages of monopolies
No incentive to improve without competition
Can abuse the customer with asymmetric information
Can charge whatever price they like (Within limitations depending on the amount of competition.)
Oligopolies
A market with several firms who have similar market share where prices are interdependent on each other. E.G the mobile data market.
Monopolistic competition
Type of imperfect competition which leads to business increasing competitiveness for imperfect substitutes e.g the food and restaurant industry.
Formula to calculate growth in a market
Market size this period
——————————— - 1 X100
Market size last period
