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Basic Concepts in Market Dynamics

2. The Market

A Market is defined as follows:

A market is a subset of a population or universe of people (ie. individuals, household decision makers, businesses buyer/specifyers) who possess demand (means to satisfy a common unsatisfied need), access to a distribution channel to acquire a product or service to satisfy the need, and recognition (awareness) that resources and distribution channels exist to satisfy the need.

Demand is a convention used to express both means and need. It is not sufficient to simply want something. To be in a market, one must also have greater than nominal means to acquire that something. At the same time, having tremendous means or wealth, does not define one in a market unless they have a specific unsatisfied need.

The Demand convention and Access and Recognition (DAR) are the market formative criteria. For a market to exist, all three must be present. Any entity who does not satisfy all three criteria, is not in the market. Determining the size of a given market therefore means applying the following called The Law of Market Volume:

All markets may be expressed as a unitary volume formed by a common zero and the least quantity or value representing demand, access and recognition.

This means that in a universe where a thousand entities have a common unsatisfied need and the means to satisfy that need (D=1,000) and half of these entities are aware of the existence of some device or offering which would satisfy the need (R=500), and one tenth have both access to and recognition of some distribution channel, inventory or vendor from whom that offering is available (A=100), then the market volume at that moment is 100 (M=100). A market volume cannot be greater than the lowest of the three values, regardless of the levels of the other values.

At any given time, the market volume determines the total amount of goods and services which can be sold to satisfy a particular need. This volume is shared by you and all competitors in a marketplace who offer a product or service which address the common need which defines the market. This is critical information to have when developing a marketing strategy.

In later sections we will cover topics related to "Growing a Market", but next, let's look at the more immediate concept of YOUR Market, or more accurately your market profile or share equilibrium.

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