Dynamic Markets - 1.1.

1
Dynamic markets - Markets which are constantly changing. The environment is dynamic, for
example buyers may choose to buy less of one product and more of another. It can grow, change and
decline very quickly

Some markets are quite stable and change little over time. For example, the market for Kelloggs
cornflakes has changed very little, although there are far more competing products than there were
when they were invented in 1894. Market size and market share do not change much and there is little
innovation. Other markets are far more dynamic, subject to rapid and continuous changes.

All businesses must adapt to the changing nature of their markets.

Reasons for dynamic markets constantly changing:

1. Social trends
2. Changes in technology
3. Competitiveness
4. Trends
5. Consumer tastes
6. Fashion
7. Rising/Falling incomes
8. Arrival of a superior product offered by competition
9. External shocks
Business have to adapt their marketing in response to these changes... If they do not keep up, they
may lose competitiveness! Utlimately falling sales will cause business to exit in the market.
 New businesses emerge when new technoloiges or design techniques make it possible to
invent new products or cheaper substitutes
 Sellers respond to buyer's changing needs by improving existing products and services or
introducing new ones. For example, demographic factors can cause needs to change.
 Sellers also respond to other sellers' changes in order to stay competitive
 Some businesses expand by diversifying their product ranges to meet needs in new or
different markets.
A dynamic market can make it difficult for a business to forecast sales of its products due to rapid
change and/or rapid growth. For example, customer demand is likely to be unpredictable in a dynamic
market as customers' wants and needs evolve more quickly.
How competition affects the market - 1.1.1

Competition - is where rival businesses in the same market try to win customers from each other.

Price - The value at which a product or service is offered to customers

Businesses can gain customers through using the price of their product or service, for example by
offering a lower price for a product or service that is similar to that of a competing business.

The difference between risk and uncertainty - 1.1.1

Risks - in business are factors that are not expected but can be quantified, such as the risk of your
factory being flooded.

Uncertainty - is being unsure of the factors influencing sales and therefore being unable to predict
what will happen to the business in terms of its profits or growth. A business might try to minimise
uncertainty by using marker research to anticipate the likely its decisions will have on its position in
the market.