What is a market?

A market is any place where buyers and sellers meet to trade products - it could be a high street shop or a website.

This means that they are always changing. A business must be aware of market trends and evolving customer requirements caused by new fashions or changing economic conditions.

The first step is to gather information about customers needs, competitors and market trends. An entrepreneur can use the results of market research to produce competitive products. Market research involves gathering data about customers, competitors and market trends.

A new magazine may run special offers to get customers to try the first issue, hoping that repeat sales are generated. The magazine will soon close if customers fail to buy future issues. The aim of a special offer scheme is to convert trial purchases into repeat sales.

Primary research (field research) involves gathering new data that has not been collected before. For example, surveys using questionnaires or interviews with groups of people in a focus group.

Secondary research (desk research) involves gathering existing data that has already been produced. For example, researching the internet, newspapers and company reports.

Factual information is called quantitative data.

Information collected about opinions and views is called qualitative data.

Most markets contain different groups of customers who share similar characteristics and buying habits. These collections of similar buyers make up distinct market segments.

For example, a magazine publisher can target a specialist journal at one group of customers of similar age, gender, class or income.

A market map is a diagram that identifies all the products in the market using two key features.

Price: If there are several retailers, each retailer will lower the price in an attempt to win customers. It is illegal for retailers to agree between themselves to fix a price. They must compete for business.

Product range: In order to attract and satisfy customers, companies need to produce products that are superior to their competitors.

Customer service: Retailers that provide customers with a helpful and friendly service will win their loyalty.