Page 143 - Cambridge IGCSE Business Studies

10: Marketing, competition and the customer

Market changes

Before we go any further we need to have a
KEY TERM clear understanding of the term ‘market’.
One defi nition is:
Market: all customers and
consumers who are interested in A market is a place where buyers and sellers
buying a product and have the come together to buy and sell goods and
financial resources to do so.
services.
However, the term ‘market’ can also
be used to describe all consumers who
are interested in buying a product and

have the financial resources to do so.

These consumers can be described as the
‘potential market’ for a product.
When a business decides to produce
products for a particular group of
consumers, then these consumers are
known as the ‘target market’.
KEY TERMS

The term ‘market’ can also describe the
Target market: individuals type of customer who the goods or services An open-air market
or organisations identified by are sold to. These customers may be the fi nal

a business as the customers or

consumer or other businesses. The markets for these customers are known as:
consumers of their products.
Customer: an individual or ■ Consumer markets – products sold to the final consumer, for example food items, 141
business that buys goods and televisions and cars.
services from a business.
■ Industrial markets – products sold to other businesses for use in the production
Consumer: the final user of a
process, for example machinery and equipment.
product.
Consumer markets: markets for Why consumer spending patterns change
goods and services bought by the

Th e business environment is one that is constantly changing. This means that the
final consumer.
market for goods and services will also change over time.
Industrial markets: markets
The amount of money customers/consumers spend on buying goods and

for goods and services bought by

other businesses to use in their services is affected by a number of factors:
production process.
■ The price of the product – for most products the higher its price the lower the
Business environment: the
quantity sold and the lower the price the greater the quantity sold. This relationship
combination of internal and
external factors that influence the between the price of a product and the demand or sales of the product is shown in
operations of a business. Figure 10.1.
Price
$10

$2 Demand

0 20 80 Quantity demanded
Figure 10.1 Demand curve

You can see that at a price of $10 the firm will sell 20 units. If price is reduced to $2
then they will sell 80 units.