A look at e-commerce from the business and customer's perspective.
Demand and supply including demand and supply curves, with an in-depth explanation of the diagrams.
Price Dis-Equilibrium and Price Determination is included.
Conditions of Supply and Demand included.
Price Elasticity of Demand with...
A market is a place where buyers and sellers exchange goods and services for a fee.
There are different types of markets:
Consumer goods/services: The finished good are sold to the consumer. They are durable that
last for a while i.e. clothes, phones and cars. They can also be consumable/ non-durable->
Use it right away i.e. food, credit and drinks. They are described as intangible: which are non-
physical items like a service, movie and phone contracts.
Capital goods: Large items: Businesses buy items e.g. land, raw materials, machinery and use
them it the production of other goods.
Labour Market: Your skills that are available for employment. They can be in demand.
Number of people employed/ in unemployment. Their skill desirability. Employer buys labour
and employees sell labour.
Mass market: Wide range of customer available for the same product that is standard.
Niche market: This is a small sub-segment of a large/mass market. With a limited amount of
customers. The product is not standard; it has been modified to meet the unique needs of
the small group of customers. It will have unique features.
Mass Market:
Advantages Disadvantages
Cost effective due to economies of scale. This leads to Limited appeal: Not everyone thinks alike, so the product may
falling unit costs which in turn maximise profits for the only suit one demographic of a geographical area. This limits
company. the sales potential and reduces the company’s profits.
Sales potential is higher as there is a wider market to be Competition is fierce as there is many competitors in the one
reached and a larger customer base in available. Thus market making it hard to break into to and establish a brand
increasing sales and profits. This maximises income. name. Also if you set prices to high there are many alternatives
so customers can easily swap between companies.
Market research and advertising costs are lower. This The product is to general and lacks the specific needs of
reduces the overall costs incurred by the company and customers. This once again reduces the potential sales as the
maximises the company’s profits. product lacks a unique or particular feature.
Niche Market:
Advantages Disadvantages
Lower levels of competition. The market is exclusive and Even though the level of competition is small within the niche
only serves a small customer base. This lower level of market the competition experienced is ruthless. If you don’t
competition can lead to increased sales and larger profit have the skills and experience it makes it harder to break the
maximisation. This small customer base also makes it market and become established. This means the money
easier to get to know the customer and is easier to develop invested in the company is lost as competition is ruthless.
a product.
Can set premium prices as the product has taken time and However, there is greater difficulty gaining high profit levels as
more effort increasing profits. The product is modified and the market is smaller. This means the business is operating on
meets specific needs of the customer hence a higher price tight profit margins and if custom is lost the business could
can be charged and per unit, profit levels are higher. begin to make losses.
The service is more personal which customers prefer and However, this custom is easy to loose as the premium prices
become accustom to meaning they will return as the may turn customers away as they may find better value for
service supplied was of a high standard. This means that money elsewhere in the market. Also it is dangerous to offer
the customer base obtained is secure and business this one product as larger rivals are likely to diversify and have
operations can continue as there is money coming in to the a wider product portfolio. These larger businesses could,
business via regular custom. therefore reduce their price to such a low level that the small
business cannot compete. The business service does not suffice
in an attempt to retain the customer base.
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