Dynamic markets

• Dynamic Market = A market which is subject to continual and rapid change.
• Dynamic Market Characteristics = customer demand is likely to be unpredictable in a dynamic market as customers' wants and needs evolve more quickly.
• Many markets are becoming more competitive and change is inevitable

  • Those businesses which do not adapt are less likely to survive in the long run
  • The mobile phone market is a good example of a dynamic market
• Online retailing:

  • Online retailing involves selling products via the internet
• online retailing:

  Positives

  • Provides business access to more consumers
  • Enables longer trading hours as the business is open 24/7
  • Cheaper to run as it lowers fixed and variable costs compared to bricks and mortar retailers
  • Businesses can collect data by tracking consumer behaviour
  • Consumers can shop at a time that suits them

  Negatives

  • There may be high costs
  • Online retailing is dominated by larger businesses
  • High levels of competition mean that it will be expensive
  • Consumers may find it difficult to get the best customer service
• How markets change:

  • Changing market conditions offer new opportunities for firms, but also pose threats
  • The following changes cause markets to be dynamic
  • Changing consumer tastes and preferences 
  • Changing demographics 
  • The amount of competition 
  • Competition can be direct i.e. the sale of similar products or indirect e.g. airlines compete with each other but also with other forms of transport
  • Changing legislation 
• Innovation and market growth:

  • Product innovation involves the adaptation or improvement of existing products e.g. improved video cameras on laptops
  • Process innovation involves the adaptation or improvement of existing processes e.g. just in time stock control
  • Market growth can be caused by numerous factors e.g.
  • Increasing population sizes can increase demand in certain markets
  • Increasing incomes can increase demand in certain markets
  • Changing tastes and preferences
• Adapting to change:

  • Recognizing and adapting to market changes allows businesses to thrive in dynamic markets
  • Strategies to adapt to change include
  • Create flexible business structures
  • Meet customer needs
  • Invest 
  • Innovate