7.1.7 My Market

This topic explains the concept of a market, including demand, customers, competitors, and how to estimate market size through surveys.

Definition

Market: If a product or service is needed by a person or a group of people, there is a demand. The people who need the product or service, and are willing to pay for it, are customers. The number of customers in the community represents the market for a service or product. Business people who provide similar products or services are competitors.

Core Concept

A market is like a fishing pond. The fish are your potential customers—people who need what you're offering. The demand is how hungry they are for your product. Competitors are other fishermen trying to catch the same fish. Before you cast your net, you need to know: How many fish are in the pond? What kind of bait do they like? Who else is fishing there? Understanding your market helps you decide if it's worth fishing, what to offer, and how to stand out from competitors.

Detailed Explanation

What is a Market?

If a product or service is needed by a person or a group of people, there is a demand. The people who need the product or service, and are willing to pay for it, are customers. The number of customers in the community represents the market for a service or product.

• Demand: Need for a product or service.
• Customers: People who need and are willing to pay for it.
• Market: Number of potential customers.
• Competitors: Business people who provide similar products or services.

Understanding Your Market

A business can estimate the size of its market by carrying out surveys of customer needs, preferences, and willingness to pay.

The survey should try to find answers to questions such as:

Market Analysis Questions

• Age, gender, income status, education, location.
• Example: Young professionals, students, families.

• Shape, size, color, quality, price, convenience.
• Example: They like the design but find it too expensive.

• Willingness to pay (WTP).
• Example: They would pay Rs. 500 but not Rs. 1000.

• Sustainable: Demand is regular and ongoing.
• Unsustainable: Demand is one-time or seasonal.
• Example: Ice cream is seasonal; bread is regular.

• Quantity demanded.
• Example: 100 units per month, 10 hours per week.

The Importance of Market Analysis

Competitors

Business people who provide similar products or services are competitors.

• Competitors offer similar products or services.
• Understanding competitors helps you differentiate.
• Competition can be direct (same product) or indirect (substitute).
• Knowing your competitors helps you position your business.

• Who are they?
• What do they offer?
• What are their prices?
• What are their strengths and weaknesses?
• How can I be different or better?

Estimating Market Size

Market Size = Number of Potential Customers × Average Purchase Quantity × Price

• Potential customers: 1,000
• Average purchase: 2 units per month
• Price: Rs. 100 per unit
• Market Size = 1,000 × 2 × 100 = Rs. 200,000 per month

Types of Markets

Intermediate Level

A market consists of potential customers who need a product or service and are willing to pay for it. Demand is the need for the product. Competitors are other businesses offering similar products. To estimate market size, conduct surveys to find answers to questions like: Who is interested? Why do they like/dislike it? Are they willing to pay? Will they buy regularly or seasonally? How much will they need? Market analysis helps identify opportunities, understand customers, assess demand, set prices, plan production, beat competition, and reduce risk. Competitors can be direct or indirect. Market types include local, regional, national, international, and niche.

Important Points

• - Market: number of potential customers.
• - Demand: need for product/service.
• - Customers: people who need and will pay.
• - Competitors: businesses offering similar products.
• - Survey questions: Who? Why? Will they pay? Regular/seasonal? How much?
• - Market analysis: identify opportunities, understand customers, assess demand, set prices, plan production, beat competition, reduce risk.
• - Market types: Local, Regional, National, International, Niche.
• - Market Size = Customers × Quantity × Price.

Remember

• - Market: Potential customers.
• - Demand: Need for product.
• - Customers: People who pay.
• - Competitors: Similar businesses.
• - Survey Questions: Who, Why, Will Pay, Regular/Seasonal, How Much.
• - Market Analysis: Opportunities, Customers, Demand, Prices, Production, Competition, Risk.
• - Market Types: Local, Regional, National, International, Niche.

Common Mistakes

• - Ignoring market research: Starting a business without understanding the market is risky.
• - Underestimating competitors: Competition can be direct or indirect.
• - Assuming everyone is a customer: Target market is specific.
• - Forgetting willingness to pay: Customers may need the product but not afford it.
• - Confusing demand with desire: Demand requires willingness and ability to pay.

Quick Revision

A market consists of potential customers who need a product or service and are willing to pay for it. Demand is the need for the product. Competitors are other businesses offering similar products. To estimate market size, conduct surveys to find answers to questions like: Who is interested? Why do they like/dislike it? Are they willing to pay? Will they buy regularly or seasonally? How much will they need? Market analysis helps identify opportunities, understand customers, assess demand, set prices, plan production, beat competition, and reduce risk. Market types include local, regional, national, international, and niche.

60-Second Revision

• Market: Potential customers.
• Demand: Need for product.
• Customers: People who pay.
• Competitors: Similar businesses.
• Survey Questions: Who, Why, Will Pay, Regular/Seasonal, How Much.
• Market Analysis: Opportunities, Customers, Demand, Prices, Production, Competition, Risk.
• Market Types: Local, Regional, National, International, Niche.