Dynamic Markets - 1.1.1

Dynamic markets - Markets which are constantly changing. The environment is dynamic, for example buyers may choose to buy less of one product and more of another. It can grow, change and decline very quickly

Some markets are quite stable and change little over time. For example, the market for Kelloggs cornflakes has changed very little, although there are far more competing products than there were when they were invented in 1894. Market size and market share do not change much and there is little innovation. Other markets are far more dynamic, subject to rapid and continuous changes.

All businesses must adapt to the changing nature of their markets.

Reasons for dynamic markets constantly changing:

1. Social trends
2. Changes in technology
3. Competitiveness
4. Trends
5. Consumer tastes
6. Fashion
7. Rising/Falling incomes
8. Arrival of a superior product offered by competition
9. External shocks

Business have to adapt their marketing in response to these changes... If they do not keep up, they may lose competitiveness! Utlimately falling sales will cause business to exit in the market.

• New businesses emerge when new technoloiges or design techniques make it possible to invent new products or cheaper substitutes
• Sellers respond to buyer's changing needs by improving existing products and services or introducing new ones. For example, demographic factors can cause needs to change.
• Sellers also respond to other sellers' changes in order to stay competitive
• Some businesses expand by diversifying their product ranges to meet needs in new or different markets.

A dynamic market can make it difficult for a business to forecast sales of its products due to rapid change and/or rapid growth. For example, customer demand is likely to be unpredictable in a dynamic market as customers' wants and needs evolve more quickly.