Why the business market is very important for the development of the company
Author: Michelle Leonny
If you have a business or company, you must participate in the market, so, that universe where some sell and others buy, a real world, where few survived, precisely who is clear about the rules that dominate the game of finance, sales and more.
Therefore, the market position of your business is important to understand the existing, competitive market forces, let them reflect the basic competitive market forces that affect any business. These are
one. Rivalry among existing firms competing to supply the same product or service
. The threat of new entrants in the market and the impact they could have: if there are major barriers to entry, the threat to existing participants is less than if allowed to easily enter a small firm. Conversely, in the quality of your new competitor, you will be pleased by the fact that there are fewer factors that prevent you from entering the market of your choice.
. The threat of substitute products or services, including those who, although they are different from yours, could provide similar benefits: Customers cannot only choose to buy a particular type of product or service, whether you or your direct competitors but may choose a substitute method to solve the problem. For example, suppliers of manual accounting packages are not only competing with each other, but also face the possibility that customers decide to use computer systems.
2. Bargaining power of suppliers and, in particular, its effect on costs:
. If the provider of a particular product or service has little competition or a monopoly, it might be difficult for you to negotiate agreements that are cost efficient. You might need time to find substitutes.
3. The bargaining power of customers and, in particular, its effect on prices:
. Without customers, there is no market. Generally have a significant purchasing power for the simple fact that they are in a position to choose who they buy, although this is not always necessarily the case. You can be lucky enough to be the sole supplier of a particular type of product or service to a particular target group – what is called niche marketing – but such luxuries rarely lasts for long.
These factors effectively determine the potential profitability of any business, as they affect costs, prices and investment needs. So part of the role of market research is to analyze these forces and make informed decisions, taking into account these factors.
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