There is a point of view that the progress of our society, both social and scientific-technical, is largely determined by the prevailing type of market relations that have developed in society.
The most favorable for development is the type of market relations, which is called the buyer's market. It is this balance of power of players in the market that stimulates most enterprises and organizations for development. And the most powerful and successful player wins.
Consider what it is - the buyer's market.
What is a market?
The market is the aggregate turnover of goods and services that currently exist on the basis of consumer demand and dealer supply. The modern market is not geographically limited and exists more as a global concept.
Market functions
The market in the modern economy performs the following functions:
- It provides a close relationship between the production of certain goods and services and their use.
- Stimulates production towards qualitative and quantitative growth.
- Reduces production costs by optimizing technology.
- Stimulates scientific progress.
The market encourages the manufacturer to produce exactly the products that meet the needs of consumers. The manufacturer and his success in the market depends on how accurately his product covers the needs of the market. A strong producer in a modern market economy is one that most effectively uses its economic resources to meet consumer needs.
Therefore, in conditions of market competition, the strongest producer wins, whose product is of high quality and meets the needs of society.
The market constantly stimulates the manufacturer to modernize products and change them.
The main characteristics of the market
The main characteristics of the market are:
- Variability. Both demand and supply are constantly changing under the influence of various factors: demographic, economic, and even political, psychological and other external ones related to living conditions and internal ones related to the psychology of the consumer and the dealer.
- Self-regulation. The market automatically responds to changes in the quantity and quality of goods. For example, with a shortage of goods, the price of it rises, and with an excess - decreases. Also, with the advent of new products, the price of old goods decreases, as demand decreases.
- Economic freedom. The consumer and the manufacturer independently determine all ways of interacting with each other.
- Free competition. Competition is a prerequisite for market growth, improving the quality of goods and services and optimizing pricing policy.
- Market capacity is a characteristic that is determined by the ability of the market to absorb a certain type of product for a fixed unit of time.
Depending on these characteristics and the characteristics of the interaction of market entities, the entire market can be divided into the seller’s market, the intermediary market and the buyer’s market.
Seller market, intermediary market and buyer market
Depending on who takes the leading role in the market, all markets can be divided into:
- Seller's market is a market in which the leading role is played by the producer and supplier of goods, largely determining the current situation, as well as supply and demand for goods, and having a lot of weight in pricing. This is a market in which there is a shortage of certain goods and services.
- The intermediary market is a market in which the leading role is played by distributors, intermediaries of the marketing channel, and demand, supply and price are largely determined by them, and it is not the presence and absence of goods that matters, but competently built positioning, marketing and logistics.
- A buyer's market is a market, the rules of which are formed by the end consumer. It turns out that sellers are forced to take an active position, the quantity of goods increases, the price decreases, quality improves. This to some extent allows buyers to establish the rules of the game in the market. It turns out that the buyer's market is a type of market that is completely controlled by consumer demand.
Buyer Market Features
Important characteristics of the buyer's market are:
- no shortage of goods or services;
- most of the products are made to high quality standards;
- manufacturers in every possible way try to reduce the price;
- high competition between manufacturers and dealers;
- sellers are forced to make efforts to sell their goods;
- An important success criterion is constant customer focus, the study of customers, their needs, needs and behavior in the market. The buyer's market determines interaction with customers;
- products on the market are distinguished by a wide range;
- the supply of goods exceeds the demand for them.
A customer’s market is a market that is distinguished by a large selection of products presented, the ability to find exactly what is suitable for each individual’s needs. Studying the market and consumers largely determines the success of a manufacturer or distributor.
Customer Market Segmentation
For success and high sales of the customer’s market, the study of demand and consumer behavior is important. The easiest way to study demand is to break down all potential buyers into groups that are similar in certain ways.
Therefore, one of the key points of market research is its segmentation.
Market segmentation is the division of the entire mass of customers into separate groups, which are expected to react similarly to certain marketing activities. It turns out that the customer market segment is a group of people that interacts with the product in approximately the same way.
Buyer Market Trends
A market trend is the possibility of changing it in one direction or another, depending on the direction of economic processes within it.
The trend may be a change in market capacity, a change in the volume, profits of trade participants and many other factors.
If the seller’s market and its trends can be tracked by production volumes and the establishment of a high-quality relationship between the seller and the buyer, then the buyer’s market trends depend largely on social factors and on the demand for a particular product.
In a situation where supply exceeds demand, the game conditions are dictated by the consumer. And, as a rule, the one who is capable of either predicting consumer behavior or generating demand independently wins.
Demand is formed through marketing and advertising campaigns, as well as through the mediation of the media.
Buyer's market is an ideal incentive for the development of society
The seller’s market implies a struggle for the consumer’s wallet. Despite the conditions of shortage of goods, solvent demand still remains limited. And in this case, aggressive advertising and tough ways to sell goods begin to be used.
But such a situation in the natural environment does not last long. As a rule, new players enter the market. And in this case, the market evolves to the buyer's market - a market oriented to the needs of the final consumer of the product.
The situation on the buyer's market requires the construction of certain marketing strategies for interacting with them, as well as improving the quality of the product and its functionality.
Such a market is much more conducive to progress, because there is natural competition for customers, which means that it is necessary to monitor the quality of the product, as well as improve it. Come up with related products, thoughtful advertising campaigns.
The basis of production are the results of marketing research. And manufacturers in advance create only the product that the buyer is supposed to need. The main buyers markets were once sellers markets.
It's just that the market in the natural environment almost always gradually becomes customer-oriented - this is a natural process.
Market evolution on the example of real estate in Moscow and the regions
In the mid-2000s, the real estate market was in a state of reduced supply and increased demand, as well as in a state of full accessibility and ease of obtaining a loan product. The volume of real demand was constantly growing amid limited supply, which created a seller's market in real estate.
This contributed to an uncontrolled increase in housing prices. Luxury housing in cities has increased in price by more than 65%.
The market growth trend was unhealthy. But for sellers the situation was comfortable and convenient - you could sell anything.
It was then that the acquisition of apartments at the construction stage became widespread.
After 2008, demand began to fluctuate amid financial uncertainty. Buyers showed less willingness to purchase a loan product.
Demand began to decline first in Moscow, and then in the regions.
At the same time, home sellers did not rebuild, prices remained unchanged, for a long time the real estate market was in a stagnant state. There was no marketing. The buyer's market has not yet formed.
From 2014 onwards, the real estate market is approaching the buyer's market. Demand for real estate is reduced and even the unrest associated with rising dollar prices did not lead to its jump, leaving it at the same level. Solvent growth has decreased, and, accordingly, real estate prices are decreasing.
Much less popular was the purchase of construction materials or unprepared housing.
The construction boom of recent years has led to the formation of a consistently high supply of primary housing in Moscow. Demand is growing much more slowly, which may contribute to the fact that the housing market in Moscow will remain a market for buyers for a long time.