Throughout history, markets have always recreated themselves, changing the economic fortunes of those who were present when they were created.
The most common concept of a marketplace is a physical place where sellers meet buyers to make a transaction. However, in economic and business terms, a market is defined differently.
What is a market?
A market is the sum of all buyers and sellers when considered within a particular plane. It can be global, regional, or territorial, limited to a country, region, city, or neighborhood. The volume of sales, the cost of costs and the price of the product correspond to the forces of supply and demand.
The market can be physical or virtual, depending on how the company sells: offline or online. The market can be “accessible” and “inaccessible.” Within an accessible market, there is a “market floor” or market size that allows goods and services to be sold without any marketing effort. This is the lowest bar at which a company can generate income without any action on its part. In today’s world, this level falls lower and lower.
Each market has its own “market potential”. It is the maximum size of the market in which it is possible to sell goods and services, applying the greatest marketing efforts, which the company can afford. The prerequisite is the ability to make a profit on sales; investments in marketing must pay off. Hence, market potential is the upper limit for a particular market and level of sales.
21st Century Markets
Today’s markets have changed and become largely dependent on the Internet. The pace of marketplace development is determined by the speed of information transfer over the web. Revolutionary changes are taking place. It used to take years to create a market, but in the age of e-commerce a few days is enough. The very notion of a marketplace is changing day by day.
The Internet Market (I-Market) is a virtual place of exchange between buyer and seller in cyberspace. It is a digital marketplace where buyers and sellers come together to exchange “money” for goods and services.
“Virtual” market feature eliminates market friction caused by time barriers (the customer can buy goods 24 hours a day, 365 days a year), geographic location (you can buy from anywhere in the world) and form (physical properties of products change for bits). Companies no longer need a physical presence to enter a new market. Customers are no longer required to visit the marketplace during normal business hours.
The main benefit of e-commerce is the ability to meet the needs of their customers more effectively. The result is more new customers, greater customer loyalty and lower costs. However, if mistakes are made in e-commerce, negative results are achieved “at the speed of the Internet.”
The Internet marketplace is changing a company’s business processes and infrastructure. E-commerce is not just a website, it is a whole new platform for a different way of doing business. To understand the philosophy of the Internet marketplace, companies need to change their business models, rethink the way they operate and change their algorithms for interacting with their suppliers, partners and customers.