Changes in modern markets
A market is where buyers and sellers meet. Modern markets are changing in four ways:
- Online shopping: buyers compare prices on phones at any hour.
- More choice: many brands, from all over the world.
- Faster change: products become old quickly, so firms must renew them.
- Informed buyers: reviews and videos help buyers decide.
A firm must therefore develop products faster and deliver them in smarter ways.
Product concept and development flow
A product concept is a clear picture of a product and the customer need it meets, before it is made. Example: a school bag that stays dry in rain.
The development flow
- Idea: collect ideas from customers, staff and market research.
- Design: decide the look, size, material and features, and draw it.
- Test: make a sample (prototype) and let real users try it. Fix problems.
- Make: plan the factory work, buy materials, check quality.
- Sell: launch with a price, advertisement and a way to deliver.
If testing shows a problem, the firm goes back to design. This loop saves money.
Distribution and products
Distribution means moving goods from the maker to the buyer. The route is called a channel.
- Direct (zero-level): maker to buyer (own website or shop).
- One stop: maker to retailer to buyer.
- Two stops: maker to wholesaler to retailer to buyer.
A wholesaler buys in large amounts and sells in smaller amounts to retailers. A retailer sells to the final buyer.
Choose the path to fit the product
Products that spoil quickly (milk, vegetables) need short channels. Heavy goods (cement) and cheap goods needed everywhere (biscuits) use wholesalers. Costly or technical goods (phones) may be sold online or by trained retailers who can explain them.
Try it
At home, pick three items. For each, guess how many stops it passed through before reaching you.
Key formulas and definitions
- Development flow = Idea → Design → Test → Make → Sell
- Channel = the path goods take from maker to buyer
- Direct: Maker → Buyer
- One stop: Maker → Retailer → Buyer
- Two stops: Maker → Wholesaler → Retailer → Buyer
Worked examples
1. A firm makes a prototype and finds the strap breaks. Which stage found the problem and where does the firm go next?
The test stage found it. The firm goes back to design to make the strap stronger, then tests again.
2. Name the channel for fresh milk delivered by a dairy to a local shop and then to homes.
Maker to retailer to buyer (one stop).
3. Why would a firm sell phones online and through trained shops, but sell salt through wholesalers?
Phones need explanation and care, so online pages or trained shops help. Salt is cheap and needed everywhere, so wholesalers reach thousands of small shops easily.
Common mistakes
- Thinking the concept is the finished product. It is the plan and picture before making.
- Skipping the test stage to save time; faults then appear after launch and cost more.
- Confusing wholesaler and retailer: the wholesaler sells to shops, the retailer to the final buyer.
- Using one long channel for every product, even for goods that spoil quickly.