Unit 1 – Planning and
financing a business
Nature of markets and
determinants of demand
What is a market?
A place where buyers and sellers come together
Different Markets
Local
Most small new firms care more about this
market
National
Often this is the next stage for successful
small businesses
Physical
Traditional view of markets
Electronic
Increasing number of markets are electronic
Your task
In pairs think about one of the following
types of market
Local
National
Physical
Electronic
Suggest examples of this type of market
Analyse the key factors a business should
consider if operating in this type of market
What do we mean by demand?
Demand is the willingness and
ability of a person to buy a product
at various prices
Demand for oil?
Group Activity
In your groups, look at the product in the
centre of your piece of flip chart paper
Analyse the different elements that influence
the demand for that product
Draw / write your answers on the flip chart
If you have time, evaluate the relative
importance of the different influences
Types of Product
Normal good
When prices go up, demand goes down
When prices go down, demand goes up
Inferior good
When prices go down, demand also goes
down, e.g. Tesco value baked beans
Luxury good
People buy much more of these products
when they feel better off
Your task
Readthe case study on Firefly Tonics
and analyse the following
What type of market does Firefly
operate in?
What are the key determinants of
demand?
How do you think that the market is
changing for this type of product?