There are several reasons why the market for a product might reduce in size, some of these include:
If the economy experiences depression or a downturn, people will have less money to spend on products, and will therefore turn to cheaper alternatives of their usual products. Therefore, the market for luxury or brand name products will reduce, as less people will be willing to spend more money for the benefit of a label or brand name. Conversely, the market for cheaper, own-brand products will increase, as people will turn to cheaper alternatives of their usual products, rather than going without.
For example, in the UK, Heinz Baked Beans are a very popular brand name product, and are considered a quintessentially British luxury product. However, in recent times, with the economic recession, more people have been buying baked beans that are not made by Heinz, as Heinz baked beans are some of the most expensive on the market. Instead, people have been buying supermarket brand baked beans, in order to save money. The market for Heinz Baked Beans has therefore reduced in size.
As a particular industry undergoes changes and developments, the market for the industry's products will also change. A prime example here is the music industry. For a long time during the late 20th and early 21st centuries, CDs were the most popular way to listen to music, and the market for CDs was huge. However, recently, with the popularity of personal music players and digital music libraries, MP3 downloads have overtaken CDs as the most popular form of music acquisition. This reflects how changes in the industry affect the size of a market.
- Changes in the economy
If the economy experiences depression or a downturn, people will have less money to spend on products, and will therefore turn to cheaper alternatives of their usual products. Therefore, the market for luxury or brand name products will reduce, as less people will be willing to spend more money for the benefit of a label or brand name. Conversely, the market for cheaper, own-brand products will increase, as people will turn to cheaper alternatives of their usual products, rather than going without.
For example, in the UK, Heinz Baked Beans are a very popular brand name product, and are considered a quintessentially British luxury product. However, in recent times, with the economic recession, more people have been buying baked beans that are not made by Heinz, as Heinz baked beans are some of the most expensive on the market. Instead, people have been buying supermarket brand baked beans, in order to save money. The market for Heinz Baked Beans has therefore reduced in size.
- Changes in the industry
As a particular industry undergoes changes and developments, the market for the industry's products will also change. A prime example here is the music industry. For a long time during the late 20th and early 21st centuries, CDs were the most popular way to listen to music, and the market for CDs was huge. However, recently, with the popularity of personal music players and digital music libraries, MP3 downloads have overtaken CDs as the most popular form of music acquisition. This reflects how changes in the industry affect the size of a market.
