A company’s “market share” is an important concept in business.
Market share is basically the % of the market that your company has. Coke and Pepsi both have a large market share in the soft drink industry. They are always looking for ways to increase their market share. Market share is a very important number for certain large companies. Many companies literally pay millions of dollars a year to market research companies to check on their market share and help them find ways to increase it. A few percentage points in market share is often huge.
It is very important for Facebook to have a large market share. This is because many people use Facebook just because their other friends are already using it. A website similar to Facebook would have a difficult time competing because Facebook already has such a large market share. A website like Facebook is only useful if you know that other people are using it. This is the same for job search websites. If few people are using them, it is difficult to convince new people to join.
Price sensitivity is an economics term and concept. It is an advanced business English term and a very useful one to know and use.
Price sensitivity basically means how much a small change in price affects sales. If something is highly price sensitive it means that a small change in price will have a big impact on sales. If you raise the price a little, a lot fewer people will buy.
An example of a price sensitive item is a certain kind of vegetable. If you raise the price of a vegetable, many people will just choose to buy a different vegetable. If there are many substitutes for a product, it is usually more price sensitive.
Something that is not very price sensitive is ticket prices to the World cup soccer finals. It doesn’t really matter how much money you charge for these tickets. Some people will buy the ticket at almost any price. Rich soccer fans don’t care if the price is $100 or $10 000.
To “subsidize” something means that someone else, often a government or company, is paying for all or some of the price of something. Subsidies make things relatively cheap for the consumers.
Here are a couple of common examples:
1. University education is much cheaper in Canada than in the USA because it is more heavily subsidized. This means that the government helps to pay for some of the education.
2. My apartment rent is only this cheap because my company subsidizes most of it.
The next time you hear of “subsidizing, subsidized, or a subsidy” you can think something is “partly paid for” by someone else.
A “Niche Market” is a relatively small and very specific market.
An example of a market might be “University students“. It is not very specific. A “Niche Market” in this category might be something like, “Female Asian university students studying in the USA“. This “niche market” is much smaller, but it has the advantage of being much more targeted.
There are certainly less people to sell your product to if you use this niche, but if you do find someone in this niche you will have a much higher chance of selling your product to them. If you design your niche well, it is easier to make a “perfect” product for these people. It is also easier to know where to advertise to find possible customers.
Many business people make the mistake of not making a narrow or clear enough niche. They want to sell to everyone, but end up making a product that is so general they sell to almost no one. It is even more important for small businesses to be able to have a very clear niche, since they don’t have the advertising budget to reach the masses.
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