Clever Grades

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Market Structures & Strategy

Study Outline

1

Market Definitions

Understanding the difference between Physical and Non-Physical markets.
2

Strategic Rationale

Evaluating why firms choose specific market channels.

Key Market Definitions

🏪

Physical Markets

Tangible, face-to-face marketplaces such as shops, malls, markets, or stores where buyers and sellers meet in person.
🌐

Non-Physical Markets

Platforms without physical locality where trades happen electronically, such as websites, mobile apps, and auction platforms.

Strategic Channel Comparison

✅
Physical Market Strengths Provide direct interaction, allow customers to see and try products, and suit certain products like food or luxury items.
❌
Non-Physical Market Strengths Offer a wider reach (national/global), convenience, lower operation costs, and 24/7 accessibility.

Market Synergy Strategy

Why combination matters

Financial management is about strategic decisions. Many firms combine both to maximize market coverage (e.g., a retailer has physical stores and an online shop).
Distinguishing Physical and Non-Physical Markets
Term
Physical Market

What defines a physical market?

Answer
Definition

A marketplace where buyers and sellers meet face-to-face, such as shops and malls.

Term
Non-Physical Market

What is a non-physical market?

Answer
Definition

An electronic platform like websites or apps where trades happen without a physical location.

Term
Advantage of Physical Markets

Name one advantage of physical markets.

Answer
Advantage

Direct interaction and the ability to see and try products.

Term
Advantage of Non-Physical Markets

Name one advantage of non-physical markets.

Answer
Advantage

Wider reach and 24/7 accessibility.

Term
Use of Both Market Types

Why might a firm use both physical and non-physical markets?

Answer
Reason

To maximize market coverage and benefit from both direct interaction and broad digital reach.

Term
Product Suited for Physical Markets

Give an example of a product better suited for physical markets.

Answer
Example

Food or luxury items.

Term
Operating Costs

How do operation costs compare between physical and non-physical markets?

Answer
Comparison

Non-physical markets generally have lower operation costs.

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🌸 Distinguishing Physical and Non-Physical Markets Quiz

1. Which of the following is a characteristic of a physical market?

Physical markets involve in-person interactions unlike electronic transactions in non-physical markets.

2. What is a key benefit of non-physical markets?

Non-physical markets allow firms to reach customers regardless of geography.

3. Why might firms combine physical and non-physical markets?

Combining both channels lets firms benefit from direct interaction and global reach.

4. Which product is most likely suited to physical markets?

Food items often require physical inspection or immediate purchase, fitting physical markets.

📊 Results

  • Notes and Quiz
  • Business
  • AS Level
  • Marketing
  • OCR