In which ways captive market differ from non captive market? discuss with example.

Captive market and non captive market

Captive market and non captive market

by Lima Khanom -
Number of replies: 0

Captive markets are markets where the potential consumers face a severely limited number of competitive suppliers; their only choices are to purchase what is available or to make no purchase at all. The term therefore applies to any market where there is a monopoly or oligopoly.

Example :

1.

The market for printer toner

Many companies sell devices and subsequently their spare parts or peripherals. The main device is usually cheap, but the follow-up products are expensive. This is because they have a captive market.

In some franchise businesses, the franchisees can only buy supplies from the franchisor.

2.

Captive market – airport shops

Critics accuse British airport shops of abusing their captive market advantage. They ask passengers for their boarding passes.

They subsequently claim back the VAT on products purchased by people traveling to outside the European Union. VAT stands for Value Added Tax, a type of sales tax.

Critics say that airport shops should pass on those savings to shoppers, instead of pocketing the money.

Non-captive markets are those businesses that are not able to guarantee sales, because of available business nearby that sells the same goods as you. As customers have varying preferences, your business must also be able to empathize with your clients and adjust to their needs.

Example 

1.

Time

Time also influences the decision of clients when choosing where to eat. Others may have more time to eat, and others can have lesser time to grab their meals. The selection of time to eat entails that you are not sure as to how many customers can visit your restaurant per day, as it varies with their working hours and their availability as well; sales depend on the amount of turnaround time you can serve your clients also.

2.

Food Preferences

For non-captive markets, preferences on food are also vital to customer preference. You cannot satisfy clients every day, as cravings for food can also change per day. They may like European food today and might want Chinese dishes the day after; nevertheless, uncertainty as to how many clients will visit your business day after day.