Posted in Marketing and Strategy Terms, Total Reads: 457
Definition: Soft Market
A market which has sellers more than buyers. As the supply is excess then demand thus prices are low, as sellers are interested to capture buyers and are also willing to make necessary concession in order to close the deal .The markets tend to be cyclic in nature and thus soft market rises periodically within a range of infinite industries. It can be also called Buyers’ market as usually the buyers gets to dictate the terms in the prepared deal and also end up in hard bargains along with sellers as they have little options to.
Thus bid-ask spreads is more that trading activity. Some buyers even takes advantage of the market and look out for long term gains. A large sell order pushes the market down .Thus if investors move in to buy at this lower level than it is called firming up. It is a market where sellers compete to find buyers thus the prices falls rapidly. For example in Real estate if 10 apartments needs to be sold and only 5 customers are there, then 5 apartments will remain unsold.
Thus the seller needs to compete on prices in order to attract the buyer for purchasing. Thus this type of real estate market can also be called soft market. This type of market can led to problems when the individual tried to get rid of the item which might end up in loss if the market turns out to be better later. Thus it is better to diversifying investments in order to make sure that some capital is still available in a liquid form.