Market Ecology

Posted in Marketing and Strategy Terms, Total Reads: 424
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Definition: Market Ecology

It’s a concept where the market for an entity (product or firm) is seen as analogous to an ecological system. Just as the life, decisions and outcomes of a member of the ecological system is affected by the various factors in its surrounding environment, an entity’s (firm’s/product’s) plans, policies and strategies are based upon and affected by cultural, political, social and economic factors working in tandem. It’s a cyclic process where such market factors affect the entity’s properties, which in turn may affect the market factors.


For example, the quantity produced of a certain commodity like oil, maybe affected by the market ecology like the input/output of the world, its price may be affected by the financial policies in the different parts of the world, and its future production policies and strategies maybe based on estimated future market ecology. Likewise, sudden dip/rise in production may lead to shortage/surplus in the market, affecting the world output, the financial policies of the producer country as well as other countries etc. thus affecting the market ecology.


Hence, the entity and its process, and the external factors together constitute market ecology, where sometimes the optimization of just one component maybe sufficient to get the cycle in order, while other times, more than one of those may need to be adjusted.

 

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