Market forces are the variables that affect the availability and price of goods and services in a marketplace economy With minimal government involvement.
When supply decreases or demand rises, economic forces drive prices up and down. They also push them down when demand grows or reduces. When demand equals supply for a service or product, the market is then said to have reached equilibrium.
To supply means to impart something that is needed, i.e., to make it available.
Market forces: Examples
Orange juice prices in supermarkets across the United States increase when there is a severe cold snap. Cancun hotel prices drop when the weather is sunny and warm in the north.
When major conflicts break out in the Middle East, the price of gasoline worldwide increases, the sale of big, gas-guzzling SUVs also drops.
What does all this have in common? All of them show how market forces influence supply and demand. They also demonstrate how they affect the cost of goods and services.
The market determines how much each product is produced by the manufacturing sectors and what their prices are.
Anyone who wants to understand how an event, government policy or public policy might impact the economy must first consider how it may affect supply and demand.
The invisible hand
Adam Smith’s “invisible hand” was a reference to market forces.
Adam Smith (1723-1790), British moral philosopher and pioneer in political economy, is often cited as the father and founder of modern economics. He wrote about the invisible hand that determines supply and demand levels, prices of goods, and wealth creation and distribution.
This invisible hand represented the market forces of supply and demand and how an economy could flourish if left to its own devices.
His influence was felt all over the globe and is frequently quoted by economists who support market economies.
Mr. Smith wrote:
“Everyone works to increase the annual income of the society. He doesn’t always intend to promote the public interests, nor does he know how much he is doing so. It is not always worse for society if he does not intend to do so. He often promotes the interests of his self more than he plans to. I have never seen much good done by people who trade for the public good.
The invisible hand, in other words, is essentially a natural phenomenon that drives free markets through competition with scarce resources.
The Seven Market Forces
Social Market Forces
Demographic Market Forces
Cultural Market Market Forces
Economic Market Forces
Technological Market Forces
Political and Legal Market Forces
Competitive Market Forces
Social Market Forces
Ask any old-timer to tell you. “Times sure have changed.” This could refer to technology’s rapid development. Most likely, they mean the way people interact and how technology has changed. In the USA, we have gone from World War II into mass interconnectedness in just eighty years. The world that Baby Boomers grew into is very different from the one that Millenials, like me, grew up in. You can see that on a grand scale in generational attitudes!
You must be able to read the room if you want to sell stuff. Social market forces revolve around our collective beliefs, attitudes, and experiences. It is essential to understand how people react to the world around them. Talk to people, listen to podcasts and watch movies and TV. While you don’t want your life to be boring, it is crucial to see the trends. It is essential to realize that you are not at the end nor the beginning of history.
Demographic Market Forces
Marketing is all about defining demographics. Demography allows us to sort people by their age, gender, religion, education, or ethnicity. Different tastes and groups can be distinguished to provide a framework for product evaluations or testing marketing strategies.
You may be required to experiment with different methods to engage your customers as the demography and industry of your customers change. To illustrate, I will use one of my most favorite marketing case studies. Old Spice, up until 2010, was an “old man’s brand.” It engaged then-young Millenials with ads about the Old Spice Man. This was known as “The Man Your Man Could Smell Like,” and it is a surrealistic masterpiece of an ad. It’s genuinely hilarious. Old Spice was losing market share due to their age. This campaign allowed them to reach a younger audience, likely keeping their arms dry for many decades.
Cultural Market Forces
There is a lot of overlap between cultural market forces and social market forces. Culture shapes society, and culture shapes society. But, culture is also referred to as globalization on the market. You’re not only shopping with fellow Americans if you are a US citizen like me. You can also shop in Europe, China, and other distant countries.
Americans have a different way of living life than Australians, Brits, and Zimbabweans. Our fundamental values, attitudes, and perceptions differ. The US values democracy, freedom, hard work, and an American-style form of extroversion. It’s much more collaborative in Japan.
It is expected of everyone to contribute and do their bit, leaving little room for individualistic desires. These ways of living are not necessarily good or bad. These are just two different ways of living. Marketers – artisans of messages – need to be aware of these differences so that messages can be effectively received.
This is not about nationality. These market forces are deep-rooted in subcultures. While subcultures may be as broad as religions and racial groups, they can also be precise. There is a subculture of people who are competitive yo-yours. Another subculture exists within this subculture, which is comprised of people who prefer a particular type of yo-yo. Your small business needs to understand how subcultures interact and break down.
Economic Market Forces
The DOW and S&P have both recently fallen a lot at the time I am writing this article. Mainly, the S&P 500 fell by 16%. Although it wasn’t enough to increase unemployment rates, the headlines were very bleak. Many people, even me, this was a shock as I checked my 401(k). Changes in the stock market, unemployment rate, and income distribution can have devastating effects on businesses.
Customers may be less inclined to spend on luxury goods and services during lean times. During boom times, the reverse is true. However, not everything works at a global level. You might need to adjust the price you charge due to changes in local taxes and tariffs. It is possible to be forced to market a higher-priced product or fight against competitors who have a lower product.
Technological Market Forces
Augmented reality, 3D printing, and smart homes are just a few of the many new technologies that exist. These are just some of the latest technologies in development or under investigation when I write this article. Technology is changing at a rapid pace. Although it is cliché, it deserves to be repeated because technology has constantly transformed since the Industrial Revolution.
Technology gives, and technology takes away. Many of the products and services we have today wouldn’t have been possible if they hadn’t existed just a few years ago. Marketers are usually faced with the task of teaching customers how to use new products and services. Marketers must reach early adopters.
You also have outdated technologies that are resisting obsolescence. The Uber CEO is probably wondering what he will do when Elon Musk, or anyone else, creates the self-driving vehicle. The private sector company will buy a self-driving fleet. Will they need to exit the market, or will they be purchased? Markets often move according to how technology develops.
Legal and political market forces
Who doesn’t love politics? Every law, whether federal, state, or local, was created by some political body. Regulations are the same. Examples include antitrust laws and employment laws, discrimination laws, and consumer laws.
You must follow all laws and regulations, regardless of whether you like it or not. Most of you are familiarized with the labor laws that you must follow to pay people correctly. You are probably familiar with accounting and tax basics. You know that a marketer cannot lie to customers or create fake reviews. It’s straightforward. However, antitrust laws may seem incredibly abstract. Two points are important to me.
Competitive Market Forces
Last but not least: You can’t control your competitors. Their actions can have a significant impact on your life. While the other forces are essential, this is the one you should be most interested in.
You can be affected by your competition in many ways. It would be impossible to include them all here.
Market Forces in the Health care sector
In the case studies Vila Health, Sharing Electronic Health Records (EHR), the primary market forces at work is technology, patient security, quality care, cost-effectiveness, staffing, legal considerations and diversification of service areas. The study finds that the five markets driving health care sector in the USA are chiefly personal medical insurance, long term care, managed care, and hospital-based care.
The Personal Medical Insurance Market, also referred to as Managed Care, covers health insurance claims for providers of individual health services such as doctors, hospitals, pharmacies and health care sector. Long term care insurance (LTCi) covers health expenses incurred during the period of the insured’s retirement or disability and is intended to cover the cost of nursing home care and related services. Managed care insurance is designed to provide coverage for health care services specific to the insured’s disabling condition or to prevent a disability.
The traditional case study focuses on the relationship between technological changes and the role of market forces. This article will focus on the relationship between regulatory changes and health care exceptionalism. Although there are some exceptions, most professionals agree that physicians and nurses have the most control over clinic-level EHR implementation. Physicians and nurses must adhere to regulatory mandates such as the HIPAA, which establishes rules and procedures for electronic medical records. These rules and regulations have been challenged by providers claiming that they violate the privacy rights of patients.
On the other side of the regulation-versus-market force debate, our service area maximization and provider management. Providers argue that they must maximize revenue and minimize costs in order to provide quality public health care services. According to the U.S. health care system researchers identified as the authoritative sources, service area maximization means providing a wide range of public health services to a large number of patients within an organization.
On the other hand, provider management means taking into consideration the unique needs of each patient and aligning services based on those needs. Providers claim that they can better serve their patients while also reducing cost by focusing on quality management.
As you can see from the above example, the relationship between market forces and health care system performance is not straightforward. It’s important to understand that market forces can have the potential to affect both providers and patients. However, health labor organizations argue that such forces primarily affect the demand side of the health care system.
As public health care providers adapt to increasing or decreasing client demands, they may be forced to reduce the quality of care provided while also increasing the prices they charge.
In this case study we look at the impact of health care professionals and allied health workers adjusting to changing regulations and health care industry demands during this regulatory reform period. The study finds that health care professionals or health worker performance are likely to be negatively impacted by market forces. Health care professionals, who are forced to adapt to new regulatory standards by their employers, will likely decrease their overall productivity.
In this case study health care professionals and allied health workers argue that they will be forced to reduce costs while also increasing the number of hours they work. Furthermore, these workers will also likely be negatively impacted by market forces if they are required to accept fewer hours or perform more costly tasks. The result is a situation where the health care professionals are decreasing their productivity same as the health worker performance while the employers increase their costs.
In short the market forces discussed in this case study impact the health care professionals and allied health workers adversely in this regulatory reform period. Although this is by no means an exhaustive look at the impact of market forces on the health care system, it does highlight some of the challenges that health care professionals and allied health workers will face. This report was designed to provide an explanation of how market forces could impact the health care system during this time.
