Captive Market

Captive Market

Captive Market Jonathan Poland

A captive market is a market where a group of customers is forced to buy from a limited number of suppliers because they have no other viable options. This typically occurs when there are barriers to entry that prevent other suppliers from entering the market, such as high start-up costs, strict regulations, or exclusive contracts.

In a captive market, customers are often unable to switch to another supplier even if they are unhappy with the quality or price of the products or services they are receiving. This lack of competition can lead to higher prices and lower quality, as suppliers have little incentive to improve their offerings or compete on price.

For example, a small town that is served by only one grocery store may be considered a captive market, as residents have no other options for buying groceries. In this situation, the grocery store may be able to charge higher prices and offer lower quality products because there is no competition from other suppliers.

Overall, a captive market is a situation where customers are forced to buy from a limited number of suppliers because there are no other options. This lack of competition can lead to higher prices and lower quality.

Communism

In a communist society, the state is the only entity that owns capital such that a bureaucratic elite control all production. This results in a universal lack of alternatives such that customers have no power over suppliers.

Monopoly

A single supplier that completely dominates the market for a product or service. For example, a nation with a single airline such that there is only one carrier on many routes. Left unregulated, this allows the monopoly to charge high prices, demand unfair terms and provide poor service.

Oligopoly

A market controlled by a few large suppliers such that their is significant temptation for these suppliers to fix prices or engage in other anti-competitive practices. For example, a nation that only has three mobile telecom firms.

Last Mile

The last mile is the ability to reach the customer at or near their home or office. This often creates captive customers. For example, a nation may have three telecom companies but only one may offer a wired internet connection in your apartment building or neighborhood. This creates large pools of customers who may be captive to high prices and poor service.

Shortages

Shortages can create temporary captive customers. For example, a reseller who aggressively purchases a new technology that quickly sells out such that they are the only supplier for a period of time. This is a type of rent seeking as the supplier adds zero value to the supply chain but dramatically increases prices.

Niche Goods

In many cases, a customer is captive because they have needs and preferences that represent a small market with few suppliers. For example, a consumer who will only buy shampoo made from 100% organic olive oil may have few choices such that they may be captive to a single product.

Geographical Monopoly

A monopoly in a single location such as the only grocery store in a remote town. In some cases, this is based on customers who are literally captive such as the passengers waiting for flights in an airport. It is common for price fixing to occur in this situation if competition laws aren’t enforced.

Non-Profit Monopoly

An organization that is ostensibly non-profit may exercise a monopoly and act in a commercially aggressive way. For example, the organizing committee for an international sporting event may effectively have a monopoly over a sport or collection of sports such that they charge high fees and prices and are unresponsive to criticisms from athletes, fans and the communities they impact.

Performance Metrics Jonathan Poland

Performance Metrics

Performance metrics, also known as key performance indicators (KPIs), are measurable values that organizations use to evaluate their progress towards…

Product-as-a-Service Jonathan Poland

Product-as-a-Service

The Product-as-a-Service business model involves offering a service in areas that were traditionally sold as products. This model involves ongoing…

Analysis Paralysis Jonathan Poland

Analysis Paralysis

Analysis paralysis, also known as “paralysis by analysis,” is a phenomenon that occurs when individuals or groups become so focused…

In-Store Marketing Jonathan Poland

In-Store Marketing

In-store marketing refers to the use of physical retail locations, such as stores and showrooms, as a platform for marketing…

Risk Estimates Jonathan Poland

Risk Estimates

Risk estimates are predictions or projections of the likelihood and potential consequences of risks. They are used to inform risk…

Unknown Risk Jonathan Poland

Unknown Risk

An unknown risk is a potential loss that is not recognized or identified. In the context of risk management, unknown…

Market Potential Jonathan Poland

Market Potential

Market potential is the entire size of the market for a product at a specific time. It represents the upper limits of the market for a product. Market potential is usually measured either by sales value or sales volume.

Pricing 101 Jonathan Poland

Pricing 101

Pricing refers to the process of determining the value that a business will receive in exchange for its products or…

Design-Driven Development Jonathan Poland

Design-Driven Development

Design-driven development is a product development approach that places a strong emphasis on design, with a focus on form, function,…

Learn More

Incident Management Jonathan Poland

Incident Management

Incident management is a process that involves the organization and coordination of efforts to address and resolve information technology incidents.…

Exit Planning 150 150 Jonathan Poland

Exit Planning

Exit planning is a comprehensive strategy for business owners to transition out of their company on their terms. It involves…

Drip Marketing Jonathan Poland

Drip Marketing

Drip marketing, also known as drip campaigns, is a strategy that involves sending targeted and personalized marketing messages to a…

Operating Model Jonathan Poland

Operating Model

An operating model is a framework that outlines how a business operates. It typically covers how a business produces and…

Brand Values Jonathan Poland

Brand Values

Brand values are the principles and beliefs that a brand stands for and that guide its actions. They reflect the…

Concept Selling Jonathan Poland

Concept Selling

Concept selling is a approach to marketing and sales that involves framing unique selling propositions as a story that customers…

Workload Automation Jonathan Poland

Workload Automation

Workload automation is the process of automating the execution of routine tasks and processes in a business environment. It involves…

Cost Advantage Jonathan Poland

Cost Advantage

A cost advantage refers to the ability of a company to produce a product or offer a service at a…

Schedule Risk Jonathan Poland

Schedule Risk

Schedule risk refers to the risk that a strategy, project, or task will take longer than expected to complete. A…