Reports What Is a Seller’s Market?

What happens when a product generates high demand but runs out of inventory (“stocks out”)? The company loses sales as customers turn to its competitors. This can happen in any month.

Usually, a product with a low customer survey score has low sales. However, if a segment’s demand exceeds the supply of products available for sale, a seller’s market emerges. In a seller’s market, customers will accept low-scoring products as long as they fall within the segment’s rough cut limits. For example, desperate customers with no better alternatives will buy:

  • A product positioned just inside the rough cut circle on the Perceptual Map– outside the circle they say “no” to the product;
  • A product priced $4.99 above the price range– at $5.00 customers reach their tolerance limit and refuse to buy the product; and
  • A product with an MTBF 4,999 hours below the range– at 5,000 hours below the range customers refuse to buy the product.