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What Is a Homogeneous Market?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 22 November 2016
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A homogeneous market is a type of marketplace in which each of the products traded in that market are more or less the same, although there may be some minor differences in design. Homogeneous markets are associated with just about every type of industry, with participants in those industries offering goods and services that provide the same basic functions, but often compete on the basis of a few additional features as well as price. One of the benefits of this type of market situation is consumers have the opportunity to compare a wider range of options rather than being limited to one or two possibilities.

Markets that can be classed as homogeneous involve the sale of all sorts of products. For example, consumers who are looking to buy a new television set will have a wide range of options, including size, range of features, and price. At the same time, all the television sets are designed to perform a core function, that of allowing the owner access to television programming. Thanks to the fact that many different manufacturers offer television sets, it is relatively easy for a consumer to consider all the options in a homogeneous market and find a unit that will fit his or her needs in terms of both functionality and cost.

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Another type of homogeneous market has to do with food items. In many communities, there are multiple suppliers of raw meats obtained from various meat packing plants. While there may be some variance in quality and price, the products that are offered are basically the same. This allows consumers to compare pricing and quality whenever there is a need to purchase chicken, steaks, hamburger meat, or any other types of meat for home consumption, choosing the products that will be acceptable in terms of both quality and price.

All that is required for a homogeneous market to exist is for several different manufacturers to produce consumer goods and services that are made available for purchase in the same marketplace. Consumers benefit from this arrangement, since it allows them more choices when it comes to purchasing those produced goods. Rather than having to settle for clothing produced by a single provider, the consumer who is shopping in a homogeneous market is able to select from similar items produced by several different companies, making it possible to still fill the basic need while also having the luxury of comparing the options in terms of price, quality of construction, and even the color of the garments under consideration.

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burcidi
Post 3

I might be wrong but I don't think that manufacturers lose out in a homogeneous market if what they're selling is a necessity.

I could give the example of toothpaste. The toothpaste market is a homogeneous one and there are many brands. But each brand seems to have its own group of customers. At the end of the day, we all need to use toothpaste and some of us will pay more for better quality toothpaste and some of us will be able to afford a cheaper one. Every brand seems to make enough sales.

burcinc
Post 2

@feruze-- That's right. Competition is more in a homogeneous market and prices tend to be lower because of the competition. Since all the products are basically the same, companies have to constantly improve their product and make their prices more competitive in order to make sales.

In a market where the products serve different functions, there is less competition because companies are not losing business to one another. This is also why they can set their own prices because they know that the consumer has no choice but to buy at that price if they want that product.

It's not like that in a homogeneous market, there are many choices and the consumers will buy the best product at the best prices.

bear78
Post 1

Competition in a homogeneous market is much more than competition in a heterogeneous market correct?

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