The captive market is the market that has no competitor, and thus stands out from all others for its high product prices.
They are also called tied markets where potential customers face a very limited number of competitive suppliers.
When it comes to the captive market, the producer can independently decide on pricing to achieve the desired sales volume.
In fact, the customer can only choose to purchase what is available or not make any purchase at all.
Types of captive markets
Captive markets include:
- The food markets in cinemas, airports, cruise ships, and sports arenas;
- University textbooks;
- American cable companies.
In this type of market, therefore, the seller has the upper hand and consumers are like "prisoners".
If there's only one store on the line, consumers have no choice but to take all their supplies from there.
As for cruise ships, passengers on board must necessarily consume in the shops and bars on board the ship and, indeed they are prisoners of it.
Finally, this type of market where there are no competitors and prices are managed by the seller is also called imperfect competition.
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