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How a simple law can change market conditions

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When you do a market research, it’s important to look at all the exterior factors that can change market conditions. There’s a special little tool to do this analysis consistently: it’s called the PESTEL analysis.

The purpose of today’s post is to illustrate how so-called exogenous factors can change dramatically the competitive landscape.

Antique books market conditions changed dramatically in Italy

As some of you may remember, I talked in an earlier post about my passion for old books on mineralogy. Just before Christmas I found a 18th century book that I wanted to add to my collection. This book was proposed by an Italian antiquarian library in northern Italy. I took contact with the librarian, negotiated a small discount. I thought the deal was done for 100€ until the merchant (who was also the head of the ALAI, the association of antiquarian libraries in Italy) told me he had first to apply for an exportation license because the book had been printed more than 50 years ago. I had never heard something like this before. In all other country the need to apply for an exportation license depends on the age AND on the price. In France for instance such a license is necessary only for books older than 100 years AND worth more than 50000€. The same definition is of application in Germany. But not in Italy where a 51-year old book worth 1€ has to go through an official export procedure (if you read Italian don’t miss this article by Umberto Pregliasco, the former president of the ALAI).

The consequences for the antique books market

This Italian law differs completely from what is in application in neighboring countries. Italian politicians have created a one-of-a-kind situation that puts pressure on Italian merchants specializing in antique books. Excessive regulations may indeed trigger an arbitrage on the part of prospective customers, who will prefer buying from a countries will less restrictions. In particular long procedures may be a deterrent.

Eventually such a law, which remains an exception in the European Union where free movement of goods is one of the pillars of the European internal market. But it isolates Italy from the rest of Europe and makes it a “local” market rather than a global one. Applying the law of offer and demand in such a situation is easy ; the offer will remain the same but the demand will plunge (the number of antique books collectors in Italy is insufficient to cope with the offer of antique books on the Italian market), hence putting pressure on prices. The discount will be the reward for patient collectors willing to undergo a complex and lengthy export procedure.

Conclusion

When carrying out your market research, don’t forget to take also external market forces into account. The dynamics of a market can be changed dramatically by external forces on which you’ll have absolutely no grip. It’s always better to explore such forces before your start a business, rather than discovering afterwards that you’re trapped.

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Author: Pierre-Nicolas Schwab

Pierre-Nicolas est Docteur en Marketing et dirige l'agence d'études de marché IntoTheMinds. Ses domaines de prédilection sont le BigData l'e-commerce, le commerce de proximité, l'HoReCa et la logistique. Il est également chercheur en marketing à l'Université Libre de Bruxelles et sert de coach et formateur à plusieurs organisations et institutions publiques. Il peut être contacté par email, Linkedin ou par téléphone (+32 486 42 79 42)

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