Market Value

There are several components of product value. The first and probably the most obvious factor of product value is the utility. The main goal, in theory, of buying is to obtain something to do what you need done. For instance, if you are just starting off in life you will probably need a washing machine. This need creates the reason that you should buy the washing machine, and the product is therefore valuable to you. Needs are not the only thing that creates value, though. Desire also does this in a similar manner. One other thing that determines value for a product is a trend. If something is trendy, and if you desire to be trendy, then you may buy that product. In theory, though, utility should outweigh trends. Trends should not be a very big part of a product's value to a consumer.

Market value is different than product value. Where product value is the value of something for one person, market value is the value of a product for an entire group of people as a whole. This is where trends really come into play. When people buy things based on market value, potentially useless things can be sold. If this is the case, it is likely that that product which was sold was 'cool' or 'trendy'. In other words, other people have it and in order for someone to be considered 'cool' that person must own whatever the product is. An example of this is the .dot com bubble in the 1990s. The internet was a new technology during this period. A multitude of online companies (such as Amazon and ebay) were formed. The share prices for these companies skyrocketed quickly, even though they may have actually been worth exactly nothing. Really the only thing to look at when thinking about a product's market value is how the group as a whole views it. The actual amount that it cost to make or the product's utility matter very little.

Whenever a person makes a financial transaction of any kind, it is important to do research. If that person did not do any research they may not get what they bargained for. Consider the stock market. As for the product value of a stock, its only use is to make money. Stocks generally tend to be rather volatile. This means that they do not usually stay at a constant price; they are always rising and falling. If you were to invest in the stock market, you must do research. This research can be anything from looking at the stock's history (possibly from a graph or a table) to making educated predictions about what will happen with that stock's price (by watching the news for stories concerning the stock). A similar idea must be taken when buying other things, for instance home appliances, but one can also research smaller ticket items if one wants a good deal. In general, if a buyer does not do research he will likely lose money due to the volatility of prices.