What is a domestic market?
This refers to the supply and demand of goods and services within one country. Firms that operate in a domestic market are based in the country in question and sell their goods or services to its citizens.
Key takeaways
A domestic market refers to the supply and demand of goods and services within one country, where firms based in that country sell to its citizens, also known as internal market or domestic trading.
Companies can choose to focus solely on their domestic market or expand internationally, with domestic trading often being more attractive due to relatively simple organization of distribution and sales.
Expanding into international markets like the European Union can offer millions of potential new customers but also brings logistical challenges and increased competition for firms.
The size of a company's domestic customer base and whether they believe a market for their products exists abroad are key factors determining if a firm opts to expand internationally.
Where have you heard about a domestic market?
Also known as an internal market or domestic trading, you may have heard this term used in relation to smaller firms in the UK which sell their products solely to people in these nations.
What you need to know about domestic markets.
Some companies choose to concentrate solely on their domestic market, while others may opt to expand and move into other markets. Domestic trading may be more attractive to a UK firm because organising aspects such as distribution and sales can be relatively simple. A firm may then expand to countries in the European Union, for example. This can offer millions of potential new customers, but will also bring logistical challenges as well as increased competition. The size of the domestic customer base may determine whether a company opts to expand, as well as whether they believe a market for their products exists abroad.
Find out more about domestic markets.
A British firm may decide to expand into markets within the EU.