Aftermarket

Aftermarket may refer to:

References

Aftermarket (merchandise)

In many economic literature, the term “Aftermarket” refers to a secondary market for the goods and services that are 1) complementary or 2) related to its primary market goods (original equipment).

Thus, in many industries, the primary market consists of durable goods, whereas the aftermarket consists of consumable or non-durable products or services.

Accordingly, the “aftermarket goods” mainly include products and services for replacement parts, upgrade, maintenance and enhancement of the use of its original equipment.

The Essentials of Aftermarket

There are two essentials of the aftermarket: installed base and lock-in effect.

Installed base

A certain level of installed base of original equipment customers is necessary for the sufficient demand of aftermarket products.

Therefore, significant installed base normally makes aftermarket profitable as an established installed base is likely to consume the aftermarket products repeatedly over the lifespan of their durable goods.

Secondary market

The secondary market, also called the aftermarket, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. Another frequent usage of "secondary market" is to refer to loans which are sold by a mortgage bank to investors such as Fannie Mae and Freddie Mac.

The term "secondary market" is also used to refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market (for example, corn has been traditionally used primarily for food production and feedstock, but a "second" or "third" market has developed for use in ethanol production).

With primary issuances of securities or financial instruments, or the primary market, investors purchase these securities directly from issuers such as corporations issuing shares in an IPO or private placement, or directly from the federal government in the case of treasuries. After the initial issuance, investors can purchase from other investors in the secondary market.