Types Of Markets

TYPES OF MARKETS

WHAT IS A MARKET?

A market is defined as an actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter.

Markets include mechanisms or means for:

(1) Determining price of the traded item.

(2) Communicating the price to buyers.

(3) Facilitating deals and transactions.

(4) Effecting distribution.

The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it.

For a market to be competitive there must be more than a single buyer or seller. It has been suggested that two people may trade, but it takes at least three persons to have a market, so that there is competition in at least one of its two sides.

However, competitive markets, as understood in formal economic theory, rely on much larger numbers of both buyers and sellers. A market with single seller and multiple buyers is a monopoly.

TYPES OF MARKETS

Consumer markets

The consumer market represents individuals and families purchasing goods and services for personal consumption. The consumer market excludes business or government purchases, or other non-personal investments.

Consumer markets are dominated by products and services designed for the general consumer. Industries in the consumer markets often have to deal with shifting brand loyalties and uncertainty about the future popularity of products and services.

Organisational markets

These are all the individuals and companies who purchase goods and services for some use other than personal consumption. Organizational markets usually have fewer buyers but purchase in far greater amounts than consumer markets, and are more geographically concentrated.

TYPES OF ORGANIZATIONAL MARKETS

Organisational markets are divided into four components:

Industrial market

This includes individuals and companies that buy goods and services in order to produce other goods and services. Producers buy raw materials and machinery, often from other producers but sometimes from resellers. Marketing to producers requires technical expertise and knowledge of the producer’s operations. Typical marketing strategies involve identifying problems in the producer’s industry or particular operations and proposing solutions that are cost-effective. Producers have a long-term view of markets since their needs change slowly. As a result, marketing to producers is usually based on long-term relationships.

Reseller market

Reseller market consists of individuals or companies that purchase goods and services produced by others for resale to consumers. Resellers include wholesale companies and retailers, as well as niche suppliers that specialize in particular areas where they have expertise. The key factor for marketing to resellers is to be aware of their added-value proposition. If the reseller is a wholesale company offering low prices for high volume, marketers must develop proposals which address this characteristic. If the company buys specialized equipment according to specifications and re-sells it to customers based on high quality and reliability, the marketing will be different.

Government market

This consists of government agencies at all levels that purchase goods and services for carrying out the functions of government. The purchasing process for governments tends to be highly bureaucratic and a familiarity with government procedures is a prerequisite.

Institutional market

This consists of individuals and organisations such as schools or hospitals that purchase goods and services for the benefit or use of persons cared for by the institution. Marketing to these organizations is highly specialized, with marketers relying on long-term relationships as well as large, one-time opportunities.

SUMMARY

A market is an actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter.

The consumer market represents individuals and families purchasing goods and services for personal consumption. Organisational markets are all the individuals and companies who purchase goods and services for some use other than personal consumption.

Organizational markets are four types – industrial or producers, resellers, and institutions, and governments.