Meaning and Concepts of Market

Market is the English word. It was derived from the Latin word ‘Marcatus’. In Latin, its meaning is ‘buying and selling place’. If it is defined with this meaning, market means a place where selling and buying goods or services is done. But this definition is narrow. This view cannot define the word ‘market’ in a broad term the word ‘market’ does not mean only the place of selling and buying goods or
services; it also means selling and buying the process. Such process may not be only directly but also takes place indirectly. In direct process the customer and seller may talk and bargain directly and sell and buy goods or services but in indirect process they can sell and buy by talking or bargaining through telephone, fax, e-mail, internet, correspondence etc. It is clear that market is not only the place where selling and buying of goods is done, it is also a process of exchange. In this process, consumers demand goods or services after the sellers make flow of goods to markets. The seller hand over goods to consumers and consumers pay for the goods or services accordingly. Finally the buyers give feedback.

Market is a process of exchange, in which the producers and sellers make flow of goods or services in market. Buyers/consumers demand for goods or services on the basis of their flow in market. The process of selling and buying between sellers and buyers takes place, which is called market. After buying goods or services, buyers show reaction which may be of dissatisfaction or satisfaction. Such reaction is called feedback. To make much clearer about market, it is necessary to study its concepts, they are as follows:
Concepts of Market

1. Place concept

According to place concept of market, market is the physical place where buyers assemble for buying goods or services and sellers assemble for selling goods or services. In other words, the easy place where buyers to buy goods or services and sellers to sell meet together is called market. Giving his concept about place William J. Stanton has defined market as, “Market may be defined as a place where buyers and sellers meet, goods or services are offered for sale, and transfer of ownership occurs.”

But the place concept of market has not defined it in a broad term. So, this has narrowed the market. So, this concept has not become universally acceptable.

2. Commodity concept

According to commodity concept, the activity of selling and buying goods or services is called market. Goods or services are put in market for sale. Sellers sell and buyers buy goods or services for their mutual interest. The economist Chapman has defined market as, “The term market refers not only to place but also to a commodity or commodities and buyers and sellers and they should be in direct competition with one another.”

Hence, the activity of selling and buying goods or services is called market.

3. Area concept

According to area concept of market, the meaning of market is the whole area where sellers and buyers make exchanges directly or indirectly (without direct contact or using modern means of communication) in free and open manner. The modern communication means are letters, e-mail, fax, telephone, internet etc. Area may be large or small. Market of some goods may be a small place or nationwide or worldwide. The economist Benhaim has defined area concept of market as, “A market as any area over which buyers and sellers are in such close touch with one another, either directly or through dealers, that the price obtainable in one part of the market affects the prices paid in other parts.” Similarly, Philip Kotler has defined it as, “Market is an area of potential exchanges, that is, a group of buyers and sellers interested in negotiating the terms of purchases and sales of goods and services.”

So, an area where sellers sell and buyers buy goods or services in free and frank ways is called market. Market area may be limited or vast.

4. Demand concept

According to demand concept of market, the total amount of actual and potential buyers for goods or services is market concept. As it is to fulfil the unlimited needs and wants through limited means, buyers buy only necessary goods or services. After one need or want has been satisfied/fulfilled, another want/need appears. This incessant process keeps on increasing. Today’s very popular thing may be unpopular tomorrow. Its demand may decrease to zero. So, market depends on consumers’ demand. American Marketing Association has defined market as, “A market is the aggregate demand of the potential buyers for a product or services.”

So, according to demand concept, the total or aggregate demand of consumers for goods or services is called market.

5. Exchange concept

According to exchange concept, the process of selling and buying goods or services in a free manner between seller and buyer is called market. The exchange between goods or services of seller and money or credit instruments of buyer is called real market. Such market should be conducted freely and independently and competitive price should be fixed.
The Market or Exchange

6. Space concept

Space concept is new concept of market. It is based on internet. Producers or sellers put valuable information about their goods and services. Customers can select needed goods and services searching internet. Buyers and sellers need not come together. But it needs telephone computer and internet for communication.

Features of Market

The features of market are as follows:

1. Commodity

Commodity is the center point of market. Commodity includes the things having physical shape and existence and services having no physical shape or existence and services having no physical shape or existence. Exchange cannot take place without commodity and market cannot exist without exchange. So, goods or commodity is very necessary component for market. There may be different types of market according to the nature of commodity. For instance, consumer goods market, industrial goods market etc.

2. Price

Price is the measurement of goods or services. It expresses intrinsic quality of goods or services. Not any goods or services. Not any goods or services can be sold or bought without price. Buyers can take ownership of goods or services by paying price. So, market is impossible without price. The price of goods or services should be stable. There are various methods of fixing prices. Prices of goods or services should be properly fixed by considering the nature of goods cost and market communication.

3. Buyers and sellers

Dealing between buyer and seller is market. So, market cannot exist without them. Buyers buy goods or services and sellers sell them. Dealing between sellers and buyers may be directly or indirectly. Sellers and buyers are suppliers and demanders respectively. Market becomes complete by demand and supply.

4. Area

The other important feature of market is area. The word ‘market’ does not denote only a certain place, it refers to the whole area of exchange where selling and buying of goods or services is completed with direct or indirect contact between sellers and buyers. Such dealing is freely and independently takes place without any external pressure or compulsion. The area of exchange may be limited or extensive.

Types of Market

There are various types of market. Scholars, experts and writers have classified market in different types. Here, market has been classified on the basis of geographical area, time, volume, control, delivery of goods or services, competition and nature of goods for easy study.

1. On the basis of geographical area

On the basis of geographical area, market can be classified into four types as follows:
  • Local market: If goods or services are sold and bought in small area, it is called local market. In such market, the sellers and buyers perform exchanges mostly with direct contact. The markets of perishable goods like fruits, fish, vegetables, milk etc. are local markets. It has also become possible to expand markets of perishable goods to regional and national levels due to development of fast means of transport and cold stores.
  • Regional market: The market which occupies a large area compared to local market is called regional market. Suppose, market of some goods or services has covered only the central region, such market is called regional market. For example, Shree Distillery has been supplying its products in plastic bags in only the Central Development Region of Nepal. So, the market of Shree Distillery is regional market.
  • National market: National market is also called domestic market. If the market of goods or services has expanded nationwide, such market is called national market. Nationwide selling and buying of goods or services takes place in national market. Nebico Biscuit, Wai-Wai Noodles, Mechi Tea etc. are bought and sold all over Nepal. So, the market of these goods is called national market.
  • World market: World market is also called international market. Such market covers the whole world. If goods or services are sold and bought all over the world, it is called world or international market. Toyota, Fait, Gulf Oil etc. have covered the world. They are sold and bought all around the world. So, it is an international market.

2. On the basis of time

On the basis of time market can be classified in the four types as follows:
  • Very short market: The market where supply of goods or services is stable is called very short market. In such market, even a very little time cannot be found to increase volume of goods or services according to the increase of demand. Or supply cannot be increased. Mostly, market of perishable goods becomes very short. For example, the market of fruits, vegetables, mushroom, fish, meat, milk etc. become very short. Generally, demand affects price in such market. If demand increases, price goes high and if demand decreases price comes down.
  • Short period market: Short period market remains longer than very short time market, during which supply volume can be increased to meet the demand through maximum mobilization and utilization of machineries, means and resources. But resources, means and machineries cannot be added. In such market also demand of goods affects price.
  • Long period market: A lot of time can be found to increase volume of goods according to demands in such market. Production of goods or services can be increased by adding machineries, resources and means. Goods or services can be supplied to meet demands whatever greater it may be. So, in such market price is fixed according to rule of demand and supply. But in this market, new wants and needs of customers cannot be satisfied by adding new technology.
  • Very long period market: In a very long period market, any firm or company gets a long time that within which it can produce a lot of goods or services according to the interest, fashion, needs and wants of the customers. The firm studies and researches markets, identifies demands, develops new technology and supplies its products to the markets.

3. On the basis of volume of business

  • Wholesale market: The place where sellers buy goods from producers and sell them to retailers is called wholesale market. In wholesale market, a large amount of goods are dealt in. as little amount of goods is not sold in wholesale market, goods are not sold to the ultimate consumers. The wholesale price of goods becomes less than retail price.
  • Retail market: The market in which sellers buy goods from wholesalers and sell them in little amount to ultimate consumers is called retail market. In other words, the function of the retailer is retail market. In such market, the retailers have direct contact with consumers.

4. On the basis of control

On the basis of control, market can be classified into two types as follows:
  • Regulated market: The market controlled by rules and regulations by Trade association and government over the production, quality, features, marketing, price etc. of goods or services is called regulated market. In such market, the quality of goods becomes high, no immoral activities are done and the price becomes reasonable. So, such market is taken as reasonable and fair market. The uncontrolled tendency and immorality cannot spread in such market.
  • Unregulated market: The market where the government and trade association have no control is called unregulated market. In such market, firms or companies become free to fix quality, features price, marketing of their goods or services. Generally, price is fixed on the basis of the law of demand and supply. Quality of goods and features depends on competition.

5. On the basis of delivery

On the basis of delivery market can be classified into two types as follows:
  • Spot market: The market where delivery of goods and payment takes place immediately after agreement between seller and buyer is called spot market. In such market selling, buying and paying price take place at a time.
  • Future market: If an agreement or contract is signed at present for selling and buying any goods or services at any certain time in future, such market is called future market. Payment of price and delivery of goods take place in future in such market. Conditions of payment of price, discount, commission, delivery etc. are fixed in the agreement or contract.

6. On the basis of competition

On the basis of competition market can be classified in the following three types:
  • Perfect market: The market where a large number of sellers and buyers throng in, same types of goods are found in large quantity and price is fixed on the basis of interactions of demands and supply is called perfect market. In such market, there should be freedom of entrance and abdication for business firm. The buyers and sellers should have knowledge about goods or services. Generally perfect market cannot be found in practice.
  • Imperfect market: The imperfect market is the market which is neither perfect nor monopoly market. It is middle way market. It has neither the features of monopoly market nor perfect market. The sellers and buyers may or may not have complete knowledge about goods or services. Different types of goods can be found in such market. Same types of goods or services may be sold at different prices and different customers at same place/shops. Generally, such markets are found in practice.
  • Monopoly market: The market where there is full control on supply of goods or services is called monopoly market. In monopoly market there remains only one producer and price is fixed by the producer himself. The price is not fixed on the basis of demand and supply in such market. The examples of monopoly market are electricity, drinking water, fuel/petroleum, rail transport, etc. in Nepal.

7. On the basis of nature of products

Market can be classified into two types on the basis of nature of goods or services as follows:
  • Commodity market: The market where selling and buying of customer and industrial goods takes place is called commodity market. For example: the market of fruit, food stuffs, machineries, different equipment, furniture etc. is commodity market.
  • Financial market: The market of money and financial equipment is called financial market. In this market, money, share, debenture, treasury bill, commercial paper etc. are dealt. The dealing of short term fund is called money market and dealing of long term fund is called capital market.

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