What is the Market? Know The Classification, Supply, Demand, Features And Characteristics

We explain what the market is, how it originated and its classification. Also, what are its characteristics, stages and what is marketing.

What is the Market?

By market is understood, broadly speaking, the place both physical and theoretical in which potential buyers and sellers of a specific item converge, to carry out commercial transactions of exchange of goods and services.

Various actors interested in the exchange intervene in the market , from individuals to companies and cooperatives, NGOs , etc. and they are organized around the principles of supply and demand, that is, the quantity of goods and services available and the specific need that consumers have for them .

Markets are governed by their own economic and financial rules , which affect availability, pricing, and frequency of exchange; and also markets are everywhere where two or more people exchange goods and services for money .

In the contemporary capitalist world, the various existing markets occupy a central place in the social, political and, naturally, economic order , so their impact on people's lives is direct, and can translate into great benefits and opportunities, or in hardship and impoverishment.

Market Concept

The concept of the market varies according to the theoretical approach with which it is viewed. For example, in the economic field, we speak of the market to refer to the set of commercial transactions that take place in a given national or regional environment, or to the dynamics of said set.

On the other hand, in matters of marketing or commercialization of a good, the market is the total of potential buyers or consumers of a product or service, to whom the efforts to promote it are directed.

And, at the same time, the term "market" is used to refer indirectly to the different financial and commercial sectors of a society , in particular when speaking of the "interests of the market" or the "hand of the market"

Market origin

The markets originated, at least as we understand them today, from the globalization that came to the world during the Renaissance and the beginning of the Modern Age , characterized by the expansion of European empires and the need to exchange materials with the regions . far to the east and west.

The establishment of new trade routes , new desirable goods and the emergence of the bourgeoisie as a new ruling class were decisive, as well as the Industrial Revolution . The exchange of products for raw materials and the advent of capitalism increasingly led to a global and international market like the one existing at the end of the 20th century .

The appearance of the Internet and telecommunications thus created a new market for the consumption of information and technological goods with a worldwide reach, thus tending towards a global market that finally transcends borders.

Market types

Market classifications are usually proposed, based on their specific characteristics, and there are usually many classifications. Among them stand out:

• Based on your geographical location.  We can talk about local, national, regional, international markets and even the global market.
• Based on the type of client. There is talk of a consumer market, if its products go to the final customer, who uses them; industrial market, if they go to other individuals who generate elaborated products from them; reseller market, if the goods go to other sellers who move them from one place and sell them again at a higher price; government market , made up of public and State institutions .
• Based on the nature of the traded.  We then speak of the market for goods or products, the market for services, the market for ideas or the market for places or real estate, according to the type of product offered.

Wholesale and retail market

In the same way, there are two types of sale in the markets, judging by the volumes of merchandise offered, and they are:

• The wholesaler.  Wholesale or large quantities, usually at lower prices, so this type of sales is used by other distributors to sell on a smaller scale and add their profit to the new price per unit.
• The retailer.  Retail or small quantities, usually units, is the opposite: small-scale sales, usually direct to the final consumer, who consumes a unit or a few.

Market niche

We speak of a market niche to refer to a specific or punctual segment of the demand for a specific good or an area , which can be satisfied by one or more companies with minimal competition. A niche can be a certain type of clothing, a certain type of drink, etc.

Product market cycle

Every product goes through a cycle of production and consumption that consists of the following stages:

• Raw material extraction .
• Product manufacturing.
• Distribution of the product to the marketing chain.
• Sale of the product and subsequent purchase by the final consumer.

Supply and demand in the market

The markets are governed by the law of supply and demand , which has to do with the quantity of goods or services offered in a specific area or item, and the demand for said goods or services at a given moment in a market.

According to these conditions, the prices of these goods or services will rise or fall, according to the following logic:

• If there is a lot of supply of a good or service and little demand for it, prices will tend to fall, since those who offer them will want to attract the little demand to their business.
• If there is little supply of a good or service, that is, it is scarce, and there is a high demand for it, prices will tend to rise, since merchants are guaranteed to buy.
• If there is a lot of supply of a good or service and a lot of demand for it, prices will tend to stabilize.

market competition

Based on the marketing strategies and the operating conditions of the different providers of a good or service in a specific market, we can speak of two types of competition:

• Perfect competition. Some say that perfect competition does not exist; because it is a market in which all bidders compete on equal terms for the purchase, without interventions outside the market, without acts of competitive disloyalty and without, therefore, the need for advertising . A perfectly competitive market is one in which products compete with each other on quality, but nothing else.
• imperfect competition. Imperfect competition is one in which factors external to the dynamics of the market itself intervene, such as state regulations, monopolies , large advertising campaigns, unfair market strategies, etc. These factors alter the "natural" functioning of the market and favor some over others.

monopolies and oligopolies

Imperfect competition regimes give rise to the possibility of monopolies or oligopolies arising, forms of control and intervention in the dynamics of the market exercised by one or by a group of producers who intervene and compete in it, to twist its laws in their own right. exclusive benefit.

In the case of monopoly, a single producer controls the market and makes it much more difficult for its competition to enter, either by controlling prices, monopolizing spaces or by having subsidies and other advantages. Oligopolies, similarly, consist of groups of producers who jointly manage the market and exert pressure so that no one else competes with them.

 Marketing

Given the importance of the study of the market in the contemporary world, a new branch of study and theorization has arisen , known as marketing , which attempts to understand its evolution, internal logic and fundamental laws.

The above content published at Collaborative Research Group is for informational and educational purposes only and has been developed by referring reliable sources and recommendations from technology experts. We do not have any contact with official entities nor do we intend to replace the information that they emit.