MARKET AND MARKETING

Market
• ‘Market’ is a derivative of the Latin word ‘Marcatus’
meaning trade or a place where business is conducted
• Sphere within which price determining forces operate.
• Area within which the forces of demand and supply
converge to establish a single price.
 Marketing
• Marketing consists of the performance of business
activities that direct the flow of goods and services from
the producer to the consumer of user.
Difference between Market and marketing

• Market is an institution e.g. milk market

(including various functionaries like middlemen,
wholesalers, retailers, etc.)
• Marketing includes all those functions performed
by these agencies in directing the flow of a good
from the primary producers to the ultimate
consumers
 MARKET STRUCTURE
Market structure means the organizational characteristics of a market
which influence the nature of competition and pricing.
Features of market structure
1. Degree of sellers concentration: It is described by number of
seller in the market
2. Degree of buyer concentration: It is described by number of
buyer in the market
3. Degree of products differentiation: When product of one seller
can be distinguished from the product of another, through actual
variation or imagined differences, then there is product
differentiation among the products
4. Condition of entry into the market: It refers to the relative ease
or difficulty with which new sellers may enter into the market
 TYPES - MARKET STRUCTURE
A. Sellers Side
1. Perfect (Pure) competition market
•large number of sellers and buyers in the market so that no
individual is able to influence the price
•There is homogeneity of the product i.e. all sellers offer a
nearly identical product in all aspects and the products of one
seller is a perfect substitute to the product of the other
•There are no restrictions on entry into or exit out of the
market for both sellers and buyers
•There is only one uniform price prevailing for one particular
product at one particular time in the market
 TYPES - MARKET STRUCTURE
A. Sellers Side
2. Monopoly
•It is situation in which there is only one seller and he
determines the price of the commodity
•There will not be close substitutes for product being marketed
•There is no freedom for the new firms or sellers to enter into
the market and hence this market structure faces no imminent
threat of competition. This is usually made possible through
control of raw materials supply or by the rules and regulations
imposed by the government. E.g. Railways, Postal departments.
 TYPES - MARKET STRUCTURE

A. Sellers Side
3. Monopolistic competition
As the name implies monopolistic competition has
characteristics of both perfect competition and monopoly
markets. E.g. Oil industry.
Many Seller and Differentiated product
 TYPES - MARKET STRUCTURE

A. Sellers Side
4. Oligopoly
•It is a market where a small number of firms or sellers market a
large amount of the product who can affect the price and pricing
policies of the other firm.
•The product material will have no substitute.
•Entry of new firms is also limited through capital investment
requirements, market organisational needs etc.,
•E.g. Automobile, TV etc
 TYPES - MARKET STRUCTURE
B. Buyers’ Side
1. Monopsony
There is a single firm or consumer on the buyer’s side of the market.
E.g. Satellite parts (one buyer).
2. Oligopsony
A few numbers of buyers dominate the market.
E.g. Tea and Coffee markets.
3. Bilateral monopoly
It is the case of single seller and single buyer.
E.g. Defence equipments.
Form of market Number of Nature of product Degree of Ease of entry
structure firms control over
price

Perfect comp Large Homogenous None Free

Imperfect comp
Monopolistic Large Differentiated (close Some Free entry but for
substitutes) producing close
substitutes
Pure Oligopoly Few Homogenous Some Limited entry
Differentiated Few Differentiated (close Large Limited entry
Oligopoly substitutes)

Monopoly One Unique products Very large Strong barrier

without close
substitutes
CLASSIFICATION OF MARKETS
 MARKET DIMENSIONS
Dimensions of a Market:
1. Location
2. Area or coverage
3. Time span
4. Volume of transactions
5. Nature of transactions
6. Number of commodities
7. Degree of competition
8. Nature of commodities
9. Stage of marketing
10. Extent of public intervention
11. Type of population served
12. Accrual of marketing margins
 Location
a) Village Markets: A market which is located in a small village, where
major transactions take place among the buyers and sellers of a village
b) Primary wholesale Markets: These markets are located in big towns near
the centers of production of agricultural commodities. In these markets, a
major part of the produce is brought for sale by the producer-farmers
themselves to traders
c) Secondary wholesale Markets: These markets are located generally in
district headquarters or important trade centers or near railway junctions.
The major transactions in commodities take place between the village
traders and wholesalers
d) Terminal Markets: A terminal market is one where the produce is either
finally disposed of to the consumers or processors, or assembled for export
e) Seaboard Markets: Markets which are located near the seashore and are
meant mainly for the import and/or export of goods are known as seaboard
markets. Examples of these markets in India are Mumbai, Chennai, Kolkata
 Area/Coverage
a) Local or Village Markets: A market in which the buying and selling
activities are confined among the buyers and sellers drawn from the
same village or nearby villages. The village markets exist mostly for
perishable commodities in small lots, e.g., local milk market or
vegetable market
b) Regional Markets: A market in which buyers and sellers for a
commodity are drawn from a larger area than the local markets.
Regional markets in India usually exist for food grains
c) National Markets: A market in which buyers and sellers are at the
national level. National markets are found for durable goods like jute
and tea
d) World Market: A market in which the buyers and sellers are drawn
from the whole world. These are the biggest markets from the area
point of view. These markets exist in the commodities which have a
world-wide demand and/or supply, such as coffee, machinery, gold,
silver, etc.
 Time Span
a) Short-period Markets: The markets which are held only for a few
hours are called short-period markets. The products dealt within
these markets are of highly perishable nature, such as fish, fresh
vegetables, and liquid milk. In these markets, the prices of
commodities are governed mainly by the extent of demand for,
rather than by the supply of, the commodity
b) Long-period Markets: These markets are held for a long period
than the short-period markets. The commodities traded in these
markets are less perishable and can be stored for some time; these
are food grains and oilseeds. The prices are governed both by the
supply and demand forces
c) Secular Markets: These are markets of permanent nature. The
commodities traded in these markets are durable in nature and can
be stored for many years. Examples are markets for machinery and
manufactured goods.
 Volume of Transactions
a) Wholesale Markets: A wholesale market is one in which
commodities are bought and sold in large lots or in bulk. Transactions
in these markets take place mainly between traders
b) Retail Markets: A retail market is one in which commodities are
bought by and sold to the consumers as per their requirements.
Transactions in these markets take place between retailers and
consumers. The retailers purchase in wholesale market and sell in
small lots to the consumers. These markets are very near to the
consumers.
 Nature of Transactions
a) Spot or Cash Markets: A market in which goods are
exchanged for money immediately after the sale is called the
spot or cash market.
b) Forward Markets: A market in which the purchase and sale
of a commodity takes place at time “t” but the exchange of the
commodity takes place on some specified date in future i.e.,
time “t + 1”.
 Number of Commodities
a) General Markets: A market in which all types of commodities,
such as food grains, oilseeds, fiber crops, etc., are bought and sold is
known as general market. These markets deal in a large number of
commodities
b) Specialized Markets: A market in which transactions take place
only in one or two commodities is known as a specialized market. For
every group of commodities, separate markets exist. The examples
are food grain markets, vegetable markets, wool market and cotton
market.
 Degree of Competition
i. Perfect Markets: A perfect market is one in which the following conditions
hold good:
 There is a large number of buyers and sellers;
 All the buyers and sellers have perfect knowledge of demand,
supply and prices;
 Prices at any one time are uniform over a geographical area,
plus or minus the cost of getting supplies from surplus to deficit
areas;
 The prices are uniform at any one place over periods of time,
plus or minus the cost of storage from one period to another;
 The prices of different forms of a product are uniform, plus or
minus the cost of converting the product from one form to
another.
ii. Imperfect Markets: The markets in which the conditions of perfect
competition are lacking are characterized as imperfect markets.
Monopoly, Duopoly, Oligopoly, Monopolistic competition, etc.
 Nature of Commodities
A. Commodity Market
A market which deals in goods and raw materials, such as wheat,
barley, cotton, fertilizer, seed, etc., are termed as commodity
markets. Specific commodities are bought and sold in these markets.
These may either be production goods or consumption goods. In such
markets, transactions of specialized commodities take place. E.g.
Mumbai cotton market, Punjab wheat market etc.
a. Produce exchange market : well organized markets for raw produce
like wheat, cotton, jute etc.
b. Manufactured and semi-manufactured goods market : E.g.
Leather goods market, Kanpur.
c. Bullion Market : purchase and sale of gold, silver and other
precious stones. Bullion markets of Bombay, Calcutta, Delhi and
Chennai etc., are of a few examples of such markets.
 Nature of Commodities
B. Capital markets
Capital market is responsible for meeting the financial requirements
of big industrial and commercial concerns.
a. Money market : providing finance to business and industrial
concerns.
b. Stock exchange market : In this market, shares are purchased and
sold in different parts of the country. Ex. BSE, NSE.
c. Foreign exchange market : It is a market for buying and selling of
foreign currencies. It can also be called as an international market
concerned with the export and import trade of a country. Mumbai,
London, New Delhi are examples of such markets.
 Stage of Marketing
a) Producing Markets: Those markets which mainly assemble the
commodity for further distribution to other markets are termed as
producing markets. Such markets are located in producing areas.
b) Consuming Markets: Markets which collect the produce for final
disposal to the consuming population are called consumer markets.
Such markets are generally located in areas where production is
inadequate, or in thickly populated urban centres.
 Extent of Public Intervention
a) Regulated Markets: Markets in which business is done in
accordance with the rules and regulations framed by the statutory
market organization representing different sections involved in
markets. The marketing costs in such markets are standardized and
practices are regulated.
b) Unregulated Markets: These are the markets in which business is
conducted without any set rules and regulations. Traders frame the
rules for the conduct of the business and run the market. These
markets suffer from many ills, ranging from non-standardized
charges for marketing functions to imperfections in the
determination of prices.
 Type of Population Served
a) Urban Market: A market which serves mainly the population
residing in an urban area is called an urban market. The nature and
quantum of demand for agricultural products arising from the urban
population is characterized as urban market for farm products.
b) Rural Market: The word rural market usually refers to the demand
originating from the rural population. There is considerable
difference in the nature of embedded services required with a farm
product between urban and rural demands.
 Accrual of Marketing Margins
Markets can also be classified on the basis of as to whom the
marketing margins accrue. Over the years, there has been a
considerable increase in the producers or consumers co-operatives or
other organizations handling marketing of various products. Though
private trade still handles bulk of the trade in farm products, the co-
operative marketing has increased its share in the trade of some
agricultural commodities like milk, fertilizers, sugarcane and sugar. In
the case of marketing activities undertaken by producers or
consumers co-operatives, the marketing margins are either negligible
or shared amongst their members.
• Less / Meager Marketing Margin – Co-operatives
• High Marketing Margin – Market with many middlemen