Define the market in general
The market is defined linguistically as a place where goods and goods are brought for sale and purchase, and technically as a place where two parties meet; one is concerned with selling specific goods and products or providing a service, and the other is interested in purchasing these goods and services. The stock market is the place where securities are traded, and it is referred to as a market.
Defining the market in economics
The economic definition of the market differs from the general definition associated with the location where goods and services are sold, as it is defined as a group of transactions of buying and selling goods, and the formation of their price based on an infinite number of decisions, as these decisions are based on two main factors that work together:
- The entity that produces: the product is in charge of the market's supply price.
- The commodity's consumer: who, in turn, controls the market's demand price.
Defining the market in business
The market is described in the sphere of business as a collection of actual and future clients for businessmen's goods and services, and these groups are grouped into one or more of the following categories: geographical, demographic, socioeconomic, psychological, or behavioral category, or sectoral.
In the new institutional economy, defining the market is crucial.
The market is defined as a mechanism of action or a type of existing institution that facilitates the exchange, coordination, and allocation of resources, goods, and services between buyers and sellers, as well as between producers, middlemen, and consumers, from a new institutional economic perspective, and these markets may be imperfect institutions with a competitive nature. It is very efficient in that it provides good market mechanism coordination, supports company development, and strives to achieve economic goals on a greater scale by lowering transaction costs and risks.
Market foundation elements
The presence of a set of elements that complement each other is required for the establishment of the market, as follows:
- Buyers: This is a group of people who expect the market to meet their demands and requirements.
- Purchasing power is the primary factor that converts buyers' wants and requirements into actual demand.
- Sellers: They are a group of people that provide their goods and services in exchange for a monetary return, with the expectation that this return would cover production expenses and allow them to profit.
- Communication: Buyers and sellers must be able to communicate with one another in order to give the goods and services for sale.
- Balance of knowledge: For the market to exist and continue, buyers and sellers must maintain a balance of knowledge by not withholding crucial information during the purchasing process, exposing the other party to partial exploitation.
- It is a means of facilitating the exchange process between the two parties; for example, cash, credit cards, and so on.
- Deferred payment: This is a service that the market provides to the buyer that permits him to pay at a later date.
- The legal system: The legal system attempts to protect sellers and buyers in transactions, and these rules include civil law, such as contracts, and criminal law, such as anti-theft statutes.
- The financial system strives to allow individuals and businesses to receive loans when they need them and to save when they have more money than they need.
- Ownership Rights: Ownership rights protect the seller's right to sell his goods and services, as well as the buyer's right to buy what he wants and own it.
The market is divided into several categories, as follows:
It is an illegal market, and it means a market in which transactions are carried out without the knowledge of the authorities or other regulatory bodies.
It is the market in which many people gather in order to buy and sell a lot of goods, and what distinguishes it is the bidding process that takes place between buyers; To give the highest price for the offered merchandise, the items being offered are sold to the highest bid.
It is the place where two parties exchange different securities, currencies, and bonds, and this type of market is the basis of capitalist societies, because it provides a source of capital formation and liquidity for companies.
It is the place where buyers can meet with sellers, and buy the required goods from them in exchange for money. Examples of this type of market are: shopping centers, stores, and retail stores.
It is also called the virtual market, and it is the market in which sellers offer goods and services online, so buyers cannot see them in their physical form, or interact directly with the seller.
Intermediate commodity market
It is the market designated for selling commodities in the form of raw materials, which are used for the final production of other commodities.
It is a group of people who exchange information and knowledge-based products.
What are the different market categories based on the target group's size?
The size of the market changes depending on a number of aspects, including the number of sellers and buyers, as well as the total funds included in the market annually. There are a number of terminology linked with the market based on the size of the target group of the marketing process, including:
- Potential Market: This market is made up of all those who are interested in purchasing a specific product or service.
- Available market: A portion of the potential market, but it targets people who have enough money to purchase products and services.
- Qualified Available Market: This market is for persons who visit the available market and are permitted to purchase the goods and services on sale.
- Target market: It is part of the available market, provided that the company is ready to serve the people who refer to its products and services.
- Customers who have purchased products and services from the target market are considered to have penetrated the market.
The perfect competition market, monopolistic competition market, oligopolistic market, and perfect monopoly market are the four primary forms of market systems. These structures refer to the various market characteristics that determine the ties between sellers and buyers, as well as any reciprocal relationship in the market, based on the following basic criteria:
- The product or service being sold is either a good or a service.
- How simple it is to enter and exit the market.
- Distribution of market share to the largest companies.
- The number of companies in the market.
- The amount of customers and how they collaborate with or compete with sellers to set price and quantity.
- The relationship between sellers.
- Business planning. It helps determine the feasibility of a business before allocating significant resources to the project.
- Providing the necessary information to businessmen about a number of main axes in the field of business, such as: potential and current customers, competition, and the industry in general.
- Clarify the marketing challenges that a business may face.
- Develop a number of strategies, such as: market segmentation, and the establishment of identity for products or services that cannot be developed without this research.
- gathering, analyzing, and interpreting market information.
- Gathering information about a product or service that will be offered for sale in the market.
- Gathering information about past, current, and potential customers of a product or service.
- Research characteristics and spending habits, location, competitors, target market needs for the business, and the industry as a whole.