The word market originates from the Latin word ‘maracatus’. It is a market where diverse commodities are bought and sold at specific retail prices. Marketing is a sub-concept that is directly related to the activities of the players present within a market environment. In Economics, marketing is referred to as a strategy which is implemented to boost the sales of a product that is listed in a defined market. However, with the introduction of the internet, the entire marketing meaning has changed significantly. The modern-day meaning of marketing is directly correlated to the concept of digital marketing. Advertisement and research are the two most fundamental pillars of marketing and must be considered by sellers to boost their overall sales potential.
Classification of Market Structure
Classification of market structure is made into four types:
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Perfect Competition: It describes a market structure, where a large number of small firms compete against each other. Here, a single firm doesn't have any significant market power. Due to this, the industry as a whole produces an optimal level of output because none of the firms can influence the market pieces.
Monopolistic Competition: In this market structure, a large number of small firms compete against each other but unlike the module in perfect competition, here the firms in monopolistic competition sell similar but slightly different products. It is based on the assumptions given below:
There is a free entry or exit in the market
Firms selling differentiated products
Consumers might prefer one product over the other
Oligopoly: It describes a market structure that is dominated by a small number of firms. The firms may compete or collaborate in this way they can drive up prices and earn more profit. This market structure builds on the following:
Oligopolies can set prices
All the firms can maximize the profits
Only a few firms can dominate the market
Monopoly: It refers to a market structure where a single firm has control of the entire market. It is formed based on the assumptions like the monopolies can set the market price, there are high barriers to entry and exit, they can maximize the profits and only one firm can dominate the entire market.
Classification of the Market in Economics
Classification of market structure in Economics is done on a different basis. Let's see a traditional approach.
Traditional Approach
Traditionally, a market is a physical place where the buyers and sellers are gathered to buy and sell the respective goods.
Based on the Area: An area can generally mean local, national and international markets. They generally include goods like fish, milk, vegetables and so on.
Based on Time: Here time is the main criteria. It is divided into a short period and a long period. In a short period, perishable goods of all sold and in the long period markets, durable goods of different varieties are produced.
Based on Transactions: Here the markets are divided into spot markets and futures markets. In spot markets, if the transaction takes place, the delivery takes place. In future markets, the transactions are finalized and the payments dues for the future.
Based on the volume of business: Here, the markets are divided into two main retail and wholesale. In retail, the quantities are sold on a small scale, whereas in wholesales, the markets are featured in large volumes of business.
Based on the Nature of Goods: Based on the nature of goods, they can be commodity markets and capital markets.
Modern Approach
In modern markets, classification is based on consumer orientation as they are the king-pin of the modern market classification.
Business Markets: It is a market of business buyers and sellers. Here the companies which sell business goods and services often face well informed professional buyers who have skills in evaluating competitive offerings.
Global Markets: This type of market involves sellers and buyers from all over the world. The companies involved in selling and buying in the global marketplace face global decisions and challenges.
Consumer Markets: These types of markets specialized in selling mass consumer durable and nondurable products.
Nonprofit and Government Markets: Companies usually sell their products to non-profit institutions like the church, orphanage to governmental departments at the local state and central level.
Did You Know?
Istanbul's Grand Bazaar is known as the oldest marketplace in the world having been established in 1455.
FAQs on Market Meaning and Classification
1. What is the Meaning of Marketing and the Classification of Its Structure?
In Economics, a market is referred to as an arrangement where buyers and sellers come in close contact with each other whether it is directly or indirectly to buy and sell goods. A market doesn't mean that buyers and sellers should meet in a particular place. Marketing functions are mainly divided into four parts namely Perfect competition, Monopolistic competition, Oligopoly and Monopoly.
2. Explain Any Two Variables in the Classification of Market Structure.
Let us discuss the two most popular market structures present in the global economy. Oligopoly describes a market structure that is dominated by a small number of firms. The firms may compete or collaborate, in this way they can drive up prices and earn more profit. On the other hand, Monopoly refers to a market structure where a single firm has control of the entire market. It is formed based on the assumptions like the monopolies can set the market price, there are high barriers to entry and exit, there can maximize the profits and only one firm can dominate the entire market.
3. Explain Three Modern Market Classification Approaches?
The three modern market classification approaches are as follows:
Business Markets: It is a market of business buyers and sellers. Here the companies which sell business goods and services often face well informed professional buyers who have skills in evaluating competitive offerings.
Global Markets: This type of market involves sellers and buyers from all over the world. The companies involved in selling and buying in the global marketplace face global decisions and challenges.
Nonprofit and Government Markets: Companies usually sell their products to non-profit institutions like the church, orphanage to governmental departments at the local state and central level.
