Lecture 06

Lecture: 06

KINDS OF MARKETS

There are four kinds of markets,

a.      According to Period of time.

b.      According to location.

c.       According to nature of commodity.

d.      According to nature of competition.

Market According to Time.

a.      Daily Market: It is a perishable commodity has a special feature. These commodities cannot be stored for longer period. Whatever, supply has arrived in the market has to be sold without delay. Eg: 100 Trucks of tomatoes have arrived in the city Vegetable Market. Now this whole quantity has to be sold in a day or two. If there is enough demand for tomatoes, the price will go high or in case of less customers, price will go low. In daily, market the deciding factor about price is demand.

b.      Short Period Market: In this, for short period of time, adjustments in supply are made within the existing productive capacity of the industry to produce more for supply to get more profit due to rise in price.

c.       Long Period Market: In this type, there is a large scope for expansion and contraction of supply. Due to long period of time, necessary changes can take place in the industry to meet permanent shifts of demand for commodity. In long period market the fluctuations in prices are small and smooth. If a factory producing Jam wants to increase its production capacity by installing new machines it will require a lot of time.

Markets According to Location.

a.      Local Market: it is a limited market comprising of small area where those good are produced and sold which are difficult to transport to far flung areas like ice and bricks etc. Products produced in houses are also come in local market category.

 

b.      Regional Market: In this market, those goods and products are sold and purchased which are produced and consumed in a particular region. Because of high transportation cost or lack of demand in other regions the market is limited. Eg: Sindhi-Shawl and pottery.

c.       National Market: This market extends to whole of a country. National market exists for those goods which are demanded in all parts of the country and can be transported easily from one region to another. Eg: Light Bulb, Wheat, Cloths etc.

d.      International Market: This market spreads all over more than one country. It may be extended to the whole world. The goods which are demanded internationally and can be produced in large scale and can be exchange in the market. Eg: Car, Computer, Gold, Oil etc.

Markets According to Nature of Commodity.

a.      General Market: Where all kinds of commodities are sold Eg: Liberty Market in Karachi, Anarkali in Lahore, Aabpara in Islamabad and Qisa Khawani in Peshawar.  

b.      Specialized Market: In this particular category of commodity is brought and sold Eg. Cloth Market, Fruit Market, Auto Market, Urdu Bazar (for Books), Bakra Mandi, factor market (labour), foreign exchange market etc.

c.       Marketing through Surplus: Some goods are sold through samples like grains, medicines etc.

d.      Marketing through Grades: Many goods are sold on the basis of grades and trade marks. Eg: watches, electric goods are sold by trade marks. Eg: SONY LED, SUZUKI Car, Philips Bulbs, Nokia Phone etc.

Markets  According to the Nature of Competition.

a.      Perfect Market (Perfect Competition) is the market having a very large number of buyers and sellers who sell identical goods. No single buyer or seller can influence the price. Entry and exit in the industry is free (i.e. every seller or buyer is price taker).

Conditions of Perfect Market:

                    i.            Large number of buyers and sellers.

                   ii.            Commodity is homogenous i.e. identical.

                 iii.            Free entry and exit of firms in market.

                 iv.            Both buyers and sellers have perfect knowledge of facts of market.

                   v.            There is perfect mobility of factors of production.

                 vi.            Unrestricted movement of commodity in all parts of the market.

b.      Imperfect Market (Imperfect Competition) is the market structure where one or more features of perfect competition are absent. The number of sellers/producers may not be large, product may not be homogenous or entry of new firms is restricted. In this market, monopoly prevails (i.e. single seller) or monopolistic competition with some sellers are present.

From Selling Side.

i.             Monopolistic Competition (Many firms producing close substitute). Those which are not identical but close substitutes are called differentiated product E.g. Coca Cola, Pepsi Cola and RC Cola.

ii.              Oligopoly (market dominated by few large firms) reacts to pricing and marketing decisions of rival firms. E.g. TV and Mobile Phone companies.

iii.                Duopoly (two sellers) the position of duopoly is just like oligopoly. The firms decide their price and output in the light policies of other firm. They compete, cooperate and curtail to keep price high e.g. Kiwi Shoe Polish and Cherry Blossom.

iv.       Monopoly (Single Seller) who fully controls the market supply and market price of a product. E.g. WAPDA in electricity supply.

From Buying Side.

       i.      Monopsony (Single buyer) e.g. in Pakistan atomic scientists can be employed by government only, govt has the monopsony in this case.

e-Market: It stands for electronic market in which marketing of products or services took place over the internet or through e-mail. It is also called online marketing. Internet marketing is inexpensive i.e. has extremely low cost to reach customers. It costs companies a small fraction of traditional advertising budgets, e-marketing is an immensely growing market form.