Types of Markets

8 Key excerpts on "Types of Markets"

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  eBook - PDF

  Economics for Investment Decision Makers

  Micro, Macro, and International Economics

  • Christopher D. Piros, Jerald E. Pinto(Authors)
  • 2013(Publication Date)
  • Wiley

    (Publisher)

  2. ANALYSIS OF MARKET STRUCTURES Traditionally, economists classify a market into one of four structures: perfect competition, monopolistic competition, oligopoly, and monopoly. Section 2.1 explains that four-way classification in more detail. Section 2.2 completes the introduction by providing and explaining the major points to evaluate in determining the structure to which a market belongs. 2.1. Economists’ Four Types of Structure Economists define a market as a group of buyers and sellers that are aware of each other and are able to agree on a price for the exchange of goods and services. Although the Internet has extended a number of markets worldwide, certain markets are limited by geographic boundaries. For example, the Internet search engine Google operates in a worldwide market. In contrast, the market for premixed cement is limited to the area within which a truck can deliver the mushy mix from the plant to a construction site before the compound becomes useless. Thomas L. Friedman’s international best seller The World Is Flat 1 challenges the concept of the geographic limitations of the market. If the service being provided by the seller can be digitized, its market expands worldwide. For example, a technician can scan your injury in a clinic in Switzerland. That radiographic image can be digitized and sent to a radiologist in India to be read. As a customer (i.e., patient), you may never know that part of the medical service provided to you was the result of a worldwide market. 1 Friedman (2006). 144 Economics for Investment Decision Makers Some markets are highly concentrated, with the majority of total sales coming from a small number of firms. For example, in the market for small consumer batteries, three firms controlled 87 percent of the U.S. market as of 2005 (Duracell 43 percent, Energizer 33 percent, and Rayovac 11 percent).

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  eBook - ePub

  Business Strategy

  • George Stonehouse, Bill Houston, David Campbell(Authors)
  • 2003(Publication Date)
  • Routledge

    (Publisher)

  Chapter 5 Products and markets

  DOI: 10.4324/9780080476346-5

  Introduction and chapter overview

  The way in which an organization relates to its markets is one of the most important aspects of competitive strategy. The idea of a market as a place where buyers and sellers come together can apply to both inputs and outputs. Product markets are those in which an organization competes for product sales; resource markets are those in which an organization competes for its resource inputs.

  In this chapter, we discuss the key elements of this system: the nature of markets and the nature and importance of products. The way in which an organization configures itself in respect to these elements is crucial to the success of business strategy.

  Learning objectives

  After studying this chapter, students should be able to:

  • explain the term market and describe three ways by which markets can be defined;
  • describe market segmentation and explain the ways in which markets can be segmented;
  • describe three ways of approaching market segmentation;
  • explain the term product and describe Kotler's five levels of product benefit;
  • describe and criticize Copeland's product typology;
  • understand the stages in, and uses of, the product life cycle;
  • explain the concept of portfolio;
  • describe the composition and limitations of the Boston matrix;
  • explain how the GEC matrix works.

  Ways of defining and understanding markets

  Defining markets and market share

  Economists refer to a market as a system comprising two ‘sides’. The demand side comprises buyers or consumers of a product or resource; the supply side produces or manufactures the same.

  In strategy, we often use the term slightly differently. By market, we usually mean a group of actual or potential customers with similar needs or wants (the demand side). We usually refer to the supply side

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  eBook - PDF

  Marketing Strategy

  • O. C. Ferrell, Michael Hartline, O. C. Ferrell, Michael Hartline, Bryan Hochstein(Authors)
  • 2021(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  Consum- ers buy products for their personal use or consumption. In contrast, organizational buyers pur- chase products for use in their operations. These uses can be direct, as in acquiring raw materials to produce finished goods, or indirect, as in buying office supplies or leasing cars for salespeople. There are four types of business markets: ● ● Commercial Markets. These markets buy raw materials for use in producing finished goods, and they buy facilitating goods and services used in the production of finished goods. Commercial markets include a variety of industries, such as aerospace, agriculture, mining, construction, transportation, communication, and utilities. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Chapter 5: Customers, Segmentation, and Target Marketing 125 ● ● Reseller Markets. These markets consist of channel intermediaries such as wholesalers, retailers, or brokers that buy finished goods from the producer market and resell them at a profit. As we will see in Chapter 6, channel intermediaries have the responsibility for creating the variety and assortment of products offered to consumers. Therefore, they wield a great deal of power in the supply chain. ● ● Government Markets. These markets include federal, state, county, city, and local governments. Governments buy a wide range of finished goods ranging from aircraft carriers to fire trucks to office equipment.

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  MBA Marketing

  • Malcolm McDonald, Ailsa Kolsaker(Authors)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  PART I DEFINING THE MARKET, TARGET AUDIENCES AND CUSTOMER VALUE CHAPTER 1 TYPES OF MARKETING IN THIS CHAPTER WE STUDY: ■ consumer marketing ■ services marketing ■ industrial marketing ■ capital goods marketing ■ trade marketing 3 CHAPTER 1 – TYPES OF MARKETING INTRODUCTION Marketing takes place in a variety of contexts. While the casual observer might think automatically of consumer marketing, there are numerous others. In this chapter, we introduce the most common forms of marketing; there are other, more specialist variants which are beyond the scope of this book. CONSUMER MARKETING Consumer products are those which are sold to individuals and then consumed by them or someone to whom they are passed. Consumer marketing is prob-ably the most accessible to those new to the study of marketing. Each of us is a consumer, so all of us have first-hand experience of consumer marketing. As consumers, we know that we want good quality products, at a reasonable price, that perform as we anticipate. In other words, we want products that have inherent value that will perform the task for which they were purchased, thereby satisfying our needs. The success or failure of any consumer product depends not only upon the organization that ultimately sells them, but also upon all the other companies involved in their production and distribution. Consumer products thus occupy a crucial position at the head of value chains that lead right back through retailers, distributors and manufacturers to the producers of the basic raw materials. Their success relies upon the whole value chain perform-ing well, thus those managing consumer product marketing also determine the survival of that value chain. This sense of mutual dependency applies equally to consumer services. The key marketing issue for anyone providing consumer goods or services is the large number of potential customers.

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  Handbook of Marketing

  • Barton A Weitz, Robin Wensley, Barton A Weitz, Robin Wensley(Authors)
  • 2002(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  Business markets are generally defined as markets where both sellers and buyers are businesses or other organizations. Markets where not only sellers but also customers are businesses and other organi-zations are of great significance in all developed economies. It is estimated that the value of trans-actions that are carried out between businesses in an economy such as Sweden’s is about 3–4 times more than the value of transactions between businesses and households. That is only a crude indicator of the importance of these markets. Apart from the volume of exchange, business markets are impor-tant arenas for economic and technological development that affect economies of regions and countries. The telecom and biotech markets are but two recent examples of markets that have had important effects both on regional developments and our way of living. Over the last few decades there has been considerable research into the nature of business markets and on the marketing practices in compa-nies that operate in these markets. Research findings show that business markets display several peculiar features that impact on marketing practices. The peculiarity of business markets has its origin in the symmetry of market relationships. We have the same type of actor on both sides – both the selling and buying side are companies or other professional organizations. The symmetry of actors has far-reaching consequences for the market processes. The aim of this chapter is to review the picture of business markets as it comes out in contemporary research, to outline their peculiarities and to explore their consequences for marketing management and future directions of marketing research. The chapter is organized around five sections. The first section deals with the distinctive traits of business markets recurrently reported in empirical studies.

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  Available until 25 Jan |Learn more

  Business Economics

  • Rob Dransfield(Author)
  • 2013(Publication Date)
  • Taylor & Francis

    (Publisher)

  5 Different types of market structures

  Chapter Outline

  5.1   Introduction

  5.2   What is market structure?

  5.3   Types of market structure

  5.4   Perfect competition

  5.5   Monopoly

  5.6   Market structures in the real world

  5.7   Price setting in the real world

  5.8   Price setting in different market settings

  5.9   Allocative efficiency

  5.10   Summary

  Chapter Objectives

  By the end of the chapter you will understand:

  • How to identify different types of market structures
  • The features and benefits of a perfectly competitive market
  • The features and benefits of a monopoly market
  • The features and benefits of oligopoly markets
  • The features and benefits of monopolistic markets
  • Pricing strategies in the real world

  5.1  Introduction

  One of the most important topics that economists have analysed is the market for goods and services. They are particularly interested in how competition between firms in the market affects market outcomes such as prices, output levels and differentiation between products. Economists are particularly interested in the extent to which competition in the market leads to an efficient use of resources.

  At the start of this book we saw that the fundamental economic problem is of scarcity and choice. If resources and goods are scarce they need to be used efficiently. A key question therefore is to what extent does a particular market lead to efficient use of resources? One of the main arguments presented to support competition and competitive markets is that this leads to a highly efficient use of resources. Many economists believe that where there is less competition this can lead to waste and less efficient use of resources. In Chapter 2 we saw that economists use models to simplify the relationship between economic variables to aid understanding. In this chapter we present some models of different market structures.

  5.2  What is market structure?

  Market structure means the characteristics under which a market operates. An understanding of market structure is very important in business because it helps to identify the nature of competition in the market. Knowledge of market structure helps entrepreneurs to consider the nature and scale of competition. The more competitive the market the greater the influence of rivals/competitors on pricing and other competitive decisions that a business makes.

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  Economics

  Theory and Practice

  • Patrick J. Welch, Gerry F. Welch(Authors)
  • 2016(Publication Date)
  • Wiley

    (Publisher)

  In an antitrust case, the accused will likely present one definition of its market’s boundaries, and the accuser another. The court must then determine which definition is correct and, partly on that basis, decide on the guilt or innocence of the accused. THE MARKET STRUCTURES We know that the degree of competition that a business faces in a market influences its behavior with regard to the prices it charges, the profit it makes, and the nonprice competition it uses. Economists have created four models of market situations, called market structures, to represent degrees of competition and study their effects: pure competition, monopolistic competition, oligopoly, and monopoly. The four market structures represent a spectrum of competitive conditions. At one end of the spectrum is pure competition, where the competitive pressure is the strongest, and at the other end is monopoly, where there is no direct competition. In between are monopolistic competition, which is closer to pure competition, and oli- gopoly, which is closer to monopoly. Each of these market models has a set of characteristics that differentiates it from the other market models and is important for determining the type and amount of competition a firm faces. For example, certain features are associated with a monopoly structure and others with oligopoly. The distinguishing characteristics of each of the market models center around three areas. ♦ Number of sellers. The number of sellers in the market is important to the amount of competition. A market may have one seller, thousands of sellers, or some number in between. ♦ Product type. The product sold in the market can be identical from seller to seller or be differentiated. If a firm can distinguish its product from those of its competitors through size, color, or any other attribute, then nonprice competition can arise. ♦ Entry and exit. The ease or difficulty with which firms can enter or leave the market affects competition.

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  New Economy - New Competition

  The Rise of the Consumer?

  • D. Asch, B. Wolfe(Authors)
  • 2001(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  3 The Nature of Markets In chapt er we will address the central issue of how markets work and what influences the nature of competition across the whole value chain of a product or service. The chapter starts by introducing a framework which helps us to understand the nature of competition. and to identify the key detcnninallls of the nature of competition in a market or induslfY. Following this we identify factors or influences which shape the way in which a market develops. We also consider the different stages of development of the industry. We conclude the chapter by looking at an example and flagging some key issues for consideration in subsequent chapters. 3.1 Analysing Industries and Markets In order to understand the industry or a market we first need to identify what market or markets we are interested in. As we saw in the previous chapter we shou ld therefore be clear about the needs of the customers and who it is that customers see as the competition. The key point here is that it is the buyer of the product or service that delennines and defines the market. Consider the case of a business selling used cars. The finn has a ccrtain amount to spend on advenising and promotion. There are a number of alternatives available. For example. they could advenise in a local newspaper. they could buy advenising space on local radio. rem some hoardings. or purchase off-peak lime on regional TV. For this particular bus in ess these are just some of the alternatives. having due regard to costs and effectiveness. that could be used to meet promotional and advenising needs. So. if we were responsible for managing the local radio station we would need to consider lhat the competitors for advertising revenues were not just other local radio stations but all other fornls of media in that town or region. In order to identify in more detail the markets that we are cons id ering we must first identify the 41

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