MARKET TYPES AND THEIR CHARACTERISTICS (WITH EXAMPLES) - ECONOMY - 2025

The market rates are different classifications that may be in the interaction between sellers and buyers, either by the nature of the purchase and consumption, geographical coverage, the amount of sales, etc.

The type of market a business is in will determine the type of business strategy it will need to have. A market consists of groups of buyers and sellers, who interact with each other to buy and sell products and services.

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Each market exhibits a different set of characteristics, which the seller must be aware of. This knowledge will help to design the appropriate marketing strategies. Market rates can be divided into different classifications based on different criteria.

Market types at the macroeconomic level

- Consumer market

It is a very large market. It is made up of all the people who have an unmet demand. The number of buyers is large. However, as the purchases they make are for personal consumption and not to be used to sell or continue to produce, people buy in small quantities.

Due to the large number of consumers, there is no close relationship between them and the manufacturer. In addition to being very numerous, the buyers are also widely distributed.

The whole world is the consumer market. As there are a large number of buyers and these buyers are geographically spread, there are a large number of intermediaries in the distribution channel.

The purchase is small and consumers have many alternatives to choose from. Therefore, they are very sensitive to price changes. Demand in the consumer market is price elastic.

- Business market

It consists of all the organizations that acquire products to use them in the production of other goods that will later be sold, or supplied to others. Therefore, the business market does not buy for personal consumption. This can be of two types:

The main industries that make up the business market are manufacturing, agriculture, fishing, forestry, utilities, construction, mining, communications, transportation, banking, services, and insurance distribution.

This market typically deals with far fewer buyers. For example, the productive occupation of the Goodyear Tire Company depends on obtaining an order from one of the big three US automakers.

Within the business market there are two subtypes: industrial market and resale market.

Industrial market

The main criterion is to keep production satisfied, making materials and components available for incorporation into the production process.

The ultimate goal is to satisfy the needs of the company's customers, whether they are intermediate manufacturers further down the production chain, or end customers.

Buyers in this market buy directly from manufacturers, rather than through third parties, especially when the items are technically complex or very expensive.

Resale market

The main criterion is the percentage of markup that can be added to products purchased from manufacturers and wholesalers, and then resold to individual customers.

- Government market

United States Capitol

In most countries, government organizations are major buyers of goods and services. Especially in developing countries, where the main infrastructure and production projects are government companies, this market becomes a very important part.

Government agencies generally require suppliers to submit bids and typically award the contract to the highest bidder.

In some cases, the government unit will take into account the quality or reputation of suppliers when finalizing contracts. They tend to favor domestic providers over foreign ones.

Government organizations require considerable paperwork on the part of providers. Therefore, there is a delay in decision-making due to excessive procedures and bureaucracy, due to having too many regulations to follow.

There are frequent changes in the procurement staff and they buy in large numbers. The cost or price plays a very important role. Product differentiation, advertising, and personal sales do not have much influence on winning bids.

- Institutional market

It is made up of hospitals, schools, prisons, universities, nursing homes, and other agencies that must supply products and services to the people in their custody. Most of these entities are characterized by having captive clients and low budgets.

The main criterion is to keep spending within predetermined budget limits that have been established as part of the previously agreed operating expense limit.

For example, hospitals have to decide the quality of food to buy for patients.

The purpose of the purchase is not profit, because the food is supplied to patients as part of the total service package, nor is the goal of the sale to minimize costs, because poor food will cause patients to complain and harm the reputation of the hospital.

The hospital buyer should look for institutional food vendors whose prices are low and of a quality that meets a certain standard. Many food vendors create a division to sell to institutional buyers.

Similarly, in the case of a bank, the stationery for forms and files is purchased not for profit, but as part of the service package offered.

Market types according to the form of interaction

Physical market

It is a place where buyers and sellers can meet bodily, both parties engaging in a transaction in exchange for money. Examples are department stores, shopping malls, and retail stores.

Virtual market

In today's business environment, this type of market is increasing rapidly. It is a place where the seller offers goods and services through a digital platform over the Internet. Buyers and sellers do not need to interact bodily. Examples: Freelancer.com, Amazon.com.

Auction market

It is the place where buyers together with sellers show the lowest and highest prices respectively that they are willing to trade. This exchange happens when both sellers and buyers agree to the same price. A good example is the New York Stock Exchange.

Financial market

It is a large market. This is a place to deal with liquid assets. For example, stocks, bonds, etc.

Market types according to the main characteristic

By size of the sale

Wholesale and retail markets vary in the quantity of products sold. Wholesale markets are less numerous and sell in large quantities. Products are sold to retailers or other intermediaries in the distribution chain.

Retail markets are numerous and generally sell to end consumers, who purchase smaller quantities, often individual units of a product.

By geographic coverage

- Local: market in a city or town.

- Regional: market in a state or in some states.

- National: market in a country.

- International: market in more than one country.

By period of time

- Short term: such as money markets.

- Weekly: like the village fairs.

- Seasonal in the long term: such as agricultural markets.

Market types according to structure

Perfect competition

Perfect competition has been observed in the fast food industry business, with McDonalds being the most relevant company to face perfect competition from competitors.

For this type of market, the income margin and the cost margin usually remain the same. During price selection, McDonalds must consider the breakeven point at which the company must still produce.

McDonald's production decision is conceptually based on the type of production and the amount of production in order to make a profit. It also focuses on how it could balance itself out if a loss is incurred.

The decision is also based on the fact of a distinction between short-term operations and long-term operations, adding the opportunity cost to the total cost of production.

Monopoly

GlaxoSmithKline can be recognized as a major company in the pharmaceuticals market. In this monopoly market, the company has control in setting its prices, either because it has no rivals or there are very few rivals who can restrain the sale of its products in the market.

On the other hand, the decision on production capacity is also determined by the company based on market demand, as this demand is still huge.

The configuration of price and production depends entirely on the expected and predictable profits that a monopoly organization usually makes.

Oligopoly

In the oligopoly, the market is dominant because of the small number of large shapes that are used to produce identical or similar products. In this type of market it is difficult to enter and exit it.

Unilever is one of the great examples in the oligopoly market. The pricing decision is largely based on the analysis of the other competitors, as there are a very small number of companies in the market, such as Procter and Gamble and Colgate-Palmolive.

Likewise, the decision on the quality of production is based on the needs and responses of the market. A stable price is oriented by the organization. In this case, the brand is another competitive advantage that usually takes place in the pricing strategy.

Duopoly

Only two major competitors operate in this market to dominate the market. The global market for aircraft is important in this regard. Airbus and Boeing are the most important competitors in the market. Here the dynamic price is considered.

Standard price level and production decisions are made based on market trend and demand so that price elasticity can be maintained.

References

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