What is a Market, Definition and Types of Market

A market can be defined as a place where buyers and sellers meet to exchange goods, services and other relevant information is called a market. Both these parties can meet in a city, state, province, country and region. The market may be a physical or virtual.

The one party (seller) sells a product or service to a buyer for money benefits. Most of the time there are more than single buyers and seller in the marketplace. The value and prices of product and service are based on the law demand and supply in the market.

Market Definition

The set of all actual and potential buyers of product and services.

The sellers offer products/services and communication. In return, they receive money and information from buyers and markets. 

Definition of marketing starts with the total population and narrowing down level by level. There are different terms used to understand these levels.

  • Potential Market. It is the total population in the market that is interested to buy a product and service
  • Available market. Within the potential market all those people with enough money to buy products and services.
  • Qualified Available Market. People in the available market who are permitted to buy the available products and services.
  • Target Market. It is the segment of the available market that a company ready to serve it.
  • Penetrated Market. those customers in the target marketing purchased the products and services.

Types of Markets

Physical Markets. Any physical market is a place where buyers and sellers physically meet that involve both parties in a transaction in exchange for money.  Few good examples are departmental stores, shopping malls and retail stores

Virtual Markets / Internet Markets. Todays’ business environment such type of markets are increasing on a fast track. It is a place where the seller offers goods and services via online platform i.e. internet. Buyers and sellers are not required to physically meet or interact. Examples are Freelancer.com, Amazon.com.

Auction Market. An auction market is a place where sellers and buyers indicate the lowest and highest prices they are willing to exchange. This exchange takes place when both the sellers and buyers agree on a price. A good example is the New York Stock Exchange (NYSE).

Consumer Markets. This market type means the marketing of consumer goods and services for personal and family consumption. Consumer market examples are

  • fast moving consumer goods are ready to cock meals and newspaper, magazines etc.,
  • consumer durables goods are fridge, televisions, personal computers etc.,
  • soft goods are shoes and clothes and
  • services include hoteling, hairdressing, schools and colleges etc.

Industrial Markets. The industrial market involves business to business sales of goods and services. These marketers do not target consumer markets. Some examples of the industrial market include

  • Finish goods like office furniture,
  • Selling raw materials for businesses i.e. gasses and chemicals
  • Offering services to businesses2business for example security agencies, auditing and legal services etc.

Black Market. Just like black money, black market deals in illegal drugs and weapons.

Market for Intermediate Goods. These markets dealing in selling raw materials that need further processing to produce finish goods.

Financial Market. This is a broad market known as a financial market. This is a place for dealing with liquid assets for example shares, bonds etc.

What is Market Size

Market size refers to the total number of people in a specific market who has the potential to buy and sell products and services. Whenever companies launch a new product they are very interested to know the market size. For any market, two factors are very important

  • Total number of buyers and sellers
  • Total money in the market on the annual basis