essay what is market

Essay on Markets: Top 4 Essays | Economics

In this essay we will discuss about:- 1. Meaning of Markets 2. Features of the Markets 3. Elements 4. Performance.

Essay on Markets  

Essay # 1. meaning of markets :.

The term market structure refers to the type constituents and nature of an industry. It includes the relative and absolute size of firms, active in industry, easiness in the entry into business, the demand curve of the firm products etc.

There are two extremities of the market structure on this basis, on one end there is a market of perfect competition and on the other perfect monopoly market. In between these two extremities there are monopolistic competition, oligopoly, duopoly etc.

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In common usage the word market designates a place where certain things are bought and sold. But when we talk about the word market in economics, we extend our concept of market well beyond the idea of single place to which the householder goes to buy something. For our present purpose, we define a market as an area over which buyers and sellers negotiate the exchange of a well- defined commodity. For a single market to exist, it must be possible for buyers and sellers to communicate with each other and to make meaningful deals over the whole market.

Several economists have attempted to define the term market as used in economics.

Some of them are as under:

According to Curnot, “Economists understand by the term market not any particular market-place in which things are bought and sold, but the whole of any region in which buyers and sellers are in such free intercourse with one another that the price of the same goods tends to equality easily and quickly.”

In the eyes of Prof. Chapman, “The term market refers not necessarily to a place but always to a commodity and the buyers and sellers who are to direct competition with one another”.

In simple words, the term market refers to a structure in which the buyers and sellers of the commodity remain in close contact.

Essay # 2. Features of the Markets:

On the basis above-mentioned definitions we can mention following main features of the market:

(i) Commodity:

For the existence of market, a commodity- essential this is to be bought and sold. There cannot be a market without commodity.

(ii) Buyers and Sellers:

Buyers and sellers are also essential for market. Without buyers and sellers the sale-purchase activity cannot be conducted which is essential part of a market.

(iii) Area:

There should be an area in which buyers and sellers of the commodity live in. It is not essential that the buyers and sellers should come to a particular place to transact the business.

(iv) Close Contact:

There should be close contact and communication between, buyers and sellers. This communication may be established by any method. For example, in olden days this contact and communication was possible only when the buyers and sellers of a particular commodity could come at a particular place.

But now with the developed means of communication physical presence of buyers and sellers at one particular place is not essential. They can contact with, each other through letters, telegrams, telephones, etc. In the boundary of a market we include only those buyers and sellers who can maintain regular close contacts.

For instance, India’s farmers (or sellers of grains) have no close contacts with the consumers (or buyers) of England, hence though they are the buyers and sellers of grains yet do not come under the purview of a market.

(v) Competition:

There should be some competition among buyers and sellers of the commodity in a market.

Essay # 3. Elements of Market Conduct:

(a) seller and buyer concentration:.

Here, seller concentration means in certain industry the number of active firms is very limited and these few firms produce a large part of the total supply. In other words, there firms possess the market power in a sense that any one of these firms can affect the market price by making change in the quantity of its product.

In full competition, each firm produces a very small part of the total production. Hence, it cannot affect the market price. In this type of market, the seller concentration is zero. So, as we move from the perfect competitive market towards pure monopolist market, the quantity of seller concentration increases.

(b) Market Power:

Every competitive firm attempts to get market power by making difference in the product. From economic point of view difference in the product or product heterogeneousness affects the market, structure significantly. In the position of homogeneous product when a seller makes even a slight change in the price of product the consumers begin to purchase the product sold by other producers.

In other words the firm producing homogeneous product has to face the perfectly elastic demand curve. On the contrary in the position of heterogeneous products any single firm can increase some price without being affected due to the preferences of the consumer.

(c) Product Differentiation:

In the perfect competition market all firms sell the same or homogeneous product. But in the market, in reality a single product is sold by the different producers, claiming that all products (such as toothpaste) are not same. The producers bring variety by means of brand name, packaging, size, colour, taste, weight etc. In spite of no locational differences, variety is seen by means of retailer service, home delivery, credit facility etc.

(d) Barriers in Entry:

Seller’s concentration indicates that how some firms acquire dominance in an industry, consequently the real competition between the firms is lessened or limited. If there are some barriers in the entry of new firms, then the prospective competition is also limited.

The types of such barriers are as follows:

(i) Cost profit to the present firm which is not available to the new firms.

(ii) Legal barriers in entry.

(iii) Product difference and advertisement etc. cause the presence of strong preference among consumers for the products sold by the established firms.

(e) Other Elements:

Apart from these main elements, there are some other elements to be considered. One of them is the growth rate of market demand. In this situation the firms are somewhat idle. On the contrary in a rapidly growing industry the firms also become more competitive. In the growing market every firm is struggling and striving for more demand.

If there is more elasticity of the price demand of a product, the firm will be motivated to lessen the price in order to increase ones portion in the total sale. In the condition of oligopoly when a firm decreases price other firms also do the same. Then all firms derive benefit in the condition of more elastic demand. If the product demand is inelastic no firm will tend to change price.

Essay # 4. Market Performance:

Market performance means the evaluation of the derivation of the behaviour of any industry when it behaves differently than the established superior laws of the market. It is assumed that in the position of the perfect competition only an industry can perform well. But when the market is derivated from the condition of perfect competition, then the market behaviour also changes. Now the question arises, as to how a market performance can be evaluated in any industry?

Certain acceptable indicators are as follows:

1. Profitability:

All firms have an objective like profitability, profit maximisation or satisfactory level of profit. But profitability in any industry does not depend only upon the performance of the firm. It also depends upon monopolist power, product diversity, or inefficient use of resources etc. Economists have used the hypothesis of normal profit. It is the rate of profit which makes the firm not to leave the industry. The performance level affects the quantity of profit significantly.

2. Productivity:

It is an index of production of per unit input used, if more production is possible by the same units then there is growth in productivity. Growth in production is an indicator of efficient performance of an industry.

But this index is also not without practical shortcomings. Till we cannot keep the other factors stable, it is difficult to measure productivity of certain means/ inputs, like labour on capital. Besides this the units of labour, capital, or land are heterogeneous, so when a change occurs in the quantity of an input, there is also a change in its quality. For example when we recruit more workers, first we recruit more skilled ones and then the less skilled.

Information about the performance of an industry can be derived from its growth rate also. The measure of growth rate of an industry can be known from the product, employment and wealth creation. But every index creates problems in measuring the performance.

For example, it is possible that in an industry more and more people get employment, or there is a rapid rate of wealth accumulation. But it is also possible that the resources are not efficiently used. Likewise when the growth rate is high we do not have information of production cost, whether it is more or less.

4. Effect on Index:

Now the question arises whether the market structure affects the indexes of market performance. Profitability is one of the many indicators of performance. For example in perfect competition, a firm earns normal profit in long term while in monopoly or market having monopolist power, the firm earns extra-normal profit in long term also.

Excessive seller concentration, barriers in entry and product difference can make firm earn more profit in long term also. Likewise we take growth index. Both in monopoly and oligopoly markets firm produces less than its capacity or there is a position of extra capacity.

5. Ill Effects on Firm Growth:

Thus, the growth of the firm is affected adversely. Productivity and efficiency are associated with each other. In the position of monopoly and oligopoly a firm has extra capacity which means inefficient use of resources and low level of productivity. Lastly, the social performance of a firm is also affected by market structure. In monopoly and perfect competition, consumer and labour, both are exploited. Growth in competition decreases the power of exploitation of the producers.

6. Social Performance:

The performance level of an industry can be evaluated in the item of many social bases. These social bases can be income redistribution or other indicators of social welfare. For example the social performance of the medicine industry can be measured by the decrease in the illness period or death rate.

If the expansion/growth of any industry results in decrease of present inequalities of income in society, or it helps in reducing poverty or unemployment then the performance level of the industry can be called high.

Market Structure Conduct Performance Interrelations:  

In micro economics the equilibrium of the firm and industry is studied. On the contrary industrial economics is more related to change in market structure, resulting in the changes of market behaviour or firm’s behaviour, which ultimately affect their market performance. So, industrial economics can be studied with the help of structure conduct performance approach or model.

Complexity of Interrelations:

According to the economists, the interrelations between the structures, conduct performance are sufficiently complex. To conclude it can be said that market structure affects the behaviour of a firm and behaviour of a firm affects its performance (profitability) in the market.

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• Monopoly and Perfect Competition | Markets | Economics
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• Aspects of Monopolistic Competition | Markets

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Pluralist Showcase

In the pluralist showcase series by Rethinking Economics, Cahal Moran explores non-mainstream ideas in economics and how they are useful for explaining, understanding and predicting things in economics.

By Cahal Moran

Markets are the focus in modern economics: when they work, when they don’t and what we can or can’t do about it. There are many ways to study markets and how we do so will inevitably affect our conclusions about them, including policy recommendations which can influence governments and other major organisations. Pluralism can be a vital corrective to enacting real policies based on only one perspective and a plethora of approaches provide alternatives to the canonical view. Although they have differing implications, these approaches share the idea that we should take a historical approach, analysing markets on a case-by-case basis; and they share a faith in the power of both individuals and collectives to overcome the problems encountered when organising economic activity.

The canonical view sees the study of markets as a technical exercise, with certain cases leading to markets working and others leading to ‘market failure’, which requires government intervention to correct things. The trouble is that these cases are typically explored through hypothetical stories rather than concrete evidence. In Famous Fables of Economics: Myths of Market Failures, Daniel Spulber assembles a collection of essays which dispute purported examples of market failures in economics. Spulber chastises approaches to teaching economics which are “replete with picturesque moral tales meant to illustrate or even support fundamental economic theory”. He laments that although the fables are usually “factually inaccurate, their appeal to economists continues undiminished”.

One prominent example is the so-called Fable of the Bees. As the story goes, bees used for honey would naturally pollinate neighbouring farmers’ crops and farmers could free ride off this pollination without paying. As beekeepers are not compensated for their services they will invest in fewer bees than they would if they captured some of the financial gains the farmer makes from pollination. In economics this is called a positive externality, and according to standard logic positive externalities will be under-provided by the market so there is scope for government intervention. However, the story neglects the capacity of people to engage in what is sometimes called Coaseian bargaining, where the farmers and the beekeepers come to an agreement amongst themselves.

Steven Cheung investigates this story and finds it an inaccurate portrayal of how farmers and beekeepers have dealt with their mutually beneficial situation. As he puts it “contractual arrangements between farmers and beekeepers have long been routine” and to establish this “one need look no further than the yellow pages”. Beekeepers typically offer their bees out for hire to pollinate farmers’ crops, increasing yields, so farmers are happy to compensate them. Cheung goes further, suggesting that not only do the arrangements exist but they are efficient – moreso than government policies enacted in this area.

Cheung’s example illustrates the two essential features, mentioned above, of this more grounded approach to the study of markets. Firstly, attention is paid to specific historical circumstances and the institutions that make up real economies. One can glean more about the market for lighthouses from the article by Ronald Coase (of Coaseian bargaining fame) on how they were privately provisioned in 18th Century England, as well as the ensuing debate, than from a fable about ‘public goods’ which implies they will not be privately provided. Secondly, people have a capacity to innovate, organise and negotiate their way out of problems, which can have unexpected consequences for how markets work – including alleviating potential market failures.

Two distinct (but complementary) schools which have paid special attention to both these points are the Austrians and the Institutionalists. Austrians such as Israel Kirzner and Joseph Schumpeter have detailed the role of individuals, particularly entrepreneurs, in discovering new opportunities - and thus actively shaping and changing markets rather than just participating in them as they exist. Schumpeter famously coined the term creative destruction to refer to the ever-changing nature of markets as new products are created, potentially unmooring existing industries. One of Kirzner’s most interesting contributions is his notion of discovery - the role of individuals in noticing potential sources of profit which have previously gone unnoticed. How many times have you looked at a successful app and thought “that's so obvious”? It’s not that the information or potential didn’t exist; it’s just that it wasn’t exploited. As Kirzner puts it “Boldness, impulse, hunch are the raw materials of entrepreneurial success (and failure)”.

An implication of both thinkers is less of a fear of monopolies, which are presumed to be a temporary state of affairs. Since monopolies represent only one iteration in the ongoing process of discovery and innovation, it is always possible – perhaps inevitable – that they will be displaced at some point in the future. In some cases this is undoubtedly true: think about Myspace versus Facebook; London Cab drivers versus Uber; iTunes versus Spotify. Even companies which retain their monopoly for long periods of time, such as Apple and Google, are perceived to do so because they are innovating to avoid being supplanted.

Of course in other cases this is less plausible – Microsoft is much-maligned and yet retains a monopoly on operating systems – but the idea of competition as a process which can look like monopoly at any one time is very powerful, and the changing nature of markets can lead people to overestimate the power – and underestimate the efficacy - of monopolies. A relevant example in Spulber’s Fables is the myth that the QWERTY keyboard is inefficient method of typing but has persisted due to technological ‘lock-in’, when studies in fact show the QWERTY keyboard is generally as efficient as other designs.

Institutionalists such as Ronald Coase and Eleanor Ostrom – still the only woman to receive the Nobel Prize in economics - were similarly concerned with how people respond to economic problems, but rather than entrepreneurs they focused on how economic and political institutions resolved tensions. Ostrom’s work concerned arguably the most prominent fable of them all: the Tragedy of the Commons . The idea is that if an area – say, a field for grazing cattle – is shared collectively, each individual farmer has an incentive to bring their cow to consume the grass. But if everyone does this the field will be overcrowded and the available grass will be depleted to the point where it is unusable. At an individual level the benefits of bringing your cow to the field outweigh the costs, but at a collective level they do not. One solution is state intervention is to regulate the number of cattle on the field.

Ostrom shows that this is a frankly ahistorical view which assumes a bizarre kind of rational idiocy on the part of the farmers: rational in that they are narrowly focused on maximising their own self-interest; idiotic in that none of them would simply realise what was happening and cooperate with their neighbours to ensure a solution. According to Ostrom, such cooperation is the norm:

“In all self-organized systems, we found that users had created  boundary rules for determining who could use the resource, choice rules related to the allocation of the flow of resource units, and active forms of monitoring and local sanctioning of rule breakers.”

One example is where locals agreed on ‘escalating social punishments’ for overfishing (a potential case of the Tragedy of the Commons): first you would be verbally admonished; next you would have your fish thrown back into the sea; next they would be dumped on your doorstep; and eventually it might escalate into physical violence and/or exile. In practice, the latter were rarely necessary and people happily cooperated, facilitating both personal subsistence and economic activity.

As Spulber and others are quick to emphasise, their analysis does not imply that market failures are not possible, only that they are not as universal as is sometimes implied. As a rule Austrians would take this line of argument a little further as they are generally against policy intervention, even when markets are perceived to fail. Regardless of your view, there is an appeal to analysis of markets which proceeds on a case-by-case basis rather than through the lens of fables – whether they are cute stories about cows, or fables in the form of mathematical models. Stories can be helpful for understanding, but past a certain point they can become a hindrance. It is always necessary to confront your story with the historical facts before believing it and passing it down to the next generation of students.

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Market: short essay on market | microeconomics.

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Read this essay to learn about the meaning of market!

There are two aspects of every market: demand and supply. We have discussed both the concepts in the previous units. In this article, we will put the two components together to examine the behaviour of ‘Market’ as a whole.

Image Curtsey: marketmonetarist.files.wordpress.com/2012/02/mvpy_lc.jpg

Market is like the nervous system of modern economic life. Producers and consumers carry out their transactions of sale and purchase through the medium of market. In the layman’s language, market refers to a place where goods are purchased and sold.

But, in economics, the term ‘market’ has a wider meaning. In economics, market has no reference to a specific place. It is not necessary for buyers and sellers to assemble at a particular place for sale or purchase of goods. The only condition is that they should be in contact with each other through any means of communication, like internet, telephones, letters, etc.

Market refers to the whole region where buyers and sellers of a commodity are in contact with each other to effect purchase and sale of the commodity. From the above discussion, the essential constituents of a market can be summarized as:

Market is not related to any particular place. It spreads over an area. The area becomes the point of contact between buyers and sellers.

(ii) Buyers and sellers:

Buyers and sellers should be in contact with each other. However, contact does not necessarily mean physical presence.

(iii) Commodity:

For the existence of market, there must be a commodity which will be sold and purchased among buyers and sellers.

(iv) Competition:

The existence of competition among buyers and sellers is also an essential condition for the existence of a market, otherwise different prices may be charged for the same commodity.

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Market Structures Essay

Introduction, types of market structures.

In an ordinary market structure, there is the assumption that there are several and different sellers and buyers. The result of this is fair competition where price of goods is determined by the forces of demand and supply. This is so because, in such a market, both the seller and buyer are equally able to influence the price.

However, this is not always the case. Some market industries have only a single seller or much fewer sellers than consumers, limiting the buyer’s ability to influence the price. This paper discusses the various market structures that exist in our market today and the various pricing strategies that could be applied in their management.

Pure monopoly

This type of market exists when there is only a single seller controlling the supply of goods or services in the entire market. He alone can control the price and prevents other businesses from entering the market. They commonly exist in a government-regulated setting. A case in point is the provision of electric and Natural gas utilities in the United States.

The government is the sole provider of these utilities and regulates their delivery to the public through the state, federal and local agencies. The prices are not arrived at through the forces of demand and supply but by the structures of the government. “The agencies govern the prices they charge, the terms of their services to consumers, their budgets and construction plans, and their programs for energy efficiency and other services,” (Regulatory Assistance Project 2011, P. 3).

Competition in this sector cannot thrive since the government provides subsidies to these utilities so as to provide cheaper services to the public, something that small private entities are unable to do. In addition, the infrastructural and technological requirement for the provision of the services would be so much of an expense for a private entity to meet.

Even though the government is the price maker here, it cannot set prices at a level that the consumer will not be able to afford if it wants to make profits. To set the prices, the monopolist should use the market demand curve and use it to set its own prices. The position marginal revenue for the monopolist should be less than the marginal revenue (MR). The position and elasticity of the demand curve works to limit the pricing mechanism of the monopolist.

The firm can only make maximum profits, on a short term, where the additional cost used to produce one more unit is equal to the resulting revenue from that one unit. For normal profits, the average revenue (AR) should be equal to the Average Total Cost (ATC). In the long run, the firm will only make profits where the AR is greater than the average cost (AC). (Mcconnel & Brue, 2009)

Pure Competition Market structure

This is a kind of a market where no single entity monopolizes the price determination process. Prices of goods are determined by forces of demand and supply and every player in the market has a part to play. A classic example would be a street vendor business.

In this kind of business, there is a large number of buyers and sellers and anyone may enter or leave the market at will without any barrier to doing so. Both consumers and producers are well informed of the prices and quality of goods and goods are homogenous across the market without much differentiation.

Every partaker is interested in maximizing profits as opposed to monopolizing the market whose returns are non-increasing to scale. Factors of production are freely mobile within the market with flexibility to ever-changing market circumstances. There are no new firms in the industry thus the same number of firms remains throughout.

In this market, the price is normally given by the demand and supply curve, as determined by the market forces, hence referred to as a ‘price taker’. The firm will sell its products at the current market prices and has no power to alter those prices. The stock is fixed while the supply curve will be perfectly elastic. In the short run, the firm can try to increase supply by increasing variable inputs. Profit will be maximized when MR is equal to MC. The firm must however fix their output to the prevailing market prices.

In the long run, the firm may change their unit of output as new firms enter the market. Supernormal profits will be realized where AR is greater than AC. When AR is greater than AC small firms starts quitting the market resulting into a decreased price. This will go on until AR is equal to AC and the firm makes normal profits. (McConnell & Brue, 2009)

Monopolistic Competition

This is a form of market where sellers deal with competitive products but which are differentiated from one another. It is almost like a perfect competition but though there are many firms in the industry, the products of each company are differentiated to make them unique to products of other firms.

An example is the Nike shoes. Even though many firms make shoes, which are equally competitive, only Nike makes that kind of shoe and one cannot obtain it from any other firm. The shoe is homogenous and specific to the firm and their differentiation gives monopoly over Nike to make the shoe alone.

Here, just like perfect market, the firm will take the market prices as determined by rival firms and will be forced to disregard their own influence on prices. In the short run, the firm may determine the prices depending on its level of differentiation and will have the same effects as a monopoly making huge economic prices.

However, as time goes by and competition increases, the effect of differentiation loosens gradually and the market changes to a perfect competitive one, with less profits. At the optimum quantity of production and optimum price, the firms will now earn normal profits. The equilibrium point, no new firms will be entering the industry.

Oligopoly market structure

This is a situation where there are few sellers of a commodity. The commodity being sold is however very similar but not identical to the others in the market. Products are close substitutes of each other but each firm has monopoly power over its own product. It also includes a duopoly where there are only two firms dealing with the product, e.g., Coca-cola and Pepsi. These two companies are the only known producers of carbonated soft drinks, yet their products are differentiated from each other.

For other firms to enter the market, they will require heavy investment and highly developed technology and incur high costs of promotion, thus posing a major barrier to entry of new firms and competition. The existing firms may also decide to merge, presenting even more difficulty to new entry. Both sellers have a substantial amount of influence on the pricing policies but there is mutual interdependency in price. The prices therefore remain relatively stable.

In this case, the pricing of Coca-cola will affect Pepsi’s price appreciably and the vice versa. Therefore, the best way is to agree, as between the two firms, on a pricing policy that is comfortable to the two firms. When such collusion of price determination occurs, the firms agree on an identical price, normally high, maximizing their profits and minimizing the production costs.

The pricing may be done through cost-plus pricing, which involves adding percentages of profit margin to Average Variables Cost to obtain the price. It may also be arrived at through the Mark-up pricing. Here the percentage mark-up it predetermined to cover the average margin. The AVC is estimated through the units of output produced over a given period of time. The level of output is used to determine the average cost.

Monopsony competition

Denotes a situation where one buyer buys from several existing sellers and he is therefore, the main determinant of the price in the entire market.

It is mostly found in the market for the exchange of factor services. The price he sets is lower than the market price and the quality exchanged is not correspondent to the price. For example, major sports clubs such as the National Baseball Association (NBA).

A baseball player wishing to be professional baseball player can only seek employment from NBA only. NBA will determine the minimum factor price which the player will and can take.

Though the monopsony is the price maker, if he wants to obtain quantity services, he has to part with a higher price or incur additional expenses or wages to hire more workers. The additional wages will enable him to earn more profits. These additional expenses are the marginal factor cost and the additional profits are the marginal revenue product. For maximization of profits, the firm should hire the quantity equal to the marginal factor cost and marginal revenue product, where these two curves meet, (Africa Awards, 2011).

The basic assumption of the existence of a perfect competitive market therefore, rarely exists. We have seen that there are markets dominated by one or two sellers or even one buyer.

Each market structure’s existence, however, is dependent on its power to influence the market price. There are also other minor types of markets that exist apart from the ones covered in this paper, for example a bilateral monopoly-duopsony, a market with two buyers and one seller. Also

Bilateral oligopoly-monopsony; one buyer and few sellers. However, all these are embedded in the five main ones discussed above.

Africa Awards. (2011). Market Structures: Monopsony , AmosWEB Encyclynomic WEB*pedia. Web.

McConnell, Campbell., & Brue, Stanley. (2009). Microeconomics: Principles, problems, and policies . New York: McGraw Hill. (18th Edition).

Regulatory Assistance Project. (2011). Electricity Regulation in the US: A Guide, Home Office, 50 State Street, Suite 3, Montpelier, Vermont 05602.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2023, December 9). Market Structures. https://ivypanda.com/essays/market-structures/

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Bibliography

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• Market – Meaning and Classification

Did you know that when you shop online you visit a market? Yes, Amazon may only exist in the virtual world without any brick and mortar stores, but it is a market in its own right. So what is a market? Let us learn more about the features and the classification of markets.

What is a Market?

When we talk about a market we generally visualize a crowded place with a lot of consumers and a few shops. People are buying various goods like groceries, clothing, electronics, etc.

And the shops are also selling a variety of products and services as well. So in a traditional sense, a market is where buyers and seller meet to exchange goods and services.

But what is a market in economics? In economics , we do not refer to a market as a physical place. Economists will describe a market as coming together of the buyers and sellers, i.e. an arrangement where buyers and sellers come in direct or indirect contact to sell/buy goods and services.

For example, the market for mobile will constitute all the sellers and buyers of mobile phones in an economy. It does not necessarily refer to a geographic location.

Let us then list a few features of a market,

• In economics, the term market will refer to the market for one commodity or a set of commodities. For example a market for coffee, a market for rice, a market for TV’s, etc.
• A market is also not restricted to one physical or geographical location . It covers a general wide area and the demand and supply forces of the region.
• There must be a group of buyers and sellers of the commodity to constitute a market. And the relations between these sellers and buyers must be business relations.
• Both the sellers and buyers must have access to knowledge about the market. There should be an awareness of the demand for products , consumer choices, and preferences, fashion trends, etc.
• At any given time only one price can be prevalent in the market for the goods and services. This is only possible in the existence of perfect competition.

Browse more Topics under Meaning And Types Of Markets

• Types of Market Structures
• Concepts of Total Revenue Average Revenue and Marginal Revenue

Classification of Markets

Now we have seen what is a market. Let us learn more about the classification of markets. Broadly there are two classifications of markets – the product market and the factor market. The factor market refers to the market for the buying and selling of factors of production like land, capital, labor, etc. The other classification of markets are as follows,

On the Basis of Geographic Location

• Local Markets: In such a market the buyers and sellers are limited to the local region or area. They usually sell perishable goods of daily use since the transport of such goods can be expensive.
• Regional Markets: These markets cover a wider are than local markets like a district, or a cluster of few smaller states
• National Market: This is when the demand for the goods is limited to one specific country. Or the government may not allow the trade of such goods outside national boundaries.
• International Market: When the demand for the product is international and the goods are also traded internationally in bulk quantities, we call it an international market.

On the Basis of Time

• Very Short Period Market: This is when the supply of the goods is fixed, and so it cannot be changed instantaneously. Say for example the market for flowers, vegetables. Fruits etc. The price of goods will depend on demand.
• Short Period Market : The market is slightly longer than the previous one. Here the supply can be slightly adjusted.
• Long Period Market : Here the supply can be changed easily by scaling production. So it can change according to the demand of the market. So the market will determine its equilibrium price in time.

On the Basis of Nature of Transaction

• Spot Market: This is where spot transactions occur, that is the money is paid immediately. There is no system of credit
• Future Market : This is where the transactions are credit transactions. There is a promise to pay the consideration sometime in the future.

On the Basis of Regulation

• Regulated Market : In such a market there is some oversight by appropriate government authorities. This is to ensure there are no unfair trade practices in the market. Such markets may refer to a product or even a group of products. For example, the stock market is a highly regulated market.
• Unregulated Market : This is an absolutely free market. There is no oversight or regulation, the market forces decide everything

Solved Example for You

Q: A market in which trading of goods happens in huge quantities is a ____ market

• Retail market
• Regulated market
• Spot Market
• Wholesale market

Ans: The correct answer is D. One other classification of a market is on the basis of quantities of goods. And a wholesale market is where firms sell huge quantities of goods to distributors or other intermediaries.

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Meaning and Types of Markets

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What is Market and Supply and Demand

Checked : Iris E. , Kamye B.

Latest Update 20 Jan, 2024

Table of content

What is the market?

Different types of markets, • the goods and services market, • the labor market, • the financial market, • the money market, • the foreign exchange market, supply and demand, a bit of history on supply and demand, supply, demand, and price, the interest of the supply and demand model, the law of supply and demand.

We live in a world which is often called a market economy, what does it mean and what economic principles does it imply?

A market is a real or fictitious place of exchange. On the market meet economic agents who offer a good service and others who come to get it. This creates a network of exchanges. These exchanges can be done in a physical place, with direct contacts or in a fictitious way, the contact then not being direct such as financial markets or internet sales. These exchange relationships are created around the product offered, its nature, its availability, its quality but also and above all, according to its price.

The major economic markets are linked to the types of products offered; there are 5 of them:

consumers (households, businesses, etc.) buy goods and services from producers (businesses, governments, etc.).

here, households sell their labor power to companies, administrations, etc. for a salary.

on this market, economic agents exchange securities such as stocks, for example. The share price is called their price.

it is a market frequented for the most part by banks where fiat money (notes) is exchanged for securities.

on this market,   foreign currency (foreign exchange)   is exchanged for national currency. Banks, businesses, and households are involved in this market.

Supply represents the number of goods or services (within the framework of the goods and services market) that economic agents are ready to sell on the market. The supply of goods and services comes mainly from businesses but also from administrations or associations.

Conversely, on the market for goods and services, demand represents the number of goods and services that economic agents are ready to buy. We, therefore, find households (final consumption) but also businesses (which make intermediate consumption or investments) or administrations (operating expenses, investments).

Supply and demand are aggregated functions that represent the addition of the behaviors of all the economic agents intervening in the markets.

Attention, on the job market, the supply of work comes from households, and the demand for work comes from companies, administration (it should not be confused with supply and demand of jobs). The work is exchanged at a certain price i.e., salary. The supply and demand are respectively the numbers of goods or services that the actors in a market are willing to sell or buy based on price.

• The TV offer in a country corresponds to the number of units for sale in all stores combined
• The demand for this same country corresponds to the number of TVs that customers want to buy.

If the theory of supply and demand covers an old intuition for Roger Guesnerie, its formalization began in 1838 when Augustin Cournot introduced the   demand curve. Later, Alfred Marshall introduced a supply curve representing supply according to prices. In the framework of the theory of partial equilibrium between supply and demand, at the intersection of these two curves are the price and the demand for equilibrium.

Supply is largely linked to the production of companies, which have a constraint expressed by their production cost, their turnover increases with the price of the goods or services sold. So if the price goes up, the turnover increases and the profit too. The offer is increasing according to the price.

The economic agents which form the demand, like households, in particular, have needed to be satisfied, but they have a constraint represented by their budget. So when the price of goods or services increases, they can no longer get as much as before, they must limit the quantities requested. The demand is, therefore, decreasing according to the price.

The interest of the supply and demand model is that it allows, outside the sophisticated formalism of the general equilibrium, to intuitively grasp the mechanisms at work in the decision to allocate resources in the economy of the market.

The offer of a good is the quantity of a product offered for sale by sellers for a given price. Unlike demand, that is the quantity of a certain product requested by buyers for a given price. The price of a good is considered to be a quantity dependent (among other things) on supply and demand.

From this principle, we derive a mathematical law, the law of supply and demand. This law is often generalized by a law of the markets, a name used to designate the law which governs a market, with or without the intervention of the state.

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The law of supply and demand often refers to partial equilibrium in a market. In markets where partial equilibrium applies, the following effects are seen:

• when the price goes up
• The supply tends to increase: producers are encouraged to offer more goods, new producers are encouraged to settle, holders of this good are encouraged to sell them.
• Demand tends to fall: the higher the prices, the less willing buyers are to buy.
• When the price drops, supply tends to decrease: Producers have less incentive to produce.
• Demand tends to increase: the lower the price, the more willing buyers are to buy.

It is presented differently, given a market where for each price, we combine supply (the quantity that all sellers want to sell) and demand (the quantity that all buyers want to buy). There is an intersection point that maximizes the number of exchanges. A price a little above will leave sellers willing to sell without a buyer. A price a little below will leave buyers willing to buy without a seller. In both cases, the number of exchanges will also be smaller than at the point of intersection. There will be buyers and sellers who will not be satisfied anyway, but it will be because of the price but not because they have not found anyone opposite.

A supply and demand curve corresponds to a given number of suppliers and applicants. An increase (or decrease) in the number of offerers or applicants causes a shift to the right or to the left, and therefore a change in the balance.

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Essay on Market Research | Marketing Management

After reading this essay you will learn about:- 1. Meaning of Market Research 2. Characteristics of Good Marketing Research 3. Necessity 4. Undertaking Market Research 5. Functions 6. Classification 7. Techniques.

Essay Contents:

• Essay on the Techniques for Conducting Market Research

Essay # 1. Meaning of Market Research:

Market research is the analysis of a project to be started, expanded or modified. Broadly speaking market research is the commercial research for the suitability of a business and is a continuous process i.e. research is always kept continued for the stability of the business.

Mar­ket research is very essential in mass scale production because volume of production depends upon the continuity of demand. If demand reduces suddenly, production comes to a stand-still, which may produce great losses to manufacturer.

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Market research includes forecasting, intelligence and statistics. It is an important factor for the sale of products. Failure to do this accurately may lead to the production of more goods than the market can absorb, which means financial losses to the firm. It may also lead to under production, the results of which are equally unpleasant.

Market research may be defined as a way of finding out facts which must be known before a market policy is to be determined. Before starting a business, planning department makes different investigations affecting the business to maintain good working conditions, better qual­ity and handsome profits.

“Many new products” and firms fail because they start business on a “Guess-estimate” of the good market but that is never reached. Therefore, investment of small amount and time on careful market analysis is comparatively better instead of bigger loss at a later stage.

The market analysis is a scientific method of determining what to produce, who the pur­chasers are, where these are located, how much to manufacture, how to sell and when to sell, in order to maximise the service rendered and the profits earned.

This is a dynamic world in which the profit opportunities are constantly altering and efficient market research can only enable a manufacturer to earn maximum while giving the customer maximum satisfaction.

Continued success in business depends on its maintaining a continuous flow of new product ideas. Thus owner should select only profitable products and leave unprofitable ones. These ideas mainly originate in the sales or research organisations.

Mainly the object of market research is to inform the management as to what the future holds good for its products and proposed products.

The market research data can be collected from the internal records of the business, reports obtained by outside sales staff, published sources, investigators in the field, financial and trade formulae and reports of trade associations.

The analysis of the product is made to find out:

(i) Sales volume.

(ii) Amount of profit and its duration.

(iii) Amount of capital needed.

(iv) Cost of necessary advertising.

(v) Production cost.

(vi) Stability of new material supply.

(vii) Business conditions and trends.

(viii) Handling and transportation charges.

(ix) Seasonal market characteristics.

(x) Any other factors which may be considered related to the success of the business.

Essay # 2. Characteristics of Good Marketing Research :

1. Effective marketing research uses the principles of scientific method, careful observa­tion, prediction and testing.

2. Marketing research develops innovative ways to solve a problem.

3. Good marketing researchers should avoid over reliance on any one method. They also recognise that using multiple sources leads to better information.

4. Good marketing researchers recognise that data are interpreted from underlying models, and these models guide the type of information sought.

5. Good marketing researchers show concern for estimating the value of information against its cost. This helps in deciding which research project should be conducted.

6. Good marketing research benefits both the sponsoring company and its consumers. Through these, company learns more about consumers’ needs and is able to supply more satisfying products and services.

Essay # 3. Necessity of Market Research :

The necessity of market research which is a new technique existed in the 20th century due to the industrialisation of Western society in the 19th century. The necessity improved greatly due to introduction of large scale production and large increase in population.

In the earliest days there was less gap between the initial manufacturer and the ultimate consumer. Fig. 42.1 shows this relation. The manufacturer knew his customer’s demands, de­sires and habits. They were very close to each other because of few in number.

Now modern industry separated customers by complicated organisation and engaged in mass production for cheap and large scale demands. Therefore, the demands of the customers must be explored, developed and evaluated.

The change from intimate manufacturer and customer contact is similar to a broken circular chain as shown in Fig. 42.2. Fig. 42.3. shows how market research brings manufacturer and customer close to each other.

Essay # 4. Undertaking Market Research :

The work of market research should be handed over to the sales department. Throughout the research, scientific methods are used so that nothing is overlooked. The reasons for the various features of the market demand are made clear and generally the maximum information is obtained.

The analyst should first make the preliminary survey suggested by the directors. Since the preliminary survey is the foundation around which a more extensive study may be practised later.

Therefore, it should be conducted only by an alert and experienced analyst who can make out plans for future operations efficiently. Sometimes a preliminary survey supplies sufficient information that there is no profitable market for the products and hence further analysis is not required.

The collection of several data in survey is generally the most exhausting and frustrating part. The various mediums used, can be questionnaire, telephone, personal contacts and inter­views. The personal contacts and interviews are the best media as they give comparatively true and correct information though costly and take more time.

Essay # 5. Functions of Market Research :

Following are the main functions of market research:

1. It helps in knowing that who and where the customer is and what he wants.

2. It helps in knowing the sale trend, market potential and its shares in the market, which is essential for production planning.

3. It helps in knowing the defects in the products and reasons of resistance by consum­ers and then to rectify them in future production.

4. It studies the distribution channel and its effectiveness.

5. It exploits new markets and helps developing new products.

6. It safeguards the interest of the company against changes in the market in future.

7. It keeps the business in touch with its market and thus helps the sales promotion efforts.

Essay # 6. Classification of Market Research :

Market research is sub-divided into four general classifications as described below:

(a) Product Analysis.

(b) Market Analysis.

(c) Distribution Analysis.

(d) Competition Analysis.

(a) Product Analysis:

Product analysis is required to find out customer’s preferences for the product. This will enable management to make improvements that will meet the require­ments of customers. These will fulfill the present requirements of the market and will be more acceptable than those of competitor’s products.

Product analysis is also carried out to simplify product lines by eliminating those which have a limited demand, or are unprofitable, to determine the method of packing that will bring best sales and to find the suitable price which may be accepted by the customers and results in handsome profits.

It is important to find what characteristics your products have and which other competitor’s products have not, in order to know their relative advantages so that custom­ers can be persuaded to purchase your products only.

A check list of questions to be answered by a product analysis is given below:

1. Whether the product fulfills market requirements.

2. Whether the product competitive in character, performance and price.

3. Whether the product permits efficient distribution.

4. Whether the product can be sold at handsome profits.

5. Whether the lines complete the required sizes.

6. Whether some design improvement are required to fulfill customers’ needs and improve performance.

7. How product can be redesigned to reduce cost of production, packing, distribution, transportation and maintenance without affecting quality?

8. Whether reduction of a selling price has effects on demand.

9. Whether finished stock can be reduced to minimise investment, warehouse costs and obsolescence.

10. How repairs and replacement methods can be improved?

11. What is the future trend of changes as determined by customers’ changing habits?

12. What new changes and inventions are likely to occur?

13. What is competition offering? Whether some better design ideas can be taken from competitor’s products.

(b) Market Analysis:

The object of market analysis is to find the location of markets, scope of sales and buying habits of customers that make up the potential market for a product. As the size of industry increases with the consumption of products, therefore, this fact is required for deciding about the capacity of plant and machinery.

A check list of questions to be answered by a market analysis is given below:

1. Who purchase the product?

2. Where are the markets?

3. How many other customers influence the purchase?

4. What is the volume of sale during a particular time?

5. On what factors buyers pay stress e.g. quality, price, delivery, safety or service etc.?

6. When customers are mostly in the habit of buying?

7. How often they used to purchase?

8. Do they buy in advance of needs?

9. Whether demand is seasonal?

10. What discount and credit terms are prevailing?

(c) Distribution Analysis:

This consists of the study of the channels of distribution, meth­ods of pricing, resale price, maintenance, selling methods, sales promotion, sales training, ware­housing, distribution, cost analysis and other policies and practices required for the product distribution.

The economic selection of the best channels of distribution for a product is essen­tial for the success in market analysis. It includes transportation, warehousing and inventory costs.

(d) Competition Analysis:

Competition studies are generally included as a part of mar­keting analysis. This makes necessary to study the recent or proposed production sales and pricing policies of the competitors.

Most important of these is the analysis of the quality of competitor’s products to ascertain how a potential customer would compare with one’s own products.

The sales department should ask its salesmen to report and comment by potential custom­ers about the firm’s product or the products of its competitor’s. It should also study the re­search and product development work that the competition may be carrying on in order to estimate how these will affect its further sales.

From these studies, plans and policies may be made to guide future activities of a concern in order to improve its competitive position.

Essay # 7. Techniques for Conducting Market Research :

To carry out various analysis as explained above, following techniques are adopted:

1. Collection of Data:

Since these data are on the table of the organisation, this technique is also known as Desk research. In this method, the data are collected from published material (either by the company itself or by other agencies e.g. Journals of the trade, published survey reports, Government publications, international publications etc.).

This type of research is carried out for knowing past sales, effects of various factors on sales in the past, fluctuation in the sales etc.

2. Interviews:

To know the views of salesmen,-dealers and consumers interviews are con­ducted with a selected sample of people. These interviews can be conducted on telephone or in person depending upto the nature of questions.

3. Market Survey:

In order to collect specific data or views a carefully prepared question­naire is posted to the selected sample of people.

4. Statistical Methods:

Statistical methods like, bar chart, frequency polygon, distribu­tion curves and concept of standard deviation is used to serve the purpose.

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• Industrial Marketing Research: Concept and Nature and Scope| Business Marketing
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Essay: What is market

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What is market

Markets bring buyers and seller together. Buyers act in a way to meet their needs; suppliers undertake economic activities to meet such needs.

a) What do you understand by the term elasticity of demand? Identify three factors that influence consumers when deciding which goods and services and how many units of every one good/service they are prepared to buy.

b) Explain the usefulness of the concept of elasticity of supply in the short and long run.

c) Illustrate the significance for public policy formation of the above two concepts in the sector of social work or education in the Maltese islands.

In very basic and simple economic terms elasticity of demand refers to how a change in price or income affects the quantity demanded of a product or service. In other words, when the price of a product or service changes, or the income of the consumer changes, how much more or less is the consumer willing to buy? This change is measured in terms of percentages: the percentage change in the quantity demanded of the commodity as compared to the percentage change in price of the same commodity, or the percentage change in income.

Demand for a product can on one hand can be very inelastic, which would mean that the consumer would be willing to pay pretty much any price for a product. An example of this could a basic good such as water or bread. On the other hand demand for a product can be very elastic, which would mean that the consumer would be willing to pay only a certain price. An example of this could be Coke, because this type of soft drink has numerous amounts of substitutes (for example Pepsi, Dr. Pepper) from which people can choose from. A good is considered perfectly elastic when no matter how small the price change, demand will drop to zero. On the other hand a good is considered perfectly inelastic when no price change would affect the demand.

In both price elasticity of demand and income elasticity of demand, a good is considered elastic if the percent change in quantity demanded is greater than the percent change in price, which would mean that revenue for the producer falls. On the other hand a product is considered inelastic if the percent change in quantity demanded is smaller than the percent change in price, which means revenue for the producer will increase. It is considered unit elastic if the percent change in demand is exactly the same as in the price.

Other than price and income elasticity, theres also the concept of cross elasticity. This refers to the responsiveness of the demand of a good to a change in the price of another good. Again this is measured by looking at the percentage change in demand of one good as a result of the percentage change in price of another good. Products and services can either be compliments or substitutes. The former refers to commodities that are used with each other (for example bread and butter); in this case when the price of one product rises, the demand of the other product will decrease. On the other hand substitutes are products that can replace each other (for example Pepsi and Coke); in this case when the price of one increases, the demand for the other increases.

Therefore three factors that influence consumers are price, income, and the price of other goods.

Elasticity of supply refers to the measure of a change in the quantity supplied of a product as a result of a change in price of the same product. Whereas in demand quantity demanded increases as a result of a price decrease, the opposite is the case with supply. This means that the value of elasticity of supply is positive: as price rises, the quantity supplied rises, and vice-versa.

Generally, in the short run the supply is more inelastic than in the long run, because the longer time the company has to adjust its production, the more it can change its output. If a time period is extremely short, supply can also be fixed, which means that the supply of a particular good cannot respond at all to a change in demand.

To put it very simply, in the short run, by definition, there is not enough time for the producers to react to a change and thereby there is less time to change the output significantly. For instance, if a factory uses certain machinery that require fuel to be run, and the price of fuel rises, the producers still need to use these machines in the short run. There isnt time to invest in new machinery; this can only done in the long-run. In the long-run, the producer can invest in new machinery which perhaps utilize less fuel or which run on a different kind of energy source, and as a result production costs will go down and output can increase. Therefore Elasticity of Supply becomes more inelastic.

In the long-run, where no important resource is fixed, the elasticity of supply will be very high. In the long-run, more workers can be hired, more machinery can be bought, more land, and so on, and this means that supply will change. On the other hand, in the short-run, when most resources are fixed, little can be changed.

The concepts of elasticity of demand and elasticity of supply are very significant when it comes to public policy formation. If we had to look at the education system in Malta, particular tertiary education, we can see how government policies have changed the demand of education. For instance, students are given stipends and smart cards in an effort to discourage students from starting work after secondary school and instead encouraging them to continue their studies. Therefore the stipends and smart cards serve as a sort of income for the students, and as the concept of Income Elasticity of Demand stipulates, the demand for education is meant to increase.

In relation to the concept of Price Elasticity of Demand, the price of education is zero (although we still pay as taxpayers). As the concept of price elasticity stipulates, the lower the price of a product, the higher the demand for the same product. Therefore since the price of the university has always been zero, the demand cannot suddenly change. It is for this reason that the government chose to introduce a stipend system to encourage students to continue with their studies, following the theory that a rise in income will cause the demand cure to shift outwards.

In Malta therefore, the government seems to believe that demand for education is relatively (rather than highly) elastic, otherwise it would not make any sense to spend millions of euros every year to encourage students to go to university if demand for tertiary education were inelastic. Tertiary education can also not be considered highly inelastic because that would mean that a small change in price or income would lead to a sharp change in demand; this is clearly not the case as evidenced by the stipend cuts that were made a few years ago.

It could be said, therefore, that tertiary education in Malta is not quite considered a necessity. Products and services that are necessities are always very insensitive to price change, which means that consumers would still buy the product despite an increase in price or a reduction in income. In a way we could say that many Maltese might see the opportunity cost of tertiary education as very high. Despite being free of charge, many people prefer going to work once out of secondary school rather than waste time studying, with the reasoning being that three or four years at the university would be a loss of three or four years worth of salaries. Therefore in a way working in general can be considered a substitute to tertiary education, even though it is not technically so. This is undoubtedly one of the reasons why the government introduced grants for students.

When the stipends and smart cards were introduced, the cost of supply also obviously increased. Not only did the cost of supply necessarily increase because of the stipends, but since the number of university students increased, more facilities had to be built to cater for the influx of new students. The concept of Elasticity of Supply stipulates that in the short-run, the output cannot change by much and as a result the supply is generally inelastic. This applies to education in Malta. In the short-run, stipends were introduced, but this meant the money had to come from somewhere (from our taxes), and this could be done in the short-run. However, in order to cater for the increase in the student population, new facilities had to be built, and this could only be done in the long-run.

Therefore it is clear that both the concepts of elasticity of demand as well as the concept of elasticity of supply are very relevant and useful when it comes to the formation of public policy formation in the sector of education.

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By Uki Goñi

Mr. Goñi is an Argentine author, essayist and journalist based in Buenos Aires, where he wrote this essay.

Argentina’s new president, Javier Milei, has been in office for just over 100 days. Since his inauguration on Dec. 10, Mr. Milei, a far-right libertarian, has been on a mission to end what he has described as “an orgy of public spending” by previous administrations that left him with “the worst inheritance” of any government in Argentina’s history.

The extreme libertarian program that Mr. Milei says will make Argentina great again — along with his unruly hair and tongue — has attracted countless comparisons to Donald Trump and won him high praise from Mr. Trump and other powerful admirers. Elon Musk indicated that Mr. Milei’s speech at the World Economic Forum in Davos, Switzerland, this year was “so hot” that it distracted from the act of sex.

But this political outsider is having a harder time convincing his fellow Argentines of his vision. A self-proclaimed “ anarcho-capitalist ,” Mr. Milei won the presidential race in November on promises to end Argentina’s sky-high inflation through a free-market transformation of the state. So far, he’s failed to deliver: Inflation doubled during his first month in office, though it has slowed down recently. Poverty rates have shot up; retail sales have plummeted . Mr. Milei has both faced widespread protests on the streets and hit a wall in Congress, which has twice so far rejected the plans he says will transform Argentina into “a world power once again.”

All of these headwinds have left a troubling question hanging over his new administration: Who is the real Javier Milei? Is he the economic visionary who won over voters and prompted Mr. Musk to predict that “ prosperity is ahead for Argentina ”? Or is he the power-hungry villain that tens of thousands of Argentines now march against on the streets, chanting, “The country is not for sale!”

This much is certain: Mr. Milei is no Donald Trump. While his anti-establishment persona and inflammatory speech invite easy comparisons to the former president, Mr. Milei is a product of a long South American history in which authoritarianism has been the norm and democracy the exception. Although he embraces some elements of the Trump populism flowing from North to South America — including the “Don’t tread on me” Gadsden flags he likes to pose with — Mr. Milei is more archetypal South American caudillo, or strongman, than Trump aspirer.

Mr. Milei, like the Venezuelan strongman Hugo Chávez, his ideological opposite, is seeking extraordinary powers in the name of saving his country. For decades, Argentina has been held up by free-market economists as one of the world’s pre-eminent examples of how progressive economic policies can lead to disaster. The argument goes that while Argentina was ruled by conservatives in the late 19th and early 20th centuries, the country was among the world’s top economies, before left-leaning governments came to power and bloated spending with unaffordable social welfare programs, generating Argentina’s chronic inflation problem. In his Dec. 10 inaugural speech , Mr. Milei waxed nostalgic for this long-ago time, boasting with undisguised exaggeration that Argentina was “the richest country in the world ” and “a beacon of light of the West.”

But Argentina was no paradise back then. A single political party clung to power through electoral fraud between 1874 and 1916. Although Argentina did become an agricultural powerhouse, the period was also marked by endemic corruption, excessive international borrowing, recurrent financial crises and empty state coffers that the government tried to fill the same way Mr. Milei wants to today — by privatizing state companies.

Argentina’s current democratic period, which started in 1983, has been the longest in its 208-year history. But the economy has proved nearly unfixable for both dictators and democratically elected leaders — left and right — since the country’s independence from Spain in 1816, marred by inflation, foreign debt defaults and various convertibility schemes.

Mr. Milei won over voters last year with the promise to end this long economic agony by attacking what he has identified as a root cause: “the aberration of social justice.” Many of his economic policies are inspired by the works of Murray Rothbard, a 20th-century American libertarian economist who befriended Holocaust deniers and whom critics accused of supporting racial segregation . Elements of Rothbard dogma were key tenets of Mr. Milei’s presidential campaign, including his “Taxation is theft” slogan and his pledge to eliminate the country’s central bank.

He blames progressive governments such as that of Cristina Fernández de Kirchner, who was in power from 2007 until 2015, for the country’s many ills. As a cure, Mr. Milei has already started dismantling Argentina’s welfare programs and removing the government from the business of education and health care.

So far, Mr. Milei does not seem averse to putting democracy on the rack as his vision of a libertarian paradise has hit political resistance. On March 14, the Senate voted to overturn a presidential decree in which Mr. Milei conferred on himself the power to plow ahead with cost-cutting reforms without congressional approval. (The decree remains in force, however, unless the lower house, where the president faces better odds, also strikes it down.) Last month, congressional opposition also forced him to withdraw the free-market omnibus bill that was the cornerstone of his economic plan and would have permitted him to privatize state companies and deregulate vast areas of the economy, including environmental controls and the labor market.

Mr. Milei, according to one report , said that he was going to “piss” on the governors who refused to back the economic bill and added that he could close Congress. He called the legislators who voted against the bill “parasites.”

It is an open question whether Mr. Milei has misread his voters on how far they, too, are willing to go to turn Argentina’s economy around. He may be testing the limits of Argentina’s on-and-off-again democracy to fulfill his dream of transforming it from a soft, populist, welfare- and social-rights-driven nation into a libertarian utopia where the fittest can realize their full potential unshackled from the weight of sharing their bounty. Even if Mr. Milei’s policies do eventually tame the price of basic goods, Argentines may not embrace being denied public health policies that generations have enjoyed — or having their elected leader threaten to shut down the legislature.

Argentina is, after all, not the unmitigated economic disaster Mr. Milei and like-minded critics make it out to be. It has a diversified industrial base and is a major agricultural exporter. It has the second-highest human development index in Latin America and is its third-largest economy, with a highly educated population and a still strong, if battered, middle class that knows how to fight for its rights.

In January, soon after he took office, Mr. Milei went to Davos with a message for the world’s businesspeople. “Let no one tell you that your ambition is immoral,” he said . “You are the true protagonists of this story, and rest assured that as from today, Argentina is your staunch and unconditional ally.”

As the enthusiastic responses from Mr. Musk and others show, his message has been well received by the wealthy. But Mr. Milei will have to make an equally convincing appeal to the real protagonists in this story: the people on the streets and byways of Argentina, whose patience may start wearing thin more quickly than expected if Mr. Milei does not soon slay the beast of inflation, which has seldom been tamed in our country’s long history.

If he fails, he will be remembered not as the libertarian genius that Mr. Trump and Mr. Musk make him out to be, but as just another in a long line of South American would-be caudillos who failed to deliver on their promises — and made life miserable for millions along the way.

Uki Goñi, a former contributing Opinion writer, is an Argentine essayist and journalist whose work has appeared in The New York Review of Books and The Guardian. He is the author of “The Real Odessa: How Nazi War Criminals Escaped Europe.”

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips . And here’s our email: [email protected] .

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What Is Market Segmentation?

• How It Works
• Determining Your Market Segment
• Limitations
• Market Segmentation FAQs

The Bottom Line

• Marketing Essentials

Market Segmentation: Definition, Example, Types, Benefits

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Market segmentation is a way of aggregating prospective buyers into groups or segments, based on demographics, geography, behavior, or psychographic factors in order to better understand and market to them.

Key Takeaways

• Market segmentation seeks to identify targeted groups of consumers to tailor products and branding in a way that is attractive to the group.
• Markets can be segmented in several ways such as geographically, demographically, or behaviorally.
• Market segmentation helps companies minimize risk by figuring out which products are the most likely to earn a share of a target market and the best ways to market and deliver those products to the market.
• With risk minimized and clarity about the marketing and delivery of a product heightened, a company can then focus its resources on efforts likely to be the most profitable.
• Market segmentation can also increase a company's demographic reach and may help the company discover products or services they hadn't previously considered.

Investopedia / Matthew Collins

Understanding Market Segmentation

Companies can generally use three criteria to identify different market segments:

• Homogeneity , or common needs within a segment
• Distinction , or being unique from other groups
• Reaction , or a similar response to the market

For example, an athletic footwear company might have market segments for basketball players and long-distance runners. As distinct groups, basketball players and long-distance runners respond to very different advertisements. Understanding these different market segments enables the athletic footwear company to market its branding appropriately.

Market segmentation is an extension of market research that seeks to identify targeted groups of consumers to tailor products and branding in a way that is attractive to the group. The objective of market segmentation is to minimize risk by determining which products have the best chances of gaining a share of a target market  and determining the best way to deliver the products to the market. This allows the company to increase its overall efficiency by focusing limited resources on efforts that produce the best return on investment (ROI).

Market segmentation allows a company to increase its overall efficiency by focusing limited resources on efforts that produce the best return on investment (ROI).

Types of Market Segmentation

There are four primary types of market segmentation. However, one type can usually be split into an individual segment and an organization segment. Therefore, below are five common types of market segmentation.

Demographic Segmentation

Demographic segmentation is one of the simple, common methods of market segmentation. It involves breaking the market into customer demographics as age, income, gender, race, education, or occupation. This market segmentation strategy assumes that individuals with similar demographics will have similar needs.

Example: The market segmentation strategy for a new video game console may reveal that most users are young males with disposable income.

Firmographic Segmentation

Firmographic segmentation is the same concept as demographic segmentation. However, instead of analyzing individuals, this strategy looks at organizations and looks at a company's number of employees, number of customers, number of offices, or annual revenue .

Example: A corporate software provider may approach a multinational firm with a more diverse, customizable suite while approaching smaller companies with a fixed fee, more simple product.

Geographic Segmentation

Geographic segmentation is technically a subset of demographic segmentation. This approach groups customers by physical location, assuming that people within a given geographical area may have similar needs. This strategy is more useful for larger companies seeking to expand into different branches, offices, or locations.

Example: A clothing retailer may display more raingear in their Pacific Northwest locations compared to their Southwest locations.

Behavioral Segmentation

Behavioral segmentation relies heavily on market data, consumer actions, and decision-making patterns of customers. This approach groups consumers based on how they have previously interacted with markets and products. This approach assumes that consumers prior spending habits are an indicator of what they may buy in the future, though spending habits may change over time or in response to global events.

Example: Millennial consumers traditionally buy more craft beer, while older generations are traditionally more likely to buy national brands.

Psychographic Segmentation

Often the most difficult market segmentation approach, psychographic segmentation strives to classify consumers based on their lifestyle, personality, opinions, and interests. This may be more difficult to achieve, as these traits (1) may change easily and (2) may not have readily available objective data. However, this approach may yield strongest market segment results as it groups individuals based on intrinsic motivators as opposed to external data points.

Example: A fitness apparel company may target individuals based on their interest in playing or watching a variety of sports.

Other less notable examples of types of segmentation include volume (i.e. how much a consumer spends), use-related (i.e. how loyal a customer is), or other customer traits (i.e. how innovative or risk-favorable a customer is).

How to Determine Your Market Segment

There's no single universally accepted way to perform market segmentation. To determine your market segments, it's common for companies to ask themselves the following questions along their market segmentation journey.

Phase I: Setting Expectations/Objectives

• What is the purpose or goal of performing market segmentation?
• What does the company hope to find out by performing marketing segmentation?
• Does the company have any expectations on what market segments may exist?

Phase 2: Identify Customer Segments

• What segments are the company's competitors selling to?
• What publicly available information (i.e. U.S. Census Bureau data) is relevant and available to our market?
• What data do we want to collect, and how can we collect it?
• Which of the five types of market segments do we want to segment by?

Phase 3: Evaluate Potential Segments

• What risks are there that our data is not representative of the true market segments?
• Why should we choose to cater to one type of customer over another?
• What is the long-term repercussion of choosing one market segment over another?
• What is the company's ideal customer profile, and which segments best overlap with this "perfect customer"?

Phase 4: Develop Segment Strategy

• How can the company test its assumptions on a sample test market?
• What defines a successful marketing segment strategy?
• How can the company measure whether the strategy is working?

Phase 5: Launch and Monitor

• Who are key stakeholders that can provide feedback after the market segmentation strategy has been unveiled?
• What barriers to execution exist, and how can they can be overcome?
• How should the launch of the marketing campaign be communicated internally?

Benefits of Market Segmentation

Marketing segmentation takes effort and resources to implement. However, successful marketing segmentation campaigns can increase the long-term profitability and health of a company. Several benefits of market segmentation include;

• Increased resource efficiency. Marketing segmentation allows management to focus on certain demographics or customers. Instead of trying to promote products to the entire market, marketing segmentation allows a focused, precise approach that often costs less compared to a broad reach approach.
• Stronger brand image. Marketing segment forces management to consider how it wants to be perceived by a specific group of people. Once the market segment is identified, management must then consider what message to craft. Because this message is directed at a target audience, a company's branding and messaging is more likely to be very intentional. This may also have an indirect effect of causing better customer experiences with the company.
• Greater potential for brand loyalty. Marketing segmentation increases the opportunity for consumers to build long-term relationships with a company. More direct, personal marketing approaches may resonate with customers and foster a sense of inclusion, community, and a sense of belonging. In addition, market segmentation increases the probability that you land the right client that fits your product line and demographic.
• Stronger market differentiation. Market segmentation gives a company the opportunity to pinpoint the exact message they way to convey to the market and to competitors. This can also help create product differentiation by communicating specifically how a company is different from its competitors. Instead of a broad approach to marketing, management crafts a specific image that is more likely to be memorable and specific.
• Better targeted digital advertising. Marketing segmentation enables a company to perform better targeted advertising strategies. This includes marketing plans that direct effort towards specific ages, locations, or habits via social media.

Market segmentation exists outside of business. There has been extensive research using market segmentation strategies to promote overcoming COVID-19 vaccination hesitancy and other health initiatives.

Limitations of Market Segmentation

The benefits above can't be achieved with some potential downsides. Here are some disadvantages to consider when considering implementing market segmentation strategies.

• Higher upfront marketing expenses. Marketing segmentation has the long-term goal of being efficient. However, to capture this efficiency, companies must often spend resources upfront to gain the insight, data, and research into their customer base and the broad markets.
• Increased product line complexity. Marketing segmentation takes a large market and attempts to break it into more specific, manageable pieces. This has the downside risk of creating an overly complex, fractionalized product line that focuses too deeply on catering to specific market segments. Instead of a company having a cohesive product line, a company's marketing mix may become too confusing and inconsistently communicate its overall brand.
• Greater risk of misassumptions. Market segmentation is rooted in the assumption that similar demographics will share common needs. This may not always be the case. By grouping a population together with the belief that they share common traits, a company may risk misidentifying the needs, values, or motivations within individuals of a given population.
• Higher reliance on reliable data. Market segmentation is only as strong as the underlying data that support the claims that are made. This means being mindful of what sources are used to pull in data. This also means being conscious of changing trends and when market segments may have shifted from prior studies.

Examples of Market Segmentation

Market segmentation is evident in the products, marketing, and advertising that people use every day. Auto manufacturers thrive on their ability to identify market segments correctly and create products and advertising campaigns that appeal to those segments.

Cereal producers market actively to three or four market segments at a time, pushing traditional brands that appeal to older consumers and healthy brands to health-conscious consumers, while building brand loyalty among the youngest consumers by tying their products to, say, popular children's movie themes.

A sports-shoe manufacturer might define several market segments that include elite athletes, frequent gym-goers, fashion-conscious women, and middle-aged men who want quality and comfort in their shoes. In all cases, the manufacturer's marketing intelligence about each segment enables it to develop and advertise products with a high appeal more efficiently than trying to appeal to the broader masses.

Market segmentation is a marketing strategy in which select groups of consumers are identified so that certain products or product lines can be presented to them in a way that appeals to their interests.

Why Is Market Segmentation Important?

Market segmentation realizes that not all customers have the same interests, purchasing power, or consumer needs. Instead of catering to all prospective clients broadly, market segmentation is important because it strives to make a company's marketing endeavors more strategic and refined. By developing specific plans for specific products with target audiences in mind, a company can increase its chances of generating sales and being more efficient with resources.

What Are the Types of Market Segmentation?

Types of segmentation include homogeneity, which looks at a segment's common needs, distinction, which looks at how the particular group stands apart from others, and reaction, or how certain groups respond to the market.

What Are Some Market Segmentation Strategies?

Strategies include targeting a group by location, by demographics—such as age or gender—by social class or lifestyle, or behaviorally—such as by use or response.

What Is an Example of Market Segmentation?

Upon analysis of its target audience and desired brand image, Crypto.com entered into an agreement with Matt Damon to promote their platform and cryptocurrency investing. With backdrops of space exploration and historical feats of innovation, Crypto.com's market segmentation targeted younger, bolder, more risk-accepting individuals.

Market segmentation is a process companies use to break their potential customers into different sections. This allows the company to allocate the appropriate resource to each individual segment which allows for more accurate targeting across a variety of marketing campaigns.

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5 major challenges that have China headed for a '100-year storm,' according to billionaire investor Ray Dalio

• The billionaire investor Ray Dalio says five major trends have China headed for a "100-year storm."
• They include a debt problem, an internal wealth gap, and increasingly fraught relations with the US.
• "The circumstances and the mood in China have indisputably changed to become more threatening," he said.

There are major economic and geopolitical challenges brewing a "100-year storm" in China, says the billionaire investor Ray Dalio.

In a LinkedIn post on Wednesday, Dalio listed five major forces casting a shadow on Beijing, detailing headwinds he says have been building up over the past four decades.

"When there is a lot of debt and big wealth gaps at the same time as there are great domestic and international power conflicts and/or great disruptive changes in nature (like droughts, floods, and pandemics, which China is especially prone to) and great changes in technology, there is an increased likelihood of a '100-year big storm,'" Dalio wrote. "That is the current environment in China."

Related stories

First, the debt problem . China has for the past few years been mired in a property crisis that has hamstrung its economy by sending real-estate prices, asset prices, and employment in a downward spiral. On top of that, the country has an aging population, which is weighing on the financial system, especially under the legacy of the one-child policy. Dalio said those trends were depressing economic activity, prices, and psychology.

Then there's a growing internal wealth gap that has spurred the government to push for more "common prosperity," Dalio said. He added that the shifting policy focus had been "fear-inducing," which has additionally soured the mood in China.

Next, there's the increasingly fraught relations with the US . The power conflict between the two countries has bled into investor sentiment, steering money away from China. Businesses have been caught in the crossfire too, trying to appease the US.

"In trade and capital flows, a cat-and-mouse game has developed that has led companies and people to move to neutral countries and to try to appear to be non-Chinese or not Chinese sympathizers, so much so that the Chinese are having problems getting other countries and companies to accept them being there and/or investing in them," Dalio wrote.

China is also dealing with a technological war with the US, Dalio wrote. Both countries are pouring money into technologies including AI and quantum computing, each trying to get the lead over the other, he said.

Finally, there are the risks of the climate crisis , including floods, droughts, and pandemics, all of which are likely to cost a lot, he said.

"The circumstances and the mood in China have indisputably changed to become more threatening," Dalio said.

Watch: Protesters in China are trying to break out of quarantine

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The labour of fruits: night-time in New Covent Garden market – a photo essay

Guardian photographer Jill Mead pays a midnight visit to New Covent Garden market, the largest wholesale fruit, vegetable and flower market in the United Kingdom

“G et there around midnight,” said Tommy Leighton, the press officer at New Covent Garden market. “Buyers Walk looks a bit like Porridge, the BBC sitcom from the 70s. It’s not a hustle and bustle place, so don’t expect a Turkish bazaar.”

Above: Every Monday to Saturday Buyers Walk fills up with amazing displays of seasonal fruits and vegetables sourced from all over the world. Right: Preparing the display before customers start to arrive at 10pm. Far right: Strong shoulders and back are essential. The sales teams on Buyers Walk must have a high weekly step count. Below: Local customers from the nearby apartments regularly shop in the early hours.

It was a spot-on description. Indeed by midnight most of the regular customers had been and gone. I managed to have a chat with Leslie Singh, who runs Pomona, a greengrocers in Belsize Park. He explained why he visits the market every Monday to Friday. “It’s essential for me to see the produce, so I buy it daily and I know it’s the freshest.”

Les Singh, stocking up on tomatoes for his greengrocers, Pomona, in Belsize Park. Leslie visits the market Monday to Friday and gets a delivery on Saturday.

Buyers Avenue, particularly when viewed from above, was indeed a bit prison-like, echoey, with harsh lighting but lined, the entire length, with the most incredible, colourful displays of fruit and vegetables. In a prison riot it would be carnage. God help anyone near a pallet of tomatoes or watermelons. Trolleys, heavily laden with produce, are pushed and pulled by porters throughout the night past wholesalers and salespeople taking telephone orders at their respective stands.

Behind the front-of-house scenes are cold storage units all stacked to the rafters with mushrooms, bananas and things I didn’t recognise, and then, outside, more porters and forklift truck drivers, weaving in and out of a city of wooden pallets. Rave music blasts out in places and blurry figures emerge through heavy PVC strip curtains. It’s my kind of venue.

The market sits next to council flats and private houses. A trader told me his parents considered buying a house there for £4,000 when it was relocated in the 1970s. New Covent Garden Market in Nine Elms is the largest wholesale fruit, vegetable and flower market in the United Kingdom. As well as fresh fruit, veg and flowers, the wholesalers can provide an extensive list of grocery items and ingredients, including meat, fish, bread, milk, pasta and vegan options.

Against a backdrop of London’s high rises, it’s an impressive, and actually very moving, sight. All this going on, right there, while most of London sleeps. I was given open access. To a photographer this is gold. Allowed to go, on my own, up high, behind the scenes, in offices, in fridges, in storerooms – and everyone, without exception, took time to share what I very quickly came to understand was the overriding sentiment of the people who work there. Immense pride in the history and heritage and a passion for the market community. They all love working there, despite the antisocial hours six days of the week.

Tony’s cafe is an institution in the market. Duncan remembered my order from the night before and I’d be confident in saying he probably knows exactly what everyone is going to ask for.

Even when prompted about the cold, winter days I was told: “We just wear an extra layer and get a brew from Tony’s cafe,” a rough gem of a place tucked snugly away in a busy underpass. My order, a bacon and egg roll, and milky coffee, was remembered on my return visit and I sensed that Duncan, the owner, and his staff had a seamless system on the go after over 35 years in business. I’d love to know the average length of employment at the market; 30-40 years seemed normal and many were third or fourth generation there.

Harry taking phone orders for Premier Foods Wholesale.

Harry from Premier Foods Wholesale started working at the market when he was 15 after being kicked out of school. “It was either come here or get thrown out of my mum’s house.”

I chatted with William Fisher who travels to the market six nights a week from Newbury in Berkshire. His grandad, also William Fisher, used to go to the old Covent Garden market in Soho and his dad, Geoff, took over the company as a teenager, running it when the market moved to the present location in Nine Elms, Battersea.

William Fisher is the third generation in his family coming to buy his fruit and vegetables.

“One of the best parts of the job,” he told me, “is working with some really interesting and great characters that have endless experience in the industry. It’s a real team effort to deliver produce to customers, so everyone must get stuck in and work until it’s done.”

It’s very much a family affair. Although there appears to be relentless ribbing, it’s clear that they’re always there for each other. They may fight over every last pound of their business, but they’ll also be the first to buy a round at the bar.

Mary Brunning is stand manager at Neil Brown Herbs and one of the few (so far, it’s going to evolve a lot over the next few years) women working in what is undeniably still a male-dominated environment.

Mary Brunning, the only female salesperson, explained: “You do have to have a thick skin to work here as a female but it’s a job like no other. I’m lucky to have a job I love.” She even found her partner, Alberto, there – “trying to meet anyone outside of the market is virtually impossible when you go to work at 7pm every night”.

The market even has its own post office. Raj Patel has worked there for 34 years and opens up every weekday at 4am until 1pm. “My customers are like family,” he told me.

Vibrant produce at the market includes romanesco cauliflowers and red pomelo grapefruit

By 6am the fruit and vegetable market is almost empty, apart from Bevington salads staff, who, much like their produce, all look as fresh as daisies. It’s a stretch to think that in 14 hours it will all be business as usual again.

A night bus runs directly past the entrance. For anyone who fancies a bit of late-night fruit and vegetable shopping or flowers, the flower market opens at 4am

The dawn sky is disappointing as I head home, knackered but with two mangoes and three boxes of strawberries to show for it. New Covent Garden market is definitely a tough gig, but the perks are seriously enviable.

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