Financing and Marketing Management

Unit 8 - Markets

8.1. Markets
The concept of exchange leads to the concept of a market.
A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.
A market is a context or situation, or a place where exchange of goods and services takes place between buyers and sellers. Thus, a market need not be a place.
Thus the size of the market depends upon the number of persons who exhibit the need, have resources that interest others, and are willing to offer these resources in exchange for what they want.

Originally the term market stood for the place where buyers and sellers gathered to exchange their goods, such as a village square. Economists use the term market to refer to a collection of buyers and sellers who transact over a particular product or product class; hence the housing market, the grain market, and so on. Marketers however, see the sellers as constituting the industry and the buyers as constituting the market. The relationship between the industry and the market is shown in the above fig. The sellers and buyers are connected by four flows. The sellers send goods and services and communications to the market; in return they receive money and information. The inner loop shows an exchange of money for goods; the outer loop shows an exchange of information.
Business people use the term markets colloquially to cover various groupings of customers. They talk about need markets (such as diet-seeking market); product markets (such as shoe market); demographic markets (such as youth market); and geographic markets (such as French market). Or they extend the concept to cover non customer groupings as well such as voter markets, labor markets and donor markets.
Approaches to marketing: How to analyze marketing problems:

• Functional approach
• Commodity approach
• Institutional approach