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| Classification of Market |
Classification
of Markets
Markets
may be classified on the basis of each of the twelve dimensions
Must Read: Definition of market and marketing बाजार और विपणन की परिभाषा
Must Read: Markets and Marketing बाजार और विपणन
1. 1. On
the Basis of Location or Place of Operation
On the basis of the place of location or place of operation, markets are
of the following types:
a. Village Market: A market which is
located in a small village, where major transactions take place among the
buyers and sellers normally residing in that village, is called a village
market.
b. Primary Markets: These markets are
located in towns near the centers of production of agricultural commodities. In
these markets, a major part of the produce is brought for sale by the
producer-farmers themselves. Transactions in these markets usually take place
between the farmers and primary traders.
c. Secondary Wholesale Markets: These
markets are located generally at district headquarters or important trade
centres or near railway junctions. The major transactions of commodities in
these markets take place between the village traders and wholesalers. The bulk
of the arrivals in these markets are from other markets. The produce in these
markets is handled in large quantities. There are, therefore, specialized
marketing agencies performing different marketing functions, such as those of
commission agents, brokers and weighmen in these markets. These markets help in
assembling commodities from neighboring district/tehsil/state.
d. Terminal Markets: A terminal market is one
where the produce is either finally disposed of to the consumers or processors,
or assembled for export. In these markets, merchants are well organized and use
modern methods of marketing. Commodity exchanges exist in these markets which
provide facilities for forward trading in specific commodities. Such markets
are located either in metropolitan cities or at sea[1]ports.
Delhi, Mumbai, Chennai, Bengaluru, Kolkata and Cochin are terminal markets in
India for many commodities.
e. Seaboard Markets: Markets which are
located near the seashore and are meant mainly for the import and/or export of
goods are known as seaboard markets. These are generally seaport towns.
Examples of these markets in India are Mumbai, Chennai, Kolkatta and Cochin
(Kochi).
On
the basis of the area from which buyers and sellers usually come for
transactions, markets may be classified into the following four classes:
a.
Local or Village Markets: A market in
which the buying and selling activities are confined among the buyers and sellers
drawn from the same village or nearby villages. The village markets exist
mostly for perishable commodities in small lots, e.g., local milk market or
vegetable market.
b.
Regional Markets: A market in which
buyers and sellers for a commodity are drawn from a larger area than the local
markets. Regional markets in India usually exist for food grains.
c.
National Markets: A market in which
buyers and sellers spread at the national level. Earlier national markets
existed for only durable goods like jute and tea. But with the expansion of
roads, transport and communication facilities, the markets for most of the
products have taken the form of national markets.
d.
World or International Market: A
market in which the buyers and sellers are drawn from more than one country or
the whole world. These are the biggest markets from the area point of view.
These markets exist for the commodities which have a world-wide demand and/or
supply, such as coffee, machinery, gold, silver, etc. In recent years many
countries are moving towards a regime of liberal international trade in
agricultural products like raw cotton, sugar, rice and wheat. It is expected
that the international trade in such commodities will become free from many
restrictions that exist now.
1. 3. On the Basis of Time Span
On this basis, markets are of the
following types
a. Short period Markets: The markets which are held only for a day or few hours are called short-period markets. The products dealt with in these markets are of a highly perishable nature, such as fish, fresh vegetables, and liquid milk. In these markets, the prices of commodities are governed mainly by the extent of demand for, rather than by the supply of, the commodity.
b. Periodic Markets: The periodic markets are congregation of buyers and sellers at specified places either in villages, semi-urban areas or some parts of urban areas on specific days and time. Major commodities traded in these markets is the farm produce grown in the hinterlands. The periodic markets are held weekly, biweekly, fortnightly or monthly according to the local traditions. These are similar to 'spontaneous markets' in several developed countries.
c.
Long-period Markets: These markets
are held for a longer period than the short-period markets. The commodities traded
in these markets are less perishable and can be stored for some time; like food
grains and oilseeds. The prices are governed both by the supply and demand
forces.
d. Secular Markets: These are markets of a permanent nature. The commodities traded in these markets are durable in nature and can be stored for many years. Examples are markets for machinery and manufactured goods.
Must Read: Role of Agricultural Marketing objective
a. Wholesale Markets: A wholesale market
is one in which commodities are bought and sold in large lots or in bulk. These
markets are generally located in either towns or cities. The economic
activities in and around these markets are so intense that over time the
population tends to get concentrated around these markets. These markets occupy
an extremely important link in the marketing chain of all the commodities
including farm products. Apart from balancing the supply and demand and
discovery of the prices of a commodity, these markets and functionaries in them
serve as a link between the production system and consumption system. The
wholesale markets for farm products in India can be classified as primary,
secondary and terminal wholesale markets. The primary wholesale markets are in
the nature of assembling centres located in and around producing regions. The
transactions in primary wholesale markets take place mainly between farmers and
traders. Secondary wholesale markets are generally located between primary
wholesale and terminal markets. The transactions in these markets take place
between primary wholesalers and traders of terminal market. The terminal
markets are generally located at the large urban metropolitan cities or export
centres catering to the large consuming population around them or in the
overseas markets.
b. Retail Markets: A retail market is one in which commodities are bought by and sold to the consumers as per their requirements. Transactions in these markets take place between retailers and consumers. The retailers purchase the goods from wholesale market and sell in small lots to the consumers in retail markets. These markets are very near to the consumers.
The distinction between the wholesale and retain market can be made mainly on the basis of buyer. A retail market means that the buyers are generally ultimate consumers, whereas in the wholesale market the buyers can be wholesalers or retailers. But sometimes-bulk consumers also purchase from the wholesale markets. The quantity transacted in retail markets is generally smaller than that in the wholesale markets.
b.
Forward Markets: A market in which
the purchase and sale of a commodity takes place at time t but the exchange of
the commodity takes place on some specified date in future i.e., time t + 1.
Sometimes even on the specified date in the future (t + 1), there may not be
any exchange of the commodity. Instead, the differences in the purchase and
sale prices are paid or taken.
1. 6. On the Basis of Number of Commodities in which Transaction Takes Place
A market may be general or specialized on the basis
of the number of commodities in which transactions are completed.
a. General Markets: A market in which
all types of commodities, such as foodgrains, oilseeds, fibre crops, gur, etc.,
are bought and sole is known as general market. These markets deal in a large
number of commodities.
b. Specialized Markets: A market in which transactions take place only in one or two commodities is known as a specialized market. For every group of commodities, separate markets exist. The examples of specialized markets are foodgrain markets, vegetable markets, wool market and cotton market.
1.
7. On the Basis of Degree of Competition
Each market can be placed on a continuous scale, starting from a
perfectly competitive point to a pure monopoly or monopsony situation. Extreme
forms are almost non-existent. Nevertheless, it is useful to know their
characteristics. In addition to these two extremes, various midpoints of this
continuum have been identified. On the basis of competition, markets may be
classified into the following categories:
a.
Perfect Markets: A perfect market is
one in which the following conditions hold good:
(i) There is a large number of
buyers and sellers;
(ii) All the buyers and sellers in
the market have perfect knowledge of demand, supply and prices;
(iii) Prices at any one time are
uniform over a geographical area, plus or minus the cost of getting supplies
from surplus to deficit areas;
(iv) The prices of different forms
of a product are uniform, plus or minus the cost of converting the product from
one form to another.
a. Imperfect Markets: The markets in which the conditions of perfect competition are lacking are characterized as imperfect markets. The following situations, each based on the degree of imperfection, may be identified:
(i) Monopoly Market: Monopoly is a market
situation in which there is only one seller of a commodity. He exercises sole
control over the quantity or price of the commodity. In this market, the price
of a commodity is generally higher than in other markets. Indian farmers
operate in monopoly market when purchasing electricity for irrigation. When
there is only one buyer of a product, the market is termed as a monopsony
market.
(ii) Duopoly Market: A duopoly market is
one which has only two sellers of a commodity. They may mutually agree to
charge a common price which is higher than the hypothetical price in a common
market. The market situation in which there are only two buyers of a commodity
is known as the duopsony market.
(iii) Oligopoly Market: A market in which
there are more than two but still a few sellers of a commodity is termed as an
oligopoly market. A market having a few (more than two) buyers is known as
oligopsony market.
(iv) Monopolistic Competition: When a
large number of sellers deal in heterogeneous and differentiated form of a
commodity, the situation is called monopolistic competition. The difference is
made conspicuous by different trade marks on the product. Different prices
prevail for the same basic product. Examples of monopolistic competition faced
by farmers may be drawn from the input markets. For example, they have to choose
between various makes of insecticides, pumpsets, fertilizers and equipments.
1. 8. On the Basis of Nature of Commodities
On the basis of the type of goods dealt in, market may be classified into the following categories:
(a)
Commodity Markets: A market which
deals in goods and raw materials, such as wheat, barley, cotton, fertilizer,
seed, etc., are termed as commodity markets.
(b) Capital Markets: The market in which bonds, shares and securities are bought and sold are called capital markets; for example, money markets and share markets.
1. 9. On the Basis of Stage of Marketing
On the basis of the stage of marketing,
markets may be classified into two categories:
(a)
Producing Markets: Those markets
which mainly assemble the commodity for further distribution to other markets
are termed as producing markets. Such markets are located in producing areas.
(b) Consuming Markets: Markets which
collect the produce for final disposal to the consuming population are called
consumer markets. Such markets are generally located in areas where production
is inadequate, or in thickly populated urban centres.
1. 10. On the Basis of Extent of Public
Intervention
Based on the extent of public intervention,
markets may be placed in any one of the following two classes:
(a)
Regulated Markets: These are those
markets in which business is done in accordance with the rules and regulations
framed by the statutory market organization representing different sections
involved in markets. The marketing costs in such markets are standardized and,
marketing practices are regulated.
(b) Unregulated Markets: These are the markets in which business is conducted without any set rules and regulations. Traders frame the rules for the conduct of the business and run the market. These markets suffer from many ills, ranging from unstandardised charges for marketing functions to imperfections in the determination of prices.
1. 11. On the Basis of Type of Population Served
On
the basis of population served by a market, it can be classified as either
urban or rural market.
(a)
Urban Market: A market which serves
mainly the population residing in an urban area is called an urban market. The
nature and quantum of demand for agricultural products arising from the urban
population is characterized as urban market for farm products.
(b) Rural Market: The word rural market
usually refers to the demand originating from the rural population. There is
considerable difference in the nature of embedded services required with a farm
product between urban and rural demands.
Rural markets generally have poor marketing
facilities as compared to urban markets. According to the survey of the
Directorate of Marketing and Inspection (DMI) of Government of India, only 46
per cent of rural primary markets, of the country have the facility of market
yards; 6.4 per cent have office buildings, 3.2 per cent have cattle shed, 3 per
cent have canteen, 4.9 per cent have storage facilities, 5.1 per cent have auction
platforms, 12.9 per cent have drinking water facility and 5.2 per cent markets
have electricity facility. Marketing support services such as godowns,
cleaning, price information and extension services were found completely
non-existent in most of these rural markets.
1. 12. On the Basis of Market Functionaries and
Accrual of Marketing Margins
Markets can also be classified on the basis
of as to who are the market functionaries and to whom the marketing margins
accrue. Over the years, there has been a considerable increase in the producers
or consumers co-operatives or other organizations handling marketing of various
products. Though private trade still handles bulk of the trade in farm
products, the co-operative marketing has increased its share in the trade of
some agricultural commodities like milk, fertilizers, sugarcane and sugar. In
the case of marketing activities undertaken by producers or consumers
co-operatives, the marketing margins are either negligible or shared amongst
their members. In some cases, farmers themselves work as sellers of their
produce to the consumers.
On the basis, the market can be
(a) farmers markets,
(b) cooperative markets or
(c) general market
Dimensions of a Market
There are various dimensions of any
specified market. These dimensions are:
1. Location or place of operation
2. Area or coverage
3. Time span
4. Volume of transactions
5. Nature of transactions
6. Number of commodities
7. Degree of competition
8. Nature of commodities
9. Stage of marketing
10. Extent of public intervention
11. Type of population served
12. Accrual of marketing margins
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