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Meaning and Types of Market

by Olufisayo
Meaning of Market

Meaning of Market

A market normally consists of (a) individuals and organizations who (b) are interested and willing to buy a particular product to obtain benefits that will satisfy a specific need or want, and who (c) have the resources (time, money) to engage in such a transaction.

With the understanding of this, some markets are sufficiently homogeneous that a company can practice undifferentiated marketing in them.

That is, the company attempts to market a line of products using a single marketing program. But because people have different needs, wants, and resources, the entire population of a society is seldom a viable market for a single product or service.

Also, people or organizations often seek different benefits to satisfy needs and wants from the same type of product (e.g. one car buyer may seek social status and prestige while someone else wants economical basic transportation).

The total market for a given product category thus is often fragmented into several distinct market segments. Each segment contains people who are relatively homogeneous in their needs, their wants, and the product benefits they seek. Also, each segment seeks a different set of benefits from the same product category.

Types of Market

There are three types of market:

  • Consumer Market.
  • Business Market.
  • Nonprofit and Governmental Market

Consumer Market

This consists of buyers (actual and potential) who buy goods and services for their ultimate consumption. Such goods and services include soap, detergent, insecticides, banking, insurance, and so on.

Because the consumer market is usually heterogeneous and large, marketers of these products must clearly target their customers, accurately determine their needs and appropriately establish a clear position. Effective marketing in the consumer market requires the following:

  • High quality and distinctive products, with attractive packaging.
  • A massive promotion, with more emphasis on advertising and sales promotion.
  • An intensive distribution.
  • A reliable service.

Business Market

This consists of firms that buy goods and services that are either used up in the production process or’ offered for resale. They are professional buyers that obtain products to make profits.

Therefore, marketers require showing how their products will help business customers achieve their profit goals. Business marketers who must show a high level of reputation for reliability and quality also require the following:

  • Some measure of advertising and heavy reliance on the well-trained and motivated sales force.
  • Attractive discounts (cash, quantity, seasonal, and so on).
  • Excellent after-sale services.

Nonprofit and Governmental Market

This consists of nonprofit organizations like churches, universities, charitable organizations, or government agencies that buy goods and services for their effective administration. Unlike business buyers, these organizations do not seek profits.

Because their purchasing power is low, business marketers must price carefully. For instance, much government purchasing is done underbidding, with a contract awarded to the lowest bidders in the absence of erroneous factors.

Photo by Aleksandar Pasaric from Pexels

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