Market Classification

Meaning

The word “market” originates from the Latin word “marcatus,” which means merchandise, trade, or a place where business is conducted. A market is a social institution that performs activities and provides facilities for exchanging commodities between buyers and sellers.

Joan Robinson defines a market as “any arrangement whereby goods and services are exchanged.”

Types of Markets

1. On the Basis of Location

• Village Markets: Located in small villages where transactions occur among local buyers and sellers.
• Primary Wholesale Markets: Situated in big towns near production centers; transactions mainly occur between farmers and traders.
• Secondary Wholesale Markets: Found in district headquarters or trade centers, dealing mainly with transactions between village traders and wholesalers.
• Terminal Markets: Located in metropolitan cities or seaports where produce is either sold to consumers, processed, or assembled for export.
• Seaboard Markets: Located near seashores, dealing with the import and export of goods.

2. On the Basis of Area/Coverage

• Local or Village Markets: Confined to nearby villages, primarily for perishable commodities like milk and vegetables.
• Regional Markets: Cover larger areas, typically dealing in food grains.
• National Markets: Operate at a national level, dealing with durable goods like jute and tea.
• World Markets: Engage in international trade of commodities like coffee, gold, silver, and machinery.

3. On the Basis of Time Span

• Short-period Markets: Operate for a few hours, dealing in highly perishable goods like fish and fresh vegetables.
• Long-period Markets: Last longer, dealing with less perishable commodities like food grains and oilseeds.
• Secular Markets: Permanent markets for durable goods like machinery and manufactured products.

4. On the Basis of Volume of Transactions

• Wholesale Markets: Commodities are bought and sold in large quantities, mainly between traders.
• Retail Markets: Commodities are sold in small quantities to consumers.

5. On the Basis of Nature of Transactions

• Spot or Cash Markets: Goods are exchanged for money immediately after the sale.
• Forward Markets: Transactions occur at a specified time, but the exchange of commodities happens at a future date.

6. On the Basis of Number of Commodities Traded

• General Markets: Deal with various commodities, including food grains and oilseeds.
• Specialized Markets: Transactions occur only in one or two commodities, such as vegetable or cotton markets.

7. On the Basis of Degree of Competition

• Perfect Markets: Characterized by numerous buyers and sellers, perfect knowledge of market conditions, and uniform pricing.
• Imperfect Markets: Lacking conditions of perfect competition, further classified into:
  • Monopoly Market: A single seller controls supply and pricing.
  • Duopoly Market: Two sellers dominate the market.
  • Oligopoly Market: A few sellers dominate the market.
  • Monopolistic Competition: Numerous sellers provide differentiated products.

8. On the Basis of Nature of Commodities

• Commodity Markets: Deal in goods and raw materials like wheat, cotton, fertilizers, etc.
• Capital Markets: Involve financial assets like bonds, shares, and securities.

9. On the Basis of Stage of Marketing

• Producing Markets: Assemble commodities for further distribution.
• Consuming Markets: Collect produce for final disposal to consumers.

10. On the Basis of Extent of Public Intervention

• Regulated Markets: Operate under rules set by statutory market organizations.
• Unregulated Markets: Conduct business without standardized regulations, often leading to market inefficiencies.

11. On the Basis of Type of Population Served

• Urban Markets: Cater to the needs of urban populations.
• Rural Markets: Serve the demand arising from rural populations.