What is a Market? Definition, Characteristics, and Types

What is a Market?

A market is a place where buyers and sellers meet and negotiate the terms of the purchase and sale of products. The place could be both physical and virtual.

The markets facilitate the exchange of goods and services between sellers and buyers. This becomes a means where a buyer can easily find his desired products and the seller finds his potential as well as actual customers.

There are certain characteristics that define a market, including sellers, buyers, and products that can be sold and purchased. This is where people can easily spend their money and get what they want.

Philip Kotler has defined the market as – It is an area of potential exchanges that is a group of buyers and sellers interested in negotiating the terms of purchase and sales of goods and services.

Characteristics of a Market

The following are the main characteristics that help us to define and understand the market.

Buyer and Seller

Buyers and sellers are two of the main components of the market. A buyer is a person who purchases the product either for a consumption purpose or reselling purpose. Whereas, a seller is a person who sells goods and services.

Product

A product or service is an object of the market. There would not be any selling and buying activities if there are no products. The product is for what buyers and sellers meet.

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Exchange of Products

A market is a convenient meeting place for exchange purposes. Transfer of product ownership should take place after the exchange of products and services.

Demand and Supply

Markets also establish the prices of goods and services which are determined by the supply and demand forces. When there is high demand for the product and the supply is less, the product’s price will be higher and vice versa.

Types of Market

There can be various types of markets such as auction markets, black markets, potential markets, segment markets, niche markets, financial markets, stock markets, target markets, penetrated markets, children markets, women markets, and so on. However, all these markets can be classified into two as:

Physical Market

Physical markets are those where buyers and sellers can physically meet and do the selling and buying of products. This includes shopping malls, departmental stores, retail shops, and other physical stores.

Virtual Market

In virtual markets, buyers and sellers do not meet each other physically instead they meet each other through the Internet. They interact with each other virtually and discuss the product’s sales and purchase conditions. Examples may include Amazon.com, eBay.com, and other e-commerce marketplaces.

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