Market. Classification of markets. Marketing strategies (Leaders, Followers, challengers, nichers)

Market - Generally speaking, a market is a gathering of people for buying and selling, the place or institution in which buyers and sellers of a good or asset meet. A market was originally a building, and still is for some goods, for example cattle or vegetable markets, and for some services, for example Lloyd’s for insurance. Nowadays the market is understood as a set of conditions permitting buyers and sellers to work together, in many cases the market is a network of dealers linked  physically by telephone and computer networks, and linked institutionally by trading rules and conventions. Market facilitate trade in goods, as in commodity markets; in securities, for example the bond market, the capital market, or the stock exchange; in labour services, as in the labour market; or in foreign currency, in the foreign exchange market.

Classification of markets

Market has been classified on the basis of differences among them.

Market on the basis of area covered are classified into

a) local markets

b) regional markets

c) national markets

d) international markets

Keeping in mind the position of sellers in the market, the markets are categorized as:

1. primary market

It is the market where in the farm products are sold by the primary producers to the wholesalers or their agents.

2. secondary market

It is the market where wholesalers sell goods to the retailers for further selling it to the consumers.

3. terminal market

It is the market where the purchase is finalized by the consumers from the retailers.

On the basis of volume of business transacted, the markets are classified into;

1. wholesale market

As the name indicates it is the market wherein the goods are sold in bulk to the dealers.

2. retail market

In case of retail market, the goods are sold in a small quantity directly to the consumers.

On the basis of nature of transactions, the market is classified as:

1. spot market

The spot market is the cash market.

2. future market

In this market the purchase or sale of the commodity calls for delivery some months in the future. Actual delivery of goods is rarely made.

Marketing strategies (Leaders, Followers, challengers, nichers)

Market structure is very complicated. In most industries and markets a lot larger and smaller companies build their business on the same as others(original one). Any firm has its particular niche according to its specific features(unique selling propositions) and its own marketing strategies. A company’s marketing strategy is a set of principles designed to achieve long-term objectives and depend on the unique situation of the individual business(its size and position in the market, extent of company’s recourses, strategies of its competitors, behavior of the consumers in the target market and the overall macro-economic environment)

According to the Strategies based on market dominance, firms are classified based on their market share or dominance of an industry. Typically there are four types of market dominance strategies:

Leader

Challenger

Follower

Nicher

Leader

In most markets there are is a definite leader: the firm with the largest market share . The market leader is frequently able to lead other firms in the introduction of new products, in price charges, level of intensity of promotions, etc.

Market leader usually want to increase their market even further. One way to do this is to try to find ways to increase the size of the target market. Contrary to a common belief, wholly dominating a market, or having a monopoly, is seldom an advantage: competitors expand markets and find new uses and user for products, which enriches everyone in the field, but the market leader more then its competitors. A market can also be expanded by stimulating more usage.(have a couple of TV)

Or at least to protect their current market share. To protect a market share, a company  can innovate in products, customer services, distribution channels, cost reductions, etc; it can extent and stretch its product lines to leave less room for  competitors. Or it can confront competitors directly in expensive sales promotion campaigns.

In many markets, there is often a distinct market challenger, with the second largest market share. Market  challengers can either to attack the leader, or to increase their market share by attacking various market followers and nichers. If challengers choose to attack the leader, the can use most of the strategies also available to market leaders.

The majority of companies in any industry are merely market followers which present no threat to the leader. One possibility for market followers is to imitate the leader’s products.  The leader has borne the costs of developing, distributing and making the market aware of its product. The followers Can clone the product, adapt or differentiate it. Market followers tend to constitute the majority of firms in a market albeit that their collective share may only account for 20-30 per cent of total sales. While no market follower is likely to challenge the leader or its immediate competitors this is not to say that they do not indulge in very active competition between themselves. Denied the economies of scale which is mo likely to be the advantage to the larger firms the followers have to be particularly efficient in their marketing and service policies if they are to survive and many of them choose to develop a concentrated or market niche strategy, therefore becoming market nicher. A market follower which does not establish its own niche is in vulnerable position: if its product does not have a “unique selling proposition” there is no reason for anyone to buy it. In fact, in the most established industries there is only room for two or three major companies.

Many market nichers concentrate on market segmentation: finding a profitable niche in the market that is not satisfied by other goods or services, and that offers growth potential or gives the company a differential advantage because of its specific competencies.  Small companies focusing on the specialized narrow segment can make big profit. Although small companies are generally flexible, and can quickly respond to market conditions, their narrow range of customers causes problematic fluctuations in turnover and profit.. Furthermore, they are vulnerable in a recession when, largely for psychological reasons, distributors, retailers and customers all prefer to buy from big, well-known suppliers.