Classification of Markets
On the basis of different approaches markets have been classified on the basis of Area, Nature of Goods, and Economic view, Transaction, Regulation, Time, Volume and importance. The detailed classification is presented in the following chart.
a. Family Market: When exchange of goods or services are confined within a family or close members of the family, such a market can be called as family market.
b. Local Market: Participation of both the buyers and sellers belonging to a local area or areas, may be a town or village, is called as local market. The demands are limited in this type of market. For example, perishable goods like fruits, fish, vegetables etc. But strictly speaking such markets are disappearing because of the efficient system of transportation and communication. Even, then, in many villages such markets exist even today.
c. National Market: a. Certain type of commodities has demand throughout the country. Hence it is called as a national market. Today the goods from one corner can reach another corner with ease as the communication and transportation facilities are developed well in India. This creates national markets for almost all the products.
d. International Market or World Market: World or international market is one where the buyers and sellers of goods are from different countries i.e., involvement of buyers and sellers beyond the boundaries of a nation.
A commodity market is a place where produced goods or consumption goods are bought and sold. Commodity markets are sub-divided into:
i. Produce Exchange Market: It is an organised market where commodities or agricultural produce are bought and sold on wholesale basis. Generally it deals with a single commodity. It is regulated and controlled by certain rules. e.g. Wheat Exchange Market of Hapur, the Cotton Exchange Market of Bombay etc.
ii. Manufactured Goods Market: This market deals with manufactured goods. e.g., Leather goods, Manufactured machinery etc. The Leather Exchange Market at Kanpur is an example of the same.
iii. Bullion Market: This type of market deals with the purchase or sale of gold and silver. Bullion markets of Mumbai, Kolkata, Kanpur etc., are examples of such markets.
New or going concerns need finance at every stage. Their financial needs are met by capital markets. They are of three types:
i. Money Market: It is a type of market where short term seurities are exchanged. It provides short term and very short term finance to industries, banks, governments agencies and financial intermediates.
ii. Foreign Exchange Market: It is an international market. This type of markets helps exporters and importers, in converting their currencies into foreign currencies and vice versa.
iii. The Stock Market: This is a market where sales and purchases of shares, debentures, bonds etc., of companies are dealt with. It is also known as Securities market. Stock Exchanges of Mumbai, Kolkata, Chennai etc., are examples for this type of market.
a. Perfect Market: A market is said to be a perfect market, if it satisfies the following conditions:
i. Large number of buyers and sellers are there.
ii. Prices should be uniform throughout the market.
iii. Buyers and sellers have a perfect knowledge of market.
iv. Goods can be moved from one place to another without restrictions.
v. The goods are identical or homogenous.
It should be remembered that such types of markets are rarely found.
b. Imperfect Market: A market is said to be imperfect when
i. Products are similar but not identical.
ii. Prices are not uniform.
iii. There is lack of communication.
iv. There are restrictions on the movement of goods.
i. Spot Market: In such markets, goods are exchanged and the physical delivery of goods takes place immediately.
ii. Future Market: In such markets, contracts are made over the price for future delivery. The dealing and settlement take place on different dates.
i. Regulated Market: These are types of markets which are organised, controlled and regulated by statutory measures.
Example: Stock Exchanges of Mumbai, Chennai, Kolkata etc.
ii. Unregulated Market: A market which is not regulated by statutory measures is called unregulated market. This is a free market, where there is no control with regard to price, quality, commission etc. Demand and supply determine the price of goods.
i. Very Short Period Market: Markets which deal in perishable goods like, fruits, milk, vegetables etc., are called as very short period market. There is no change in the supply of goods. Price is determined on the basis of demand.
ii. Short Period Market: i. In certain goods, supply is adjusted to meet the demand. The demand is greater than supply. Such markets are known as Short Period Market.
iii. Long Period Market: This type of market deals in durable goods, where the goods and services are dealt for longer period usages.
i. Wholesale Market: In wholesale market goods are supplied in bulk quantity to dealers/ retailers. The goods and services are not sold to customers directly.
ii. Retail Market: In retail market the goods are purchased from producer or wholesales and sold to customers in small quantities by retailers.
i. Primary Market: The Primary producers of farm sell their output or products through this type of markets to wholesalers or consumers. Such markets can be found in villages and mostly the products arrive from villages.
ii. Secondary Market: In this market, the semi finished goods are marketed. Here finished goods are not sold. The commodities arrive from other markets. The dealings are commonly between wholesalers or between wholesalers and retailers.
iii. Terminal Market: It is a central site that serves as an assembly and trading place for commodities in a metropolitan area. For agricultural commodities, these are usually at or near major transportation hubs.