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WHAT IS A MARKET | DEFINITION | CLASSIFICATION OF MARKETS

MARKET

What is a Market? In the most general sense of the word ‘market’ it is a place where goods are offered for sale. It may be an open place, a shop, a building or premises. People go there to buy and sell commodities. With the growth of economic activity, a market has come to be regarded as a place where different sorts of trade and commerce activities are carried out. Market may be local, national and international. Similarly, they can be retail markets or wholesale markets.

CLASSIFICATION OF MARKET

Markets may be classified as:
1. Commodity Markets
2. Capital Markets

COMMODITY MARKETS

These are the markets where different types of transactions pertaining to commodities are carried out. Depending on the nature of the goods/articles sold and bought in commodity markets, they are farther classified as:

(a) Produce Markets
(b) Manufactured Goods Markets
(c) Bullion Markets

(a) Produce Markets: Produce markets deal in raw produce goods, both agricultural and mineral. A produce market may deal in only one kind of commodity or several commodities of a group of produce. We have well-organized produce markets in almost all the notable cities of Pakistan. These markets may be limited to particular localities, but they are wide-spread in terms of the areas that they cover.
(b) Manufactured Goods Markets: Manufactured goods markets deal in semi-manufactured or fully-finished goods like sugar, leather, garments, textile, machinery, etc. These days separate markets have come to exist for manufactured goods of a particular type.
(c) Bullion Markets: Bullion markets are the highly specialized centers of trade where precious metals like gold and silver are sold. Diamond markets where precious stones are sold and bought are also a part of bullion markets. However, in many big cities of the world bullion markets and diamond markets function separately.

CAPITAL MARKETS

These are the markets where transactions pertaining to wealth in the form of money, bills, shares, securities and other such stocks are carried out. Capital markets may be classified;
(a) Money Markets
(b) Foreign Markets
(c) Stock Exchange Markets

(a) Money Markets: Banks and financial institutions serve as money markets. Basic function of money markets is to collect deposits and provide capital for investment by advancing loans to public and private sectors. These markets are open to private individuals and organizations for money transactions,
(b) Foreign Exchange Markets: Foreign Exchange Market is a specialized market that deals in money-exchange transactions with foreign countries. This market also buys and sells foreign currencies at local level. Both public and private sectors have access to foreign exchange markets. Banks and financial institutions have special foreign exchange sections to deposit and cash foreign currencies. Close to the Foreign Exchange Markets are the Money Exchange Centers which exchange the local and foreign currencies. These markets function under the existent laws of the land.
(c) Stock Exchange Markets: Stock Exchange Markets deal in the matters related to sale and purchase of shares and securities. Traders in these markets are both public and private sectors, as individuals and as institutions. The Stock Exchange Market is an index of the total economy of the country, as it grows or shrinks with the growth and shrink of the economic activity in the country.

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