Types of Market
A marketing perspective on the concept of market defines it as the actual or potential demand for a product or service for a certain period of time.Analyzing the market reveal more classification levels from the reference product market to brand market or company market.
The reference product market includes all the consumers of all products that satisfy the same need and all the suppliers for those products. It represents the mass of consumers or users of the same kind of products, not considering the brand or the producer. This market has actual geographic, demographic and social limitations.
A company's performance on a certain product's market is indicated by :
- Market share – represented by the percentage of the total product market that the company supplies. This indicator is calculated by dividing the sales(quantity or amount) to the sum of all the sales on the market.
- Relative market share – indicates the position of the company relative to the main competitors. The relative market share results from dividing the sales of a company to the sales of the market leader. For the market leader, the relative market share is relative to the following company by sales.
The main types of markets are established considering various criteria:
- Customers' interest, buying power and reach:
- Total market – containing all the customers
- Potential market – members of the total market that express an interest for the product
- Available market – members of the potential market that dispose of financial resources and can reach to the product
- Qualified available market – members that express an interest, posses the financial resources and are ready to purchase the product
- Target market – the segment of the market that the producer focuses on
- Penetrated market – all the customers that bought the product
- Considering the substitution and complementarity relations between products:
- Main market – all the similar products sold on the market that are in direct competition
- Adjacent market – different products that satisfy the same requirements in the same consumption circumstances
- Support market – represented by the products that contain the product of another company( the automobile industry is a support market for tyre industry)
- Generic market – all the products that satisfy the same needs. Comprises the main market and all the adjacent markets.
- Geographical location:
- Intern market
- International market.
Evaluating the market size implies the following aspects:
- Market capacity(the maximum market size) is the maximum quantity of the reference product that can be absorbed by the customers, only limited by the physical and biological limits of the consumers(not taking into account the price).
- Actual market – the demand available, the clients that have already bought the product.
- Total market potential – the maximum volume of sales that can be attained by the group of companies manufacturing a product, in a certain period of time.
Q=n·q·p
where:
Q is the maximum sales volume possible for a product
n is the number of individuals in the market
q is the average quantity bought by a person
p is the price of the product.
- Saturation level – the actual sales divided by the maximum market potential.
When evaluating the market size, aspects like the product, the product range, the company, the geographical area need to be considered.