The concept of exchange leads to the concept of a market. After understanding what market is, we can learn more about marketing & marketing aspects, principles.
**A market consists of all potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.**
Thus the size of the market depends upon the number of persons who exhibit the need, have resources that interest others, and are willing to offer these resources in exchange for what they want.
Originally the term market stood for the place where buyers and sellers gathered to exchange their goods, such as a village square. Economists use the term market to refer to a collection of buyers and sellers who transact over a particular product or product class; hence the housing market, the grain market, and so on.
Marketers, however see the sellers as constituting the industry and the market. The sellers and buyers are connected by four flows. The sellers send goods and services and communications to the market; in return they receive money and information. The inner loop shows an exchange of money for goods, the outer loop shows an exchange of information.
Business people use the term markets colloquially to cover various groupings of customers. They talk about need markets (such as the diet-seeking market); product markets (such as the shoe market); demographic markets (such as the youth market); and geographic markets (such as French market). Or that extend the concept to cover noncustomer groupings as well, such as voter markets, labour markets, and donor markets.
The fact is that modern economies operate on the principle of division of labour where each person specializes in the production of something, receives payment, and buys needed things with this money. Thus modern economies abound in markets. The basic kinds of markets and the flows connecting them are shown below.
Essentially, manufacturers go to resource markets (raw-material markets, labour markets, money markets, and so on.), buy resources, turn them into goods and services, sell them to middleman, who sells them to consumers. The consumers sell their labour, for which they receive money income to pay for the goods and services they buy. The government is another market which plays several roles. It buys goods from resource, manufacturer, and middleman markets; it pays them; it taxes these markets (including consumer markets); and it returns needed public services. Thus each nation’s economy and the whole world economy consist of complex interacting of markets that are linked through exchange processes.
