Any study of marketing and its allied subjects should begin with the academician developing an answer to the seemingly innocuous and simple question like, What is “Market”? But Aashima, you would be surprised that even seasoned faculty and researchers find it difficult to give an acceptable answer to this question!!!
The “oversimplified” explanation would be that “Market is place where buyers and sellers get together to buy and sell”.
The Economic definition would be: “Market is a structure that allows transaction between buyers and sellers.” In this case transaction stands for exchange of goods, services and information for money of equivalent value.
The Sociological view point would be: “The market is a social institution comprising of relationships that allow exchange and transaction of goods and services”
The problem with this “oversimplified definition” is that the term is being explained only as a geographical location where a physical transaction is taking place. But the term “market” has been used to describe other socio economic entities too. For example…. You meet a business man and ask hi how he is doing and invariably (at least these days!!) the answer will be, “Market bahut mandi hai”… Now he is using the term market to describe “demand”. Another limitation of the simplified explanation is that it fails to accommodate net marketing, marketing where “value” may be exchanged but no physical good may have been bought or sold, and most importantly the definition fails to highlight the fact that the market is “platform of social interaction” (social is the key word here).
Therefore the criticism of the oversimplified definition is that it fails to integrate the economic view and the social view. It also fails to accommodate emerging concepts like the web based marketing.
Keeping all this mind, I prefer to define market as: “Market is a socio economic institution that allows for creation and exchange of value.”
The words “exchange instead of transaction and the word “value” instead of goods and services have been brought in. Of course we begin the definition by calling “market’ a socio-economic institution. If you try to analyse any purchase or sale you may have made in your life involved interactions between human beings (which is the obvious part of the definition) and an interaction of social relationships and phenomena.
Let me clarify……
The “Social – Economic” Linkage
You buy something from Sec 17 and in another case you buy something from Amazon.com….. In case of the Sec 17 purchase, you will have definitely had to interact with a number of people to just complete the transaction….. At least you would have had to interact with the shopkeeper!! So at least in this case it is easy to see, how the market involves interaction of people. In case of Amazon.com, the person was faceless or as in ebay he or she might be a total stranger connected to you by the net. So in case of web based examples, the interaction between people has been taken online. This is quite like talking to some one in person and talking to some one on the phone. So market is definitely a social institution.
Explanation of the economic view is simple and you would do well to remember that before marketing came into independent existence, it existed as a part of economics. The economic angle to describing the market involves an appreciation of the fact that even though you and the shopkeeper in sec 17 shared a social relationship, it was a temporary relationship which created to facilitated to complete the exchange. Now exchange, transaction and value are core economic concepts. So market is an economic institution too.
One more thing that you need to keep in mind while discussing the “social – economic” linkage is that whatever we have done over the past many decades in the name of “marketing” has been heavily influenced by the sociological variables and whatever we have done in the name of marketing has most definitely affected the society itself…… Think about it…. Think of examples…..
Value is also one of those funny words which have separate meaning in English, Economics and Marketing!!! But why I love the word is that it is able to “adapt” easily in all three areas and in fact I consider it the one word that is able to bring al three together! Let me illustrate……. Remember the cup I used to like so much and which ultimately became one Rahul’s first victims…… What would you understand if I said that the cup was very valuable” to me….?? Am I trying to say that it was “valuable” as in expensive????? Or am I using the word value as “Value = Benefit/Cost???? These are the English and the marketing view on value…… I am not even beginning to talk on the economic’ view as it will open a huge Pandora’s box (Imagine they have a theory of value!!!)
But whatever be the usage, We bought the cup, we paid something for it….. today I am sure I will be willing to “pay” a lot more if someone offer it me again….. What do you say????
In the definition the word value has been used to indicate that whether you buy a physical product or service, you do that for the “value” it provides to you and you “pay” what you deem fit considering the value it provides…… I hope it is clear…..
And how do you "create" value??? Easiest and a very simplified answer to this would be that you provide what the customer needs, when he needs it and whereever he needs it. Of course the emerging face of marketing asks one to do more. In fact, Marketing, in its current form has only begun after you have been able to deliver the goods to the consumer. elivery of value can be said to have taken place only if you have created a "customer experience" far greater than what your customer expected, greater than what any of your competitor could have offered and sustain that level of service for the entire time the customer associates with your company..... Whew!!! And you thaought that marketing was only selling!!!
According to AMA (American Marketing Association www. Marketingpower.com), the definition of “exchange” is, “All activities associated with receiving something from someone by giving something voluntarily in re-turn.” What I like here is that it introduces “voluntariness” to the definition and as you may agree, the ideal market would be where every trade is voluntary, no coercion or force at all….. On the other hand you will find that the definition of transaction is too cold, non social and too economics oriented….. According to Wikipedia…. Transaction is, “An agreement, communication, or movement carried out between separate entities or objects, often involving the exchange of items of value, such as information, goods, services and money.” I am sure you agree with me!!!
So my answer to the question, what is “Market” would be: “Market is a socio economic institution that allows for creation and exchange of value.”
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