The Market

I was going to discuss Adam Smith today, but the market looks to need explanation.  What is the market?  No, its not the place we go to buy things. We're going to examine the market in a purely economic sense, so let's use an economics dictionary.

 

market: The organized exchange of commodities (goods, services, or resources) between buyers and sellers within a specific geographic area and during a given period of time. Markets are the exchange between buyers who want a good--the demand-side of the market--and the sellers who have it--the supply--side of the market. In essence, a buyer gives up money and gets a good, while a seller gives up a good and gets money. From a marketing context, in order to be a market the following conditions must exist. The target consumers must have the ability to purchase the goods or services. They must have a need or desire to purchase. The target group must be willing to exchange something of value for the product. Finally, they must have the authority to make the purchase. If all these variables are present, a market exits.

 

Ok, that's a whale of a definition.  Let's break it down.  Market is: the organized exchange of goods, services or resources--buying stuff--between buyers and sellers within a specific geographic area --at a certain place--during a given period of time.at a certain time.  Lucky for us, a good portion here is explanation, but we have an explanation of what is required for a market to exist.  Let's examine that.  " The target consumers must have the ability to purchase the goods or services." Ok, the buyer has to have money in our case.  "They must have a desire to purchase."  Ok, they have to want it (or need it).  " The target group must be willing to exchange something of value for the product." Ok, they have to be willing to buy it.  "Finally, they must have the authority to make the purchase"  They have to be able (by law or physics) to purchase it.

 

Let's look at this again.  A market is a purchase at a certain time at a certain place.  But for it to exist, the buyer must have money, they must want the product, they must be willing to buy it, and they must be able to buy.  What does this all boil down to?  Basic economics.  Markets only exist when there is a supply (seller) and a demand (buyer) and the buyer is willing and able to purchase something that serves their wants or needs.

 

Let's simplify our definition a bit and forumulate a definition that makes sense.  If they are able to buy the product, they have money, so we can skip that portion.  Let's word it like this.  A market only exists when there is supply and demand, the seller is serving something that the buyer wants or needs, and the buyer is willing and able to make a purchase.   If we look at what this all says at once, what is going to happen?  A purchase is going to be made.  That is the market.

 

Sincerely,

Ted

 

P.S. Why do I keep citing dictionaries?  They're unbiased.