Markets

The idea of any market is some arrangement whereby buyers and sellers make contact and exchange goods and services. The purpose of the market is for each party to benefit from the transaction.

We may be aware of a wide range of types of market, from the fruit and vegetable market in your local town through the local cattle market, church jumble sale, supermarket or the sophisticated ins and outs of the stock market. Other types of market exist for illegal goods (black market) and even exchanges (such as for Pokemon cards).

Market types

There are many types of market in existence from various types of free market including true competition through monopoly markets and including degrees of market manipulation by governments and market buyers and sellers. This is covered in some detail in the members pages.

Internal markets

Where market forces are perceived to be beneficial the principles of competition and of buying and selling can be applied to internal organizations. Those with responsibility for the system can 'create' internal supply chains with transactions being carried out between units of the organization.

Market analysis

The purpose of any attempt to understand your market is to better appreciate how your organization may influence and better satisfy the market and thereby your own organization's objectives - whether for higher sales, improved market share or increased profitability.

Markets can be defined in many ways such as geography, age demographics (tweenies, silver surfers), customer disposable income (remember DINKYs - double income no kids yet) or the types of product we buy eg iPod buyers.

For your market you can go on to analyse the factors associated with the market that may impact on your performance in the future and might affect the things you do in the future. Sometimes known as an 'environment analysis' - often characterised by the acronym PEST. The purpose of this analysis is to look at aspects outside the direct control of the organization that are likely to impact the organization.

The simpler version of this type of analysis is as follows:

• Political. What is happening in the political arena that might affect our market?
• Economic. What are the economic conditions the market is facing?
• Social. Are there any changes in society that could change the way the market works in the near future
• Technological. Are there any changes in product or production technology now or predicted for the near future that could change the way the market operates?

An internal analysis then takes the output form the environmental analysis (above) and looks at how well the organization is able to cope with the market. This is the first half of a SWOT analysis where the organization assesses its:

• Strengths. In terms of the organization's current position in the market and its structure / resources and;
• Weaknesses. As for strengths above

The second part of this analysis is to identify from the environmental analysis any:

• Opportunities the organization is well placed to take advantage of or;
• Threats that current or potential competitors might use to improve their relative position

Market analysis can be developed into a formalized process whereby an organization takes a step back from its day to day activity and looks firstly at the market it operates in and then how well it is placed to meet the needs of the market. Once it has carried out this analysis it is in a position to develop a series of plans to satisfy those needs.

Further tools can help to understand the markets better and provide an organization with the information it needs to build its strategy (particularly its marketing strategy).

More information on markets and market analysis is available in the members pages.