The market can be classified on the basis of various criteria such as geographical area, time, a volume of business, nature of product, consumption, competition, control, and delivery.
On the Basis of Geographical Area
The market is usually classified into the following categories.
- Local Market: It is a market for local transactions. Transactions take place among buyers and sellers of a limited area. For example, Bazar is a local market because of buyers and sellers of surrounding places in rural areas come together in that Bazar. It is mainly a market for perishable items like vegetables, milk, fruits, etc that cannot remain fresh for several days.
- Regional Market: It extends beyond the local area. Transactions take place among buyers and sellers of the entire region consisting of several villages and towns and districts as well.
- National Market: If the transactions take place within the entire country, it is known as the national market. It is wider than a regional market. Various kinds of durable consumers goods, construction materials, producer goods, etc are sold and purchased in the national wide market.
- International Market: It is not limited to national frontiers. Transactions extend beyond countries. If people from various countries of the world undertake mutually transactions, it is known as the international market. It is the outcome of the international trade. The international market consists of imports and exports. Goods are imported and exported to met mutual requirements on the basis of comparative advantages.
On the Basis of Time
On the basis of time, the market can be classified into a very short period market, short market, long period market and very long period market.
- Very Short Period Market: If a transaction occurs day to day or in a day or two, it is Kwon as a very short period market. Highly perishable goods like green vegetables, fresh fish and meat, and fresh milk have a very short period market. Influence of demand is predominant in price determination in a very short period market. Supply cannot immediately respond to demand. Therefore, demand is supreme.
- Short Period Market: The short period market is not limited to a day or two. It consists of a number of days. Although demand plays a vital role in price determination in the short period market also, supply also assumes some role. Supply can slightly respond to changes in demand in a short period market. Although it is not possible to bring about changes in the quantum of factor inputs, existing factor inputs can be utilized to a greater extent.
- Long Period Market: the long period market has a period of time which exceeds that of a short period market. The time period is long enough for supply to completely respond to changes in demand. Transactions in a long period market are influenced by supply. If demand increases, a quantum of factor inputs can also be increased correspondingly. Therefore, the influence of supply in price determination may be equal to or even higher than that of demand. If a rise in demand stimulates more than proportionate rise in supply, prices will be influenced more by supply than by demand.
- Very Long Period Market: It is a secular market with a period of time which exceeds that of a long period market. A time period is sufficient for supply to adopt and implement all kinds of devices. Quantum of factor inputs can be changed as necessary. Even technology improves and becomes more efficient in the very long period. Therefore, supply plays a more effective and dominant role in the very long period market.
On the Basis of Volume Of Business
The market can be classified on the basis of the volume of transactions in the following manner.
- Wholesale Market: If there are transactions in bulk, not in pieces or units, It is known as the wholesale market. Retailers buy in bulk in a wholesale market. There is contact between wholesalers and retailers, Wholesalers do not have direct contact with consumers.
- Retail Market: If goods are sold and purchased in pieces or in units, it is known as the retail market. For example, various kinds of food items are sold at price per Kg. Shirts and Sweaters are sold at price per piece. Sellers keep shops. In the retail market, there is direct contact between sellers and consumers.
On the basis of Nature Of Product
- Commodity Market: Various kinds of goods are sold and purchased in the commodity market. There is the physical transfer of goods from sellers to buyers. The goods may be primary goods and raw materials, capital goods, consumers goods, industrial products, agricultural produce, or any kind of commodity.
- Financial Market: If the subject of the transaction is finance, it is a market for cash, credit, securities, and equities. The stock market is a financial market. it includes money market and capital market. There is a flow of short-term finance in money market and long-term finance in the capital market.
On the Basis of Consumption
- Consumer Market
- Industrial Market
- Organizational Market
On the Basis of Competition
- Monopoly Market
- Perfect Market
- Imperfect Market
On the Basis of Control
- Regulated Market
- Unregulated Market
On the Basis of Delivery
- Spot Market
- Future Market