essay about market

Market Scene Essay: A Deep Dive into Market Activities and Demand for all Classes 100 to 500 + Words

Following is the collection of essays on Market Scene , written for the students of all age groups. we have short and long paragraphs to guide you on several topics. Dive into the Market Scene Essay

Market Scene Essay 100 Words

A market scene is a very common sight in any country. It is a place where people go to buy and sell things. There are many different types of markets, ranging from small, local markets to large, international ones. No matter what type of market it is, there is always a lot of activity and movement . People are constantly bargaining to get the best market price. The atmosphere is usually very lively and loud. In conclusion, the market scene is a very important and necessary part of life. It is not only a place where people buy and sell goods, but also a place where people socialize and interact with each other.

Market Scene Essay 150 Words

Market scenes can be quite chaotic and overwhelming , especially to someone who is not used to them. However, they can also be very fascinating and provide a great insight into the culture of a place. If you ever have the chance to visit a market scene, make sure to take some time to wander around and take everything in. It is an experience that you will not forget anytime soon. A market scene is always a vibrant and colorful place. The market is a place where people from all walks of life come together to buy and sell goods. It is a place where the haggling and bargaining skills of the sellers are put to the test. In conclusion, the market scene is a vibrant and essential part of life in any city. It is a place where people come together to trade goods and services, and it is also a place where people can relax and enjoy the company of others. Understanding the marketing meaning behind each stall, we realize the market scene is an important part of our culture, and it should be preserved.

Market Scene Essay 250 Words

A market scene is a busy and bustling area where people go to buy and sell goods. It is a place where you can find a variety of things all in one place. The market scene is always bustling with activity. The air is thick with the smell of spices and sweat. The ground is littered with garbage and the stalls are crammed together so tightly that it is difficult to move around. But despite all of this, the market is a place that I love. There is something about the chaos and the noise that I find exhilarating. I love watching the sellers try to outdo each other with their sales pitches. I love seeing the different products that are on offer. And I love tasting the different food that is available. A market survey would reveal that the market is a true reflection of life in India. It is a place where you can see the best and worst of humanity on display. But it is also a place full of life and energy. And for me, that makes it a special place indeed. The market scene is always bustling with activity and it is a great place to people watch. I love observing the different interactions between the vendors and customers and seeing the colorful array of produce on display. It’s always interesting to see what new items are being sold each time I visit. The market scene is a great way to get a glimpse into the local culture and it’s definitely one of my favorite places to go when I’m traveling.

Market Scene Essay 300 Words

The market scene is one of the most vibrant and colorful scenes that you will ever witness. The market is a hub of market activities where people from all walks of life come together to buy and sell goods and services.The market making process can make the market scene a bit overwhelming for new visitors, but it is really quite fascinating. There is a lot of hustle and bustle in the market scene, as people are trying to haggle for the best prices on goods. The air is filled with the sounds of people bargaining and the smell of fresh produce. The colors of the fruits and vegetables are also very striking. If you take the time to wander around the market scene, you will see that there is a lot of variety in the products that are being sold. There are stalls selling clothes, jewelry, food, and even livestock. You can also find service providers such as barbers and masseuses in the market scene. Based on the market definition, the market scene is a great place to observe consumer behavior, as you will see a wide range of people from different socio-economic backgrounds interacting with each other. It is also a great place to buy some cheap souvenirs or gifts for friends and family back home. The market scene essay describes the sights, sounds, and smells of the market. It is a busy place full of people and activity. The essay describes the different stalls and how they are set up. It also describes the people who are buying and selling goods. A market scene is always a hustle and bustle. People from all walks of life going about their daily business in search of good deals and bargaining for the best prices. It’s a place where you can find anything and everything, from fresh produce to second-hand goods. No matter what time of day it is, the market is always busy.

Market Scene Essay 400 + Words

Introduction

The market scene in my town is quite a busy one. There are a lot of people and a lot of noise. The market has a lot of small shops which sell everything from vegetables to clothes. The market is always full of people, and it can be quite difficult to find what you’re looking for. However, the market is also a great place to find bargains. If you’re looking for a specific item, it’s best to ask around. Chances are, someone in the market will know where to find it. The market scene in my town is quite busy, but it’s also a great place to find bargains on things you need.

The Market Scene

The market scene is always busy, reflecting the market demand and bustling with people. There are stalls of all sorts, selling everything from fresh produce to clothes and trinkets. The atmosphere is one of excitement and hustle and bustle, as people bargain and haggle over prices. During all this activity, it can be easy to forget that the market is also a place where people come to socialize. Friends and neighbors catch up with each other while they shop, sharing news and gossip. The market is a lively place where the community comes together.

The Bargaining Process

When two people trade goods or services, they engage in what is called a bargain. The bargaining process is how they come to an agreement on the price and terms of the trade. In a simple bargain, each person has something that the other wants and they agree on a price. For example, when you buy a cup of coffee from a café, both you and the café owner want something – you want coffee and they want money. You agree on a price (usually the going rate for coffee) and make the trade. Bargaining can be more complex than this, however. For example, when buying a car, there are many factors to consider such as the make and model of the car, its age and condition, how much you can afford to pay, and so on. The bargaining process is how you and the seller come to an agreement on all of these factors.

There are some important things to remember when bargaining:

Be clear about what you want before you start bargaining. This will help you stay focused during the process.
Try to find out as much as you can about what the other person wants too. This will give you an advantage in negotiations.
Don’t be afraid to walk away from a deal if it’s not what you want. There’s always another opportunity around the corner!

The Haggling and the Final Purchase

When you’ve finally found the perfect item at the market, it’s time to haggle for the best price. This can be a daunting task, but with a few tips, you can get the best deal. First, don’t be afraid to haggle. The seller expects it and will most likely start high. Second, know your limits. If you’re not comfortable paying more than a certain amount, be firm and walk away if necessary. Third, have fun with it! Haggling can be a fun game of back-and-forth between buyer and seller. Once you’ve reached an agreement on price, it’s time to make the purchase. Be sure to inspect the item carefully before handing over any money. If you’re satisfied, hand over the agreed upon amount and enjoy your new purchase!

The Different Types of Markets

There are many different types of markets, each with their own unique features. The most common type of market is the spot market, where securities are traded for immediate delivery. This is the market that most people are familiar with, as it is where stocks and bonds are bought and sold. Another type of market is the futures market, where contracts are traded for delivery at a later date. Futures markets are used by investors to hedge against price movements in the underlying asset. For example, if a farmer expects the price of wheat to rise in the future, he may sell a wheat futures contract to lock in a lower price for his crop. The options market is another type of derivatives market, where contracts give the holder the right but not the obligation to buy or sell an asset at a certain price. Options can be used to speculate on the direction of an asset’s price, or to hedge against risk in another part of your portfolio. The last major type of market is the foreign exchange (Forex) market, where currencies are traded against each other. The Forex market is the largest financial market in the world, with a daily turnover of over $5 trillion.

The Advantages and Disadvantages of Markets

There are both advantages and disadvantages to markets. On the one hand, markets provide a space for buyers and sellers to come together and exchange goods and services. This can lead to increased efficiency and greater choice for consumers. On the other hand, markets can also be unstable, leading to price fluctuations and shortages of goods. They can also be susceptible to monopolies and oligopolies, which can reduce choice and increase prices.

Effective market management ensures the market scene is always busy and bustling with activity. It’s a great place to people watch and take in the sights and sounds of the city. I love how with effective marketing, the market scene is always changing, with new stalls and vendors popping up all the time. It’s a great place to find fresh produce, unique gifts, and delicious food. Whether you’re looking for a fun day out or just want to grab some quick groceries, the market scene is definitely worth checking out.

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Market: short essay on market | microeconomics.

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Read this essay to learn about the meaning of market!

There are two aspects of every market: demand and supply. We have discussed both the concepts in the previous units. In this article, we will put the two components together to examine the behaviour of ‘Market’ as a whole.

Image Curtsey: marketmonetarist.files.wordpress.com/2012/02/mvpy_lc.jpg

Market is like the nervous system of modern economic life. Producers and consumers carry out their transactions of sale and purchase through the medium of market. In the layman’s language, market refers to a place where goods are purchased and sold.

But, in economics, the term ‘market’ has a wider meaning. In economics, market has no reference to a specific place. It is not necessary for buyers and sellers to assemble at a particular place for sale or purchase of goods. The only condition is that they should be in contact with each other through any means of communication, like internet, telephones, letters, etc.

Market refers to the whole region where buyers and sellers of a commodity are in contact with each other to effect purchase and sale of the commodity. From the above discussion, the essential constituents of a market can be summarized as:

Market is not related to any particular place. It spreads over an area. The area becomes the point of contact between buyers and sellers.

(ii) Buyers and sellers:

Buyers and sellers should be in contact with each other. However, contact does not necessarily mean physical presence.

(iii) Commodity:

For the existence of market, there must be a commodity which will be sold and purchased among buyers and sellers.

(iv) Competition:

The existence of competition among buyers and sellers is also an essential condition for the existence of a market, otherwise different prices may be charged for the same commodity.

Market: What is the Meaning of Market?
5 Major Factors which Determine the Market Structure of an Industry

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Economics Essay Examples

Ace Your Essay With Our Economics Essay Examples

Published on: Jun 6, 2023

Last updated on: Jan 31, 2024

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Are you struggling to understand economics essays and how to write your own?

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We’ve got the solution you've been looking for. Explore quality examples that bridge the gap between theory and real-world applications. In addition, get insightful tips for writing economics essays.

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What is an Economics Essay?

An economics essay is a written piece that explores economic theories, concepts, and their real-world applications. It involves analyzing economic issues, presenting arguments, and providing evidence to support ideas.

The goal of an economics essay is to demonstrate an understanding of economic principles and the ability to critically evaluate economic topics.

Why Write an Economics Essay?

Writing an economics essay serves multiple purposes:

Demonstrate Understanding: Showcasing your comprehension of economic concepts and their practical applications.
Develop Critical Thinking: Cultivating analytical skills to evaluate economic issues from different perspectives.
Apply Theory to Real-World Contexts: Bridging the gap between economic theory and real-life scenarios.
Enhance Research and Analysis Skills: Improving abilities to gather and interpret economic data.
Prepare for Academic and Professional Pursuits: Building a foundation for success in future economics-related endeavors.

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If youâre wondering, âhow do I write an economics essay?â, consulting an example essay might be a good option for you. Here are some economics essay examples:

Short Essay About Economics

Fiscal policy plays a crucial role in shaping economic conditions and promoting growth. During periods of economic downturn or recession, governments often resort to fiscal policy measures to stimulate the economy. This essay examines the significance of fiscal policy in economic stimulus, focusing on two key tools: government spending and taxation.

Government spending is a powerful instrument used to boost economic activity. When the economy experiences a slowdown, increased government expenditure can create a multiplier effect, stimulating demand and investment. By investing in infrastructure projects, education, healthcare, and other sectors, governments can create jobs, generate income, and spur private sector activity. This increased spending circulates money throughout the economy, leading to higher consumption and increased business investments. However, it is important for governments to strike a balance between short-term stimulus and long-term fiscal sustainability.

Taxation is another critical aspect of fiscal policy. During economic downturns, governments may employ tax cuts or incentives to encourage consumer spending and business investments. By reducing tax burdens on individuals and corporations, governments aim to increase disposable income and boost consumption. Lower taxes can also incentivize businesses to expand and invest in new ventures, leading to job creation and economic growth. However, it is essential for policymakers to consider the trade-off between short-term stimulus and long-term fiscal stability, ensuring that tax cuts are sustainable and do not result in excessive budget deficits.

In conclusion, fiscal policy serves as a valuable tool in stimulating economic growth and mitigating downturns. Through government spending and taxation measures, policymakers can influence aggregate demand, promote investment, and create a favorable economic environment. However, it is crucial for governments to implement these policies judiciously, considering the long-term implications and maintaining fiscal discipline. By effectively managing fiscal policy, governments can foster sustainable economic growth and improve overall welfare.

A Level Economics Essay Examples

Here is an essay on economics a level structure:

Globalization, characterized by the increasing interconnectedness of economies and societies worldwide, has brought about numerous benefits and challenges. One of the significant issues associated with globalization is its impact on income inequality. This essay explores the implications of globalization on income inequality, discussing both the positive and negative effects, and examining potential policy responses to address this issue.

Globalization has led to a rise in the demand for skilled workers in many sectors. As countries integrate into the global economy, they become more specialized and engage in activities that utilize their comparative advantages. This shift toward skill-intensive industries increases the demand for skilled labor, resulting in a skill premium where high-skilled workers earn higher wages compared to low-skilled workers. Consequently, income inequality may widen as those with the necessary skills benefit from globalization while those without face limited employment opportunities and stagnant wages.

Globalization has also led to labor market displacement and job polarization. Developing countries, attracted by lower labor costs, have become manufacturing hubs, leading to job losses in industries that cannot compete internationally. This displacement primarily affects low-skilled workers in developed economies. Moreover, advancements in technology and automation have further contributed to job polarization, where middle-skilled jobs are declining while high-skilled and low-skilled jobs expand. This trend exacerbates income inequality as middle-income earners face challenges in finding stable employment opportunities.

To address the implications of globalization on income inequality, policymakers can implement several strategies. Firstly, investing in education and skills development is crucial. By equipping individuals with the necessary skills for the evolving labor market, governments can reduce the skill gap and provide opportunities for upward mobility. Additionally, redistributive policies, such as progressive taxation and social welfare programs, can help mitigate income inequality by ensuring a more equitable distribution of resources. Furthermore, fostering inclusive growth and promoting entrepreneurship can create job opportunities and reduce dependency on traditional sectors vulnerable to globalization.

Globalization has had a profound impact on income inequality, posing challenges for policymakers. While it has facilitated economic growth and raised living standards in many countries, it has also exacerbated income disparities. By implementing effective policies that focus on education, skill development, redistribution, and inclusive growth, governments can strive to reduce income inequality and ensure that the benefits of globalization are more widely shared. It is essential to strike a balance between the opportunities offered by globalization and the need for social equity and inclusive development in an interconnected world.

Band 6 Economics Essay Examples

Government intervention in markets is a topic of ongoing debate in economics. While free markets are often considered efficient in allocating resources, there are instances where government intervention becomes necessary to address market failures and promote overall welfare. This essay examines the impact of government intervention on market efficiency, discussing the advantages and disadvantages of such interventions and assessing their effectiveness in achieving desired outcomes.

Government intervention can correct market failures that arise due to externalities, public goods, and imperfect competition. Externalities, such as pollution, can lead to inefficiencies as costs or benefits are not fully accounted for by market participants. By imposing regulations or taxes, the government can internalize these external costs and incentivize firms to adopt more socially responsible practices. Additionally, the provision of public goods, which are non-excludable and non-rivalrous, often requires government intervention as private markets may under provide them. By supplying public goods like infrastructure or national defense, the government ensures efficient allocation and benefits for society.

Information asymmetry, where one party has more information than another, can hinder market efficiency. This is particularly evident in markets with complex products or services, such as healthcare or financial services. Government intervention through regulations and oversight can enhance transparency, consumer protection, and market efficiency. For example, regulations that require companies to disclose accurate and standardized information empower consumers to make informed choices. Similarly, regulatory bodies in financial markets can enforce rules to mitigate risks and ensure fair and transparent transactions, promoting market efficiency.

While government intervention can address market failures, it can also create unintended consequences and distortions. Excessive regulations, price controls, or subsidies can result in inefficiencies and unintended outcomes. For instance, price ceilings may lead to shortages, while price floors can create surpluses. Moreover, government interventions can stifle innovation and competition by reducing incentives for private firms to invest and grow. Policymakers need to carefully design interventions to strike a balance between correcting market failures and avoiding excessive interference that hampers market efficiency.

Government intervention plays a crucial role in addressing market failures and promoting market efficiency. By correcting externalities, providing public goods and services, and reducing information asymmetry, governments can enhance overall welfare and ensure efficient resource allocation. However, policymakers must exercise caution to avoid unintended consequences and market distortions. Striking a balance between market forces and government intervention is crucial to harness the benefits of both, fostering a dynamic and efficient economy that serves the interests of society as a whole.

Here are some downloadable economics essays:

Economics essay pdf

Economics essay introduction

Economics Extended Essay Examples

In an economics extended essay, students have the opportunity to delve into a specific economic topic of interest. They are required to conduct an in-depth analysis of this topic and compile a lengthy essay.

Here are some potential economics extended essay question examples:

How does foreign direct investment impact economic growth in developing countries?
What are the factors influencing consumer behavior and their effects on market demand for sustainable products?
To what extent does government intervention in the form of minimum wage policies affect employment levels and income inequality?
What are the economic consequences of implementing a carbon tax to combat climate change?
How does globalization influence income distribution and the wage gap in developed economies?

IB Economics Extended Essay Examples

Economics Extended Essay Topic Examples

Extended Essay Research Question Examples Economics

Tips for Writing an Economics Essay

Writing an economics essay requires specific expertise and skills. So, it's important to have some tips up your sleeve to make sure your essay is of high quality:

Start with a Clear Thesis Statement: It defines your essay's focus and argument. This statement should be concise, to the point, and present the crux of your essay.
Conduct Research and Gather Data: Collect facts and figures from reliable sources such as academic journals, government reports, and reputable news outlets. Use this data to support your arguments and analysis and compile a literature review.
Use Economic Theories and Models: These help you to support your arguments and provide a framework for your analysis. Make sure to clearly explain these theories and models so that the reader can follow your reasoning.
Analyze the Micro and Macro Aspects: Consider all angles of the topic. This means examining how the issue affects individuals, businesses, and the economy as a whole.
Use Real-World Examples: Practical examples and case studies help to illustrate your points. This can make your arguments more relatable and understandable.
Consider the Policy Implications: Take into account the impacts of your analysis. What are the potential solutions to the problem you're examining? How might different policies affect the outcomes you're discussing?
Use Graphs and Charts: These help to illustrate your data and analysis. These visual aids can help make your arguments more compelling and easier to understand.
Proofread and Edit: Make sure to proofread your essay carefully for grammar and spelling errors. In economics, precision and accuracy are essential, so errors can undermine the credibility of your analysis.

These tips can help make your essay writing journey a breeze. Tailor them to your topic to make sure you end with a well-researched and accurate economics essay.

To wrap it up , writing an economics essay requires a combination of solid research, analytical thinking, and effective communication.

You can craft a compelling piece of work by taking our examples as a guide and following the tips.

However, if you are still questioning "how do I write an economics essay?", it's time to get professional help from the best essay writing service - CollegeEssay.org.

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Barbara is a highly educated and qualified author with a Ph.D. in public health from an Ivy League university. She has spent a significant amount of time working in the medical field, conducting a thorough study on a variety of health issues. Her work has been published in several major publications.

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Does Market Share Still Matter?

Julian R.K. Wichmann,
Alexander Edeling,
Alexander Himme,
Felix Anton Sklenarz

New research suggests that the metric doesn’t mean what it used to.

Market share has traditionally correlated strongly with profitability because of efficiency, market efficiency, and customer perception effects. But, as the authors demonstrate, the relationship has been changed by the digital transformation in firms. The authors’ research finds that the market-share profitability relationship has become weaker for firms that favor investment in value creation over value appropriation and for firms operating in B2B markets. In both cases, digital helps smaller firms catch up with larger rivals. But digital can also amplify market share effects for large firms focusing digital investments on customer-facing processes and for large firms that create digital platforms.

Market share regularly ranks amongst the most important KPIs for C-suite executives. And for good reason: Larger market share has long been associated with higher profitability . But does this relationship still hold today, given companies’ increasing digitalization? Or have strategies focused on market share growth become outdated?

JW Julian R.K. Wichmann is an assistant professor of marketing at the University of Cologne in Germany. He researches strategic marketing issues surrounding the influence of digitalization and new technologies on retailing, advertising, and brand-consumer relationships.
AE Alexander Edeling is an associate professor of Marketing at KU Leuven in Belgium.
AH Alexander Himme is Associate Professor of Management Accounting at Kühne Logistics University in Germany.
FS Felix Anton Sklenarz is an associate at McKinsey & Company in Hamburg, Germany.

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Marketing: Integration and Reflection, Essay Example

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The behavior of markets is easy to understand when there is coordination in all areas that determine the manner in which a new product is introduced into the market. Organizational characteristics determine branding strategy decisions that are adopted. These decisions might relate to the size of the market, clientele and future branding prospects.

For distribution strategies to succeed, managers must ensure that communication within the firm is efficient. Although cross-functional information sharing strategies can be good, they might fail in terms of ensuring that there is credibility all the time. They might end up being more of bureaucratic procedures than practical engagements. This, in turn, might negatively affect any ongoing branding and promotion strategies.

Pricing strategies are determined largely by the established trends in a particular line of products, cost of production and consumer expectations. Pricing and branding efforts go hand in hand. The price of a new brand that is at the entry level should be low. Once the product has cut out a niche in the market, the price will gradually be increased.

Today, internet technologies are at the heart of all marketing strategies that modern firms are adopting. Firms that have used the internet marketing for a long time find that the challenge of carrying a marketing audit is very real. This is largely because of the global orientation of this new marketing strategy. The importance of such an audit depends on the extent to which firms depend on internet marketing in order to reach consumers.

In order to reduce the cost of promotion, marketing and distribution, viable transportation formulas should be conceived and adopted. The inventory costs should be kept at the minimum. Basically, the managers of organizations should always strike viable trade-offs in all these costs in order to reap maximum profits.

Direct shipping is a distribution strategy whereby separate loads are delivered to each customer. On the other hand, peddling is a strategy whereby one load is dispatched to many customers at the same time. The choice between these two strategies depends on size of shipment.

Many sensitive analyses need to be carried out in order to determine proper strategies in distribution. It should be borne in mind that in most cases, distribution costs have a stronger influence on final pricing. The only exception here could be situations when an ambitious branding and marketing strategies are being adopted.

Pricing is a sensitive issue that can make or break a brand. Many companies depend on price simulators and in-market tests in order to determine what to ask of customers in exchange for the product or service and when to do it. Historical price sensitivities in a particular line of products are also worth revisiting in search for insights on sustainable strategies. Historical sales data also offers helpful clue on consumer response to pricing vis-à-vis any ongoing branding and promotion campaigns.

In conclusion, research on product management should be centered on a holistic marketing approach. In this case, there has to be cross-functional communication within the organization in order for the target market to perceive the product positively. When the product is introduced into the market for the first time, product management research, while being exploratory in nature, should be centered on sound objectives.

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Essay on Oligopoly: Top 8 Essays on Oligopoly | Markets | Microeconomics

Here is a compilation of essays on ‘Oligopoly’ for class 9, 10, 11 and 12. Find paragraphs, long and short essays on ‘Oligopoly’ especially written for school and college students.

Essay on Oligopoly

Essay Contents:

Essay on Payoff (Profit) Matrix

Essay # 1. Introduction to Oligopoly:

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Two extreme market forms are monopoly (characterised by the existence of a single seller) and perfect competition (characterised by a large number of sellers). Competition is of two types- perfect competition and monopolistic competition. In perfect competition, all sellers sell homogeneous products while in monopolistic competition they sell heterogeneous products. In monopoly there is no rival.

So the monopolist is not concerned with the effect of his actions on rivals. In both types of competition, the number of firms is so large that the actions of any one seller have little, if any, effect on its competitors. An industry with only a few sellers is known as an oligopoly, a firm in such an industry is known as an oligopolist.

Although car-wash is a million rupee business, it is not exactly a product familiar to most consumers. However, often many familiar goods and services are supplied only by a few competing sellers, which means the industries we are talking about are oligopolies. An oligopoly is not necessarily made up of large firms. When a village has only two medicine shops, service there is just as much an oligopoly as air shuttle service between Mumbai and Pune.

Essentially, oligopoly is the result of the same factors that sometimes produce monopoly, but in somewhat weaker form. Honestly, the most important source of oligopoly is the existence of economies of scale, which give better producers a cost advantage over smaller ones. When these economies of scale are very strong, they lead to monopoly, but when they are not that strong they lead to competition among a small number of firms.

Since an oligopoly contains a small number of firms, any change in the firms’ price or output influences the sales and profits of competitors. Each firm must, therefore, recognise that changes in its own policies are likely to elicit changes in the policies of its competitors as well.

As a result of this interdependence, oligopolists face a situation in which the optimal decision of one firm depends on what other firms decide to do. And so there is opportunity for both conflict and cooperation. Oligopoly refers to a market situation in which the number of sellers is few, but greater than one. A special case of oligopoly is monopoly in which there are only two sellers.

Essay # 2. Characteristics of Oligopoly:

The notable characteristics of oligopoly are:

1. Price-Searching Behaviour :

An oligopolist is neither a price-taker (like a competitor) nor a price-maker (like a monopolist). It is a price-searcher. An oligopolist is neither a big enough part of the market to be able to act as a monopolist, nor a small enough part of the market to be able to act as a competitor. But each firm is a dominant part of the market.

In such a situation, competition among buyers will force all the sellers to charge a uniform price for a product. But each firm is sufficiently so large a part of the market that its actions will have noticeable effects upon his rivals. This means that if a single firm changes its output, the prices charged by all the firms will be raised or lowered.

2. Product Characteristics :

In oligopoly, there may be product differentiation as in monopolistic competition (called differentiated oligopoly) or a homogeneous product may be traded by all the few dominant firms (as in pure oligopoly).

3. Interdependence and Uncertainty :

In oligopoly no firm can take decision on price independently. It is because the decision to fix a new price or change an existing price will create reactions among the rival firms. But rivals’ reactions cannot be predicted accurately. If a firm reduces its price its rivals may reduce their prices or they may not. So there is lack of symmetry in the behaviour of rival firms.

This type of reaction of rivals is not found in perfect competition or monopolistic competition where all firms change their price in the same direction and by the same magnitude in order to remain competitive and survive in the long run. So the outcome of a firm’s decision is uncertain.

For this reason it is difficult to predict the total demand for the product of an oligopolistic industry. It is still more difficult, and in some situations virtually impossible, to estimate the share of an individual firm in industry’s output.

It is true that the consequences of attempted price variations on the part of an individual seller are uncertain. His rivals may follow his change, or they may not, but they will, in all likelihood, notice it. The results of any action on the part of an oligopolist or even a duopolist depend upon the reactions of his rivals. In short, it is not possible to define general price- quantity relations for an individual firm, since reaction patterns of rivals are highly uncertain and almost completely unknown.

4. Different Reaction Patterns and Use of Models :

It is not true to say that, in oligopoly, profit is always maximised. It is because an oligopolist does not have control over all the variables which affect his profit. Moreover, a variety of possible reaction patterns is possible in this market—there is a conjectural variation in this market.

Just as firm A’s profit depends on the output of firm B also, firm B’s profit, in its turn, depends on firm A’s output. This is why various models are used to describe the diverse behaviour of oligopoly markets where a variety of outcomes is possible.

5. Non-Price Competition :

As in monopolistic competition there is not only price competition but non-price competition as well in oligopoly (and, to some extent, in duopoly). For example, advertising is often a life and death question in this type of market due to strategic behaviour of all firms. In most oligopoly situations we find intermediate outcomes. Economists are yet to emerge with a definite behaviour pattern in oligopoly.

Essay # 3. Scope of Study of Oligopoly :

Here we study a few of the many possible reaction patterns in duopoly and oligopoly situations. The focus is on pure oligopoly. Here we assume that all firms produce a homogeneous product. We do not discuss the case of differentiated oligopoly and the issue of selling cost (advertising) separately. Of course, we discuss briefly Baumol’s sales maximisation hypothesis—without and with advertising.

The focus here is on the interdependence of the various sellers’ reactions, which is the essential distinguishing feature of oligopoly. If the influence of one seller’s quantity decision from the profit of another, δπ i /δq j , is negligible, the industry must be either perfectly competitive or monopolistically competitive. If δπ i /δq j , is perceptible, the industry is duopolistic or oligopolistic.

The optimum quantity and maximum profit of a duopolist or oligopolist depend upon the actions of the firms belonging to the industry. He can control only his own output level (or price, if his product is differentiated), but he has no direct control over other variables which are likely to (or do) affect his profits. In truth, the profit of each oligopolist is the result of the interaction of the decisions of all players in the market.

Since there are no generally accepted behavioural assumptions for oligopolists and duopolists as is found in other market forms, there are diverse patterns of behaviour and many different solutions for oligopolistic and duopolistic markets. Each solution is based on different types of models and each model is based on a different behavioural assumption or a set of assumptions.

Here we start with one or two simple duopoly models. The same analysis (solution) can be extended to cover any oligopolistic market. The earliest model of duopoly behaviour is the Cournot model, with which we may start our review of different oligopoly models. We end with the game theoretic treatment of oligopoly which shows decision-making under conflict.

Essay # 4. Models of Oligopoly:

1. the cournot model :.

The Cournot model (presented in 1838) is based on the analysis of a market in which two firms produce a homogeneous product. Augustin Cournot (a French economist) noticed that only two firms were producing mineral water for sale. He argued that each firm would choose quantity that would maximise profit, taking the quantity marketed by its competitor as given.

Two main features of the model are:

(i) Each firm chooses a quantity of output instead of price; and

(ii) In choosing its output each firm takes its rival’s output as given.

In Cournot’s model, then, strategies are quantities of output. Here we assume that firms produce a homogeneous good and know the market demand curve.

Each firm must decide how much to produce, and the two firms make their decisions at the same time. When taking its production decision, each duopolist takes into consideration its competitor. It knows that its competitor is also deciding how much to produce, and the market price will depend on the total output of both firms.

The essence of the Cournot model is that each firm treats the output level of its competitor as fixed and then decides how much to produce. Each Cournot’s duopolist believes that the other’s quantity will not change. In Fig. 1 when I produces Q M , II maximises its profit by producing 1/4Q C . In order to sell Q M plus Q c , the price must fall to P 1 . Here Q M is the monopoly output which is half the competitive output Q c .

The inverse demand function, stating price as a function of the aggregate quantity sold, is expressed as:

P =f (q 1 ) + q 2 … (1)

where q 1 and q 2 are the output levels of the duopolists. The total revenue of each duopolist depends upon his own output level as also as that of his rival:

R 1 = q 1 f 1 (q 1 + q 2 ) = R 1 (q 1 , q 2 )

R 2 = q 2 f 2 (q 1 + q 2 ) = R 2 (q 1 , q 2 ) … (2)

The profit of each equals his total (sales) revenue, less his cost, which depends upon his output level above:

π 1 = R 1 (q 1 , q 2 ) – C 1 (q 1 )

π 2 = R 2 (q 1 , q 2 ) – C 2 (q 2 ) … (3)

The basic behavioural assumption of the Cournot model is that each duopolist maximises his profit on the assumption that the quantity produced by his rival is invariant with respect to his own decision regarding output quantity. Duopolist I maximises π 1 with reference to q 1 , treating q 2 as a parameter, and duopolist II maximises π 2 , with reference to q 2 , treating q 1 as a parameter. Setting the partial derivatives of (3) equal to zero, we get:

The solution of (7) is

Here OM is the marginal cost of producing the commodity. The second firm’s price is p 2 . The first firm’s profit function is composed of three segments. When p 1 < p 2 , the first firm captures the entire market, and its profit increases as its price increases. When p 1 > p 2 , the two firms split the total profits equal to distance CA, and each makes a profit equal to CB. When p 1 >p 2 , the first firm’s profit is zero because it sells nothing when its price exceeds the second firm’s price.

Criticisms:

The Bertrand model has been criticised on two main grounds. First, when firms produce a homogeneous good, it is more natural to compete by setting quantities rather than prices. Second, even if firms do set prices and choose the same price (as the model predicts), what share of total sales will go to each one? The model assumes that sales would be divided equally among the firms, but there is no reason why this must be the case.

However, despite these shortcomings, the Bertrand model is useful because it shows how the equilibrium outcome in an oligopoly can depend crucially on the firms’ choice of strategic variable.

3. The Stackelberg Model :

The Stackelberg model (presented by the German economist Heinrich von Stackelberg) is a modified version of the Cournot model. In the Cournot model, we assume that two duopolists make their output decisions at the same time. The Stackelberg model examines what happens if one of the firms can set its output first. The Stackelberg model of duopoly is different from the Cournot model, in which neither firm has any opportunity to react.

The model is based on the assumption that the profit of each duopolist is a function of the output levels of both:

π 1 = g 1 (q 1 , q 2 ) π 2 = g 2 (q 1 , q 2 ) … (1)

The Cournot solution is found out by maximising π 1 with reference to q 1 , assuming q 2 to be constant and π 2 with reference to q 2 , assuming q 1 to be constant. In general, each firm might make some other assumption about the response (reaction) of its only rival. In such a situation, profit-maximisation by the two duopolists requires the fulfillment of the following two conditions:

Since the firm’s demand curve is kinked, its combined marginal revenue curve is discontinuous. This means that the firm’s cost can change without leading to price change. In this figure, marginal cost could increase but would still equal marginal revenue at the original output level. This means that price remains the same.

The kinked demand curve model fails to explain oligopoly pricing. It says nothing about how marginal revenue firms arrived at the original price P̅ to start with. In fact, some arbitrary price is taken as both the starting and end point of our journey. Why firms did not arrive at some other price remains an open question. It just describes price rigidity but cannot explain it. In addition, the model has not been supported by empirical tests. In reality, rival firms do match price increases as well as price cuts.

Market-sharing Price Leadership :

Oligopolists often collude—jointly restrict supply to raise price and cooperate. This strategy can lead to higher profits. Collusion is, however, illegal. Moreover, one of the main impediments to implicitly collusive pricing is the fact that it is difficult for firms to agree (without talking to each other) on what the price should be.

Coordination becomes particularly problematic when cost and demand conditions—and, thus, the ‘correct’ price—are changing. However, benefits of cooperation can be enjoyed without actually colluding. One way of doing this is through price leadership. Price leadership may be provided by a low-cost firm or a dominant firm.

In this context, we may draw a distinction between price signalling and price leadership. Price signalling is a form of implicit collusion that sometimes gets around this problem. For example, a firm might announce that it has raised its price with the expectation that its competitors will take this announcement as a signal that they should also raise prices. If competitors follow, all of the firms (at least, in the short run) will earn higher profits.

At times, a pattern is established whereby one firm regularly announces price changes and other firms in the industry follow. This type of strategic behaviour is called price leadership— one firm is implicitly recognised as the ‘leader’. The other firms, the ‘price followers’, match its prices. This behaviour solves the problem of coordinating price: Everyone simply charges what the leader is charging.

Price leadership helps to overcome oligopolistic firms’ reluctance to change prices—for fear of being undercut. With changes in cost and demand conditions, firms may find it increasingly necessary to change prices that have remained rigid for some time. In that case, they wait for the leader to signal when and by how much price should change.

Sometimes a large firm will naturally act as a leader; sometimes different firms will act as a leader from time to time. In this context, we may discuss the dominant Firm model of leadership. This is known as market- sharing price leadership.

6. The Dominant Firm Model :

In some oligopolistic markets, one large firm has a major share of total sales while a group of smaller firms meet the residual demand by supplying the remainder of the market. The large firm might then act as a dominant firm, setting a price that maximises its own profits.

The other firms, which individually could exert little, if any, influence over price, would then act as perfect competitors; they all take the price set by the dominant firm as given and produce accordingly. But what price should the dominant firm set? To maximise profit, it must take into account how the output of the other firms depends on the price it sets.

Fig. 5 shows how a dominant firm sets its prices. A dominant firm is one with a large share of total sales that sets price to maximise profits, taking into account the supply response of smaller firms. Here D is the market demand curve and S F is the supply curve (i.e., the aggregate marginal cost curves of the smaller firms, called competitive fringe firms). The dominant firm must determine its demand curve D D .

This curve is just the difference between market demand and the supply of fringe firms. For example, at price P 1 , the supply of fringe firms is just equal to market demand. This means that the dominant firm can sell nothing at this price. At a price P 2 or less, fringe firms will not supply any of the good, in which case, the dominant firm faces the market demand curve. If price lies between P 1 and P 2 , the dominant firm faces the demand curve D D .

The marginal cost curve of the dominant firm corresponding to D D is MR D . The dominant firm’s marginal cost curve is MC D . In order to maximise its profit, the dominant firm produces quantity Q D at the interaction of MR D and MC D . From the demand curve D D , we find P 0 . At this price, fringe firms sell a quantity Q F , thus the total quantity sold is Q T = Q D + Q F .

7. Collusive Oligopoly: The Cartel Model :

Various models have been formulated to explain the strategic behaviour of firms in an oligopolistic market. A price (cut-throat) competition exists among the rivals who try to oust the others from the market. Sometimes there exists a dominant firm that acts as the leader in the market while the others just follow the leader.

As a result, there happens to be a clear possibility of the formation of a cartel by the rival firms in an oligopolistic market in order to eliminate competition among themselves. This is termed as “collusive oligopoly” because the firms somehow manage to combine together in order to behave collectively as a single monopoly.

Now let us see graphically what incentives the firms get for forming a cartel. In Fig. 6, the market demand curve is given by the D M the total supply curve is the horizontal summation of the marginal cost curves of all existing firms in the industry, which is denoted by MC M .

The market equilibrium is attained at the point of intersection between the D M (demand curve) and the marginal cost curve MC M , if the firms compete with each other. OP M is the equilibrium price at which the total output of the industry is OQ M .

In order to determine its own quantity, each firm equates this price to its marginal cost. The sum of the quantities of the firms is OQ. If the firms form a cartel in order to act as a monopolist, the price rises to OP ‘ M and the quantity is reduced to OQ ‘ M to be in equilibrium. Now, when the quantity is being reduced by Q M Q’ M , then all the firms together save the cost represented by the area below the MC M curve which is Q M E M F M Q ‘ M .

Thus, a rise in price due to a reduction in the quantity is followed by a decrease in the total revenue represented by the area below the MR M curve, i.e., area Q M G M F M Q’ M . This, in turn, shows that the cost saved exceeds the loss in revenue and, so, all the firms taken as a whole can increase their profit represented by the area E M F M G M . The prospect of earning this extra profit actually acts as the incentive to form a cartel in the oligopoly market structure.

Since the cartel is formed, all firms agree together to produce the total quantity OQ’ M . In order to carry this out, each and every firm is allotted a quota or a certain portion of production such that the sum of all quotas is equal to OQ M . For this, the best way of quota allotment would be to treat each firm as a separate entity (plant) under the same monopolist. Thus, all the firms have the same marginal cost (MC) such that MC = MR (marginal revenue).

Finally, the total profit is maximised because the total output is produced at the minimum cost.

Each and every firm can increase its profit by reducing the profits of other firms, simply by increasing its output quantity above the allotted quota. The system of cartel formation must guard against the desire of individual firms to violate the quota and the cartel breaks down when the cost of guarding against quota violation is very high.

The OPEC is an example of collusive oligopoly or cartel in which members (producers) explicitly agree to cooperate in setting prices and output levels. All the producers in an industry need not and often do not join the cartel. But if most producers adhere to the cartel’s agreements, and if market demand is sufficiently inelastic, the cartel may drive prices well above competitive levels.

Two conditions for success:

Two conditions must be fulfilled for cartel success. First, a stable cartel organisation must be formed whose members agree on price and production levels and both adhere to that agreement. The second condition is the potential for monopoly power. A cartel cannot raise price much if it faces a highly elastic demand curve. If the potential gains from cooperation are large, cartel members will have more incentive to share their organisational problems.

Analysis of Cartel Pricing:

Cartel pricing can be analysed by using the dominant firm model of oligopoly. It is because a cartel usually accounts for only a portion of total production and must take into account the supply response of competitive (non-cartel) producers when it sets price. Here we illustrate the OPEC oil cartel.

Fig. 7 illustrates the case of OPEC. Total demand TD is the world demand curve for crude oil, and S c is the competitive (non-OPEC) supply curve. The demand for OPEC oil D 0 is the difference between total demand (TD) and competitive supply (SC), and MR 0 is the corresponding marginal revenue curve.

MC 0 is OPEC’s marginal cost curve; OPEC has much lower production costs than do non-OPEC producers. OPEC’s marginal revenue and marginal cost are equal at quantity Q 0 , which is the quantity that OPEC will produce. Here we see from OPEC s demand curve that the price will be P 0 .

Since both total demand and non-OPEC supply are inelastic, the demand for OPEC oil is also fairly inelastic; thus the cartel has substantial monopoly. In the 1970s, it used that power to drive prices well above competitive levels.

In this context, it is important to distinguish between short-run and long-run supply and demand curves. The total demand and non-OPEC supply curves in Fig. 7 apply to short-or intermediate-run analysis. In the long run, both demand and supply will be much more elastic, which means that OPEC’s demand curve will also be much more elastic.

We would thus expect that, in the long run, OPEC would be unable to maintain a price that is so much above the competitors’ level. In truth, during 1982-99, oil prices fell steadily, mainly because of the long- run adjustment of demand and non-OPEC supply.

However, cartel is not an unmixed blessing. No doubt cartel members can talk to one another in order to formalize an agreement. But it is not that easy to reach a consensus. Different members may have different costs, different assessments of market demand, and even different objectives, and they may, therefore, want to set prices at different levels.

Furthermore, each member of the cartel will be tempted to “cheat” by lowering its price slightly to capture a larger market share than it was allotted. Most often, only the threat of a long-term return to competitive prices deters cheating of this sort. But if the profits from cartelization are large enough, that threat may be sufficient.

Essay # 5. Sales (Revenue) Maximisation :

W.J. Baumol presented an alternative hypothesis to profit maximisation, viz., sales (revenue) maximisation. He has suggested that large oligopolistic firms do not maximise profit, but rather maximise sales revenue, subject to the constraint that profit equals or exceeds some minimum accepted level. Various empirical studies support Baumol’s hypothesis. And it accurately captures some aspects of oligopolistic firms’ behaviour.

Most important, when firms are uncertain about their demand curve they actually face, or, when they cannot accurately estimate the marginal costs of their output (due to uncertainty about factor prices, or when they produce more than one product), the decision to try to maximise sales appears to be consistent with their long-term survival. This is why many oligopolist firms seek to maximise their market share in order to protect themselves from the adverse effects of uncertain market environment.

Graphical Analysis :

A revenue-maximising oligopolist would choose to produce that level of output for which MR = 0. When MR = 0, TR is maximum. That is, the oligopolist should proceed to the point at which selling any extra unit(s) actually leads to a fall in TR. This choice is illustrated in Fig. 8.

For the firm which faces the demand curve D, TR is maximum when output is q s . For q < q s , MR is positive. This means that selling more units increases TR (though not necessarily profit). For q > q s , however, MR is negative. So further sales actually reduce TR because of price cuts that are necessary to induce consumers to buy more. We know that

MR = P(1 – 1/e p ) … (1)

MR = 0 if e p = 1, in which case TR will be maximum. TR is constant in a small neighbourhood of that output quantity at M 1 P = 0, TR is maximum, and when TR is maximum, e p = 1.

We may now compare the revenue-maximisation choice with the profit-maximising level of output, q s . At q p , MR equals marginal cost MC in Fig. 8. Increasing output beyond q p would reduce profits since MR < MC. Even though TR continues to increase up to q s , units of output beyond q p bring in less than they cost to produce. Since marginal revenue is positive at q p , equation (1) shows that demand must be elastic (e p > 1) at this point.

Essay # 6. Constrained Revenue Maximisation :

A firm that chooses to maximise TR is neither taking into account its costs nor the profitability of the output that it is selling. And it is quite possible that the output level q s in Fig. 8 yields negative profit to the firm. However, it is not possible to any firm to survive for ever with negative profits. So it may be more realistic to assume that firms do meet some minimum level (target rate) of profit from their activities.

Thus, even though oligopolists may be prompted to produce more than q p with a view to maximising revenue, they may produce less than q p units in order to ensure an acceptable level of profit. They will, therefore, behave as constrained revenue maximises and will choose to produce an output level which lies between q p and q s .

Mathematical Analysis :

According to a news release, Anthony placed first in the state of Illinois in the Elementary School Division of the Spring 2024 InvestWrite national essay competition.

Last spring, 4th- and 5th-grade Westmoor students participated in The Stock Market Game, a financial education program challenging students to manage a hypothetical $100,000 online portfolio of stocks, bonds, mutual funds, and cash, the release said. The game and the essay contest are sponsored by the Securities Industry and Financial Markets Association Foundation (SIFMA) Foundation. The foundation delivered a cache of prizes to Anthony after his essay was named the best in the state in the elementary division. In total, 959 students participated in the competition nationally.

Anthony’s 4th-grade teacher, Nick Grigolo, presented the award to Anthony on Monday in front of his classmates. Anthony’s team invested in a number of sporting goods and other companies including Lululemon, according to the release. His essay recaps his experience investing in the Stock Market Game and offers the golden rule of advice in stocks: “Buy low, sell high.”

“Mr. Sylvano (the 4th grade literacy teacher) taught me to really like literacy and writing and I wanted to try my best to see if I could win anything,” Anthony said in the release. “I thought I might make it in the top ten but I didn’t think I would win!”

“Anthony has so much going for him. He is hardworking and kind but what really impresses me is his ability and desire to go above and beyond what is expected of him as student. Good isn’t good enough. Anthony always gives his very best,” Grigolo said.

Anthony said he is devoting his writing efforts this year to fiction, especially fantasy and mystery fiction, the release said. As for the $100 gift card, he says he plans to save it.

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How Does the Stock Market Work?

The stock market defined, what are public companies, what are stocks: buying and selling shares, what is a stock exchange, over-the-counter market, other assets sold on the stock market, what does the stock market do, why is the stock market so important, the meaning of the stock market for most americans, the bottom line, what is the stock market and how does it work.

Investing: An Introduction
Stock Market Definition CURRENT ARTICLE
Primary and Secondary Markets
How to Buy/Sell Stocks
Market Hours
Stock Exchanges
How to Start Investing in Stocks: A Beginner’s Guide
What Owning a Stock Means
The Basics of Order Types
Position Sizing
Executing Trades
When to Sell a Stock
Income, Value, Growth Stocks
Commissions
Investing and Trading Differences
Stocks vs. ETFs
Stocks vs. Mutual Funds
ETFs vs. Mutual Funds
What Is a Bond?
Bond Yield Definition
Basic Bond Characteristics
How to Buy a Bond
Corporate Bonds
Government Bonds
Municipal Bonds
Options vs. Futures
Essential Options Trading
Diversification
Measuring Investment Returns
Corporate Actions
Stock Fundamentals
Essentials of Analyzing Stocks
Evaluating Company Financials
Technical Analysis

The stock market as a whole is an exchange mechanism that helps investors buy and sell shares in publicly traded companies. Though you can visit the New York Stock Exchange (NYSE) and offices of the NASDAQ, these are just components in a broader marketplace. Trades are conducted mostly through electronic means between participants who are remote from each other. The mechanism is an excellent means for businesses to raise capital from investors. Additionally, analysts closely examine its traded prices for signals of economic strength or weakness.

Key Takeaways

The stock market is defined as the collective trading network involving company shares and their derivatives.
The stock market, is a central part of modern economies since it's where companies raise vast sums of money to accelerate successful startups, expand existing businesses, or consolidate operations and pay off debt.
Companies listed on stock exchanges must be public, meaning their shares are open not just to a select few but traded on stock exchanges and elsewhere. Public companies are subject to many reporting and transparency regulations.
Stocks are sold to institutional investors and high-net-worth individuals, but also those with far more modest means looking for income from a share of the profits, to sell the stock later at a higher price, or simply to have a say in how a company is run.
The Securities and Exchange Commission ( SEC ) and individual state regulators oversee the U.S. stock market.

The price of a stock changes based on the demand for shares from new investors who want to buy, or the supply of shares from existing investors who want to sell. Investors decide to buy or sell based on the company’s performance, economic conditions, the current price of the shares, and other factors. Not every investor makes decisions based on the same criteria, and what might not seem rational to one investor, will seem perfectly acceptable to another. This dynamic keeps shares trading hands and makes future prices difficult to predict.

People purchase stocks for a lot of reasons. Some hold onto shares, looking for income from dividends. Others might think a stock will rise, so they snap it up, trying to buy low and sell high. Still, others might be interested in having a say in how particular companies are run. That’s because you can vote at shareholder meetings based on the number of shares you own.

Both “stock market” and “stock exchange” are often used interchangeably, but they’re not the same. Traders in the stock market buy or sell shares on one or more stock exchanges, which are only part of the overall stock market. The major U.S. stock exchanges include the New York Stock Exchange ( NYSE ) and Nasdaq.

Ellen Lindner / Investopedia

The stock market is a vast, complex network of trading activities where shares of companies are bought and sold, protected by laws against fraud and other unfair trading practices. It plays a crucial role in modern economies by enabling money to move between investors and companies.

Sometimes the best way to see how something works is to look at its parts. In that light, let's review the major elements of the stock market, from the companies selling shares to stocks to exchanges to the indexes that give us a snapshot of the stock market's health:

Not all companies can offer stock to the public. Only public companies that have offered their shares for the first time in an initial public offering ( IPO ) can have their stock bought and sold on exchanges like the NYSE or Nasdaq. From the time a company starts planning its IPO through all the time its shares are sold to the public, it must meet stringent regulations and financial disclosure laws.

The primary market could involve raising money and giving parts of a business to friends, family, and others in direct trades, making it the oldest way of dividing shares in a company. Since the primary market is where a company sells its securities directly, today it includes IPOs, follow-on public offerings, private placements, debt offerings, and other times when a company sells part of itself to raise funds.

From then on, stocks are traded in the secondary market on exchanges or "over the counter." More than 58,000 companies worldwide are publicly traded today.

When you buy a stock or a share, you're getting a piece of that company. How much of the company you own depends on the number of shares the company has issued and the number of shares you own. If it's a small, private company, a single share could represent a large part of the company. Major public companies often have millions, even billions, of shares. For example, Apple Inc. ( AAPL ) has billions of shares in circulation, so a single share is just a tiny fraction of the company.

Owning shares gives you the right to part of the company's profits, often paid as dividends, and sometimes the right to vote on company matters.

Once a company goes public, its stocks can be traded freely on the stock market. This means that investors can buy and sell shares among themselves. This is the secondary market for stocks, and most trading is done through stock exchanges. This part of the larger stock market dates to at least 1602 in Amsterdam, evolving since into some of the world's most complex institutions.

Stock exchanges are organized and regulated "places" (much trading today is virtual) where stocks and other types of securities are bought and sold. They play a crucial role in the financial system by providing a platform for companies to raise money by selling their stocks and bonds to the public.

The NYSE and Nasdaq are prime examples, serving as central locations for the buying and selling of stocks. There are major exchanges worldwide, such as the London Stock Exchange, the Tokyo Stock Exchange, and the Shanghai Stock Exchange. Each has its own internal rules, and investors follow different national and local laws. These are meant to ensure fair trading practices and to keep investors confident in dealing there. They also provide transparency in the trading process, giving real-time information on securities prices, which is why it's so easy to find up-to-date stock prices on just about any financial news site.

Stock exchanges wouldn't live up to their name, though, if they didn't offer liquidity, the ability to buy or sell stocks relatively easily. This means that during trading hours, you can buy a stock quickly or just as rapidly sell it to raise cash.

Many stock exchanges also cross-list company shares, offering securities primarily listed on other exchanges. This way, companies can reach more investors when raising capital, and those trading with certain exchanges have far more options.

Though it is called a stock market, other securities, such as exchange-traded funds (ETFs), are also traded there.

Stocks and other securities are also traded "over the counter" ( OTC ). These OTC markets are where you buy or sell stocks directly with another investor, typically without the same level of regulation or public scrutiny. OTC trading involves a network of brokers and dealers who negotiate directly over computer networks and by phone.

This type of trading is commonly used for smaller, less liquid companies that may not meet the stringent listing requirements of the stock exchanges. This can make it more challenging for investors to get reliable information about the companies they are investing in.

As part of understanding stock market basics, it's important to know that, in addition to common stocks, many other assets are traded through stock exchanges and OTC. These count, too, as part of the "stock market":

American depositary receipts : Represent shares in foreign companies and are traded on U.S. stock exchanges. They let U.S. investors invest in foreign companies without dealing with foreign stock exchanges or converting over their currency.
Derivatives : This is a broad category that includes options and futures, whose value is derived from the value of an underlying asset, such as stocks, bonds, commodities, currencies, interest rates, or market indexes. So, in derivatives trading, you're not directly buying or selling the actual asset (like the stock). Instead, you're trading something whose value is influenced by the changes in the price of an underlying asset.
Funds : These include mutual funds, which pool money from many investors for a basket of stocks, bonds, and other securities, and exchange-traded funds, which trade on stock exchanges like individual stocks and "track" or try to mirror how a sector, index, or theme of stocks is doing.
Preferred stocks : These stocks generally provide a set dividend and, as the name suggests, have priority over common stock in getting a share of the profits or what's left over if the company goes bankrupt.
Real estate investment trusts (REITs) : These are worth mentioning to get an idea of the breadth of what counts as the stock market. REITs are companies that own, manage, or finance real estate. Investors can buy shares in them, and they legally must provide 90% of their profits as dividends each year.

More loosely, while independent markets, people often talk about these as part of the "stock market":

Bonds : These represent debt, and governments and corporations issue them to raise capital. Investors who buy bonds effectively lend money to the issuer in exchange for interest payments and the return of the bond's face value at maturity.
Commodities : There are 50 major commodities markets worldwide where you buy raw materials like oil, steel, wheat, and coal directly or buy futures contracts based on where their prices might go.

Investors and Traders

Those in the stock market include institutional investors, such as pension funds, mutual funds, insurance companies, and hedge funds, that manage large amounts of money and often have a significant influence over the market since they are trading in large volumes. Retail investors buy and sell securities for their personal accounts—not for an organization. They can range from beginners to experienced traders, and today, most use online platforms. Another key group is accredited investors, high-net-worth individuals with the money and investing experience, so the SEC allows them access to more complex investments, like venture capital and private equity.

Generally speaking, investors approach the market from a long-term perspective. They put money in stocks, ETFs, mutual funds, and other securities, expecting their value to grow over time; these are not the quick trades you see in movies to get in and out fast. These investors are often more concerned with the fundamental strength of the companies or assets they invest in, such as their financial performance, market position, and potential for growth. They decide on investments after research and analysis or after getting recommendations from financial advisors while trying to build wealth steadily through a portfolio that increases in value over time.

Traders, for their part, take a more short-term approach to the stock market. They aim to capitalize on the market’s volatility, trading stocks, options, futures, and other financial instruments within shorter time frames—from seconds and minutes to days and months. Traders often rely on technical analysis, which involves studying market trends, charts, and other statistical measures to predict future price movements. While trading can offer the potential for quick profits, it also comes with higher risks than long-term investing. Quickly buying and selling securities requires a sharp understanding of the market and a more active, hands-on strategy for trading.

Role of Brokers

Brokers in the stock market play the same role as in insurance and elsewhere, acting as a go-between for investors and the securities markets. They are licensed organizations that buy and sell stocks and other securities for individual and institutional clients. Brokerage firms can be small boutique shops or multinationals offering investment advice, research, and wealth management services while executing trades for customers. Full-service brokers provide detailed financial advice, portfolio management, and personalized services, making them better for investors who prefer a thorough approach to managing their investments. Further down in cost, discount brokers provide a more hands-off experience and are typically preferred by investors who make their own trading decisions.

Online brokerage firms have become increasingly popular with user-friendly platforms that allow investors to trade securities electronically at lower costs and more convenience. These platforms often have educational resources, analytical tools, and real-time market data. There has also been a rise in robo-advisors , automated financial planning services offered at a very low price.

Whatever type of broker, they are all regulated by the SEC and Financial Industry Regulatory Authority (FINRA) in the U.S.

A significant aspect of the stock market—dictating what’s traded and how—is the regulations and regulators involved. In the U.S., the latter is the SEC, an independent federal agency set up in 1934 on the heels of the 1929 market crash and the travails of the Great Depression. The mission of the SEC is “protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.”

The SEC enforces laws against market manipulation, insider trading, and other forms of fraud while verifying that public companies reveal any significant financial information investors should know when trusting a firm with their money by buying its stock. The SEC also oversees stock exchanges, broker-dealers, investment advisors, mutual funds, and public utility holding companies.

In addition, the exchanges have their own requirements, such as filing timely (usually quarterly) updates to company financial reports and instant reporting of relevant corporate developments to ensure that everyone looking to trade has the same information.

FINRA oversees brokerage firms and their registered securities representatives and is more focused than the SEC on protecting retail investors. Similar agencies exist worldwide, which is crucial given how the stock market is global and a calamity in one corner of the world soon reaches the other—it’s not just something that happens from a few buildings on Wall Street.

While many countries’ regulations differ significantly—they answer to diverse populations and cultural expectations—general rules are enforced to ensure fair practices, protect investors, and promote confidence in the broader stock market.

How Stock Prices Are Determined

Textbook descriptions of stock prices tend to start off talking about investors and dealers coming together, and for there to be a stock trade, the buyer and seller must agree on a figure. But most investors find prices as they are listed in online brokerage accounts or online graphs of stock prices over time, not as coming from tough negotiations. That said, you do have to agree to buy stocks, and each investor or trader making this decision collectively shapes the demand for stocks, which, taken against the supply on hand in the market, produces the prices on our screens.

The factors that influence these prices fall into two main types: fundamental and technical. Fundamental factors are rooted in a company's earnings, profitability from its operations, and the goods or services it offers. Meanwhile, technical factors relate to market sentiment and statistical analyses of historical market activity and stock price trends.

High stock prices can indicate a company's success—or at least the feeling of buyers that they are doing well—but they can also result from stock splits, dividends, and share repurchases. When a stock price drops, this doesn't mean that money is lost from the market as a whole. Instead, it signifies a decrease in the market value of the specific stock. For instance, if a company reports higher profits than expected, its stock price might increase as more investors want to buy shares, hoping for future growth. Similarly, economic events like interest rate changes or geopolitical issues can affect investor confidence and stock prices.

Market Indexes

Most Americans first learn about the stock market through indexes since reporting on the ups and downs of the Dow Jones Industrial Average (DJIA) or S&P 500 has long been a staple for news programs to quickly get across the news about Wall Street. Indexes like the DJIA, which includes 30 large publicly owned companies, give a picture of the wider stock market. Indexes can be used to take a very wide shot of the market, such as with the S&P 500, representing the 500 largest U.S. public companies. There are currently 11 sectors for specific groups like technology, healthcare, or consumer discretionary companies etc.

Indexes are important since they are used as benchmarks for stocks and portfolios. For example, if you're invested in technology stocks, you'll want to see how your stocks are doing against a tech index. You'll then have a better way to rate your returns.

The stock market fills several different roles worth highlighting:

Corporate governance : Publicly traded companies follow stringent reporting regulations, which makes them far more transparent and accountable. This information allows investors to make informed decisions and helps maintain investor confidence in the market. It's also a boon for everyday Americans to gain a view inside major U.S. corporations since, without these transparency requirements, they could close down much of what we know about them.

Economic indicator : The stock market's performance is often considered a gauge of an economy's health. Rising stock prices are associated with corporate profitability and economic growth while declining prices signal problems ahead.

Investment opportunities : The stock market offers the chance to invest in companies and potentially grow a portfolio over time. The stock market has historically delivered returns outpacing inflation, making it a vital tool for retirement planning, wealth building, and financial security.

Liquidity : The stock market enables investors to buy and sell shares of companies and other securities quickly when needed.

Raising capital : Most importantly, the stock market offers a platform where companies raise funds by issuing stocks. This capital is essential for business expansion, research and development, and other corporate initiatives. By selling shares to the public, companies gain access to these funds without incurring debt.

Resource allocation : By reflecting the collective judgment of traders and investors through the price of different companies, the stock market is said to help efficiently distribute capital to companies more likely to succeed and away from those that are not.

Now that we know the different parts of the stock market—who, what, where, and how it works—we can better understand why it's such a large part of our economy today. The meaning of the stock market can't be understated for how our world functions.

When the earliest stock markets formed, the global economy was vastly different. These were eras when trade and commerce were primarily driven by physical goods, with industries like agriculture, textiles, and early manufacturing dominating the economic landscape. Stock markets at the time were fledgling institutions, primarily helping to finance expeditions and trade ventures, which is to say, the colonial enterprises taking goods and peoples from South Asia, the Americas, and Africa. These stock exchanges were already global investment operations. Yet, they played a relatively minor role in everyday economic life.

Fast forward to today, and the stock market is considered central to the global economy, a change underscored by financialization and the increasing dominance of financial markets and institutions. This isn't just because over a million Americans work in finance. Modern economies are characterized by a complex web of financial transactions and instruments, with the stock market not just a barometer for economic health but also seen as critical for distributing and creating wealth.

Financialization has also mirrored broader socioeconomic changes. Today's stock markets are not just platforms for raising capital but have been tied into millions of Americans' retirement and investment strategies. This is why, at perilous times—2007 to 2008 and the pandemic being two major examples—the U.S. government and Federal Reserve felt far more obligated than in previous eras to step in. This was not just to protect the wealth of a select few but because the savings of a vast swath of Americans were at risk. Not long ago, Americans hearing stock market news might be listening for indirect effects on their jobs—say, to see how their firm is doing—but now they are doing so more often for the direct impact on their own portfolios, including 401(K)s .

Of course, many are paying off college, mortgages, and other debts or are otherwise too fragile financially to have a portfolio of stocks or other assets. Still, they, too, feel the reach of the stock market and its effects. First, the market drives funding for technological advances like the smartphones in our pockets or the medications we take, which require many billions of dollars for research and development. This access to capital has been crucial for companies pushing into areas like artificial intelligence or new medical devices, costing many times what a company could otherwise borrow.

Moves in the stock market also affect the broader economy and, by extension, employment. Its performance can influence corporate decisions, influencing job creation (and the opposite as layoffs can boost a stock price), expansion, and overall economic growth. A healthy stock market generally correlates with a more robust economy. But it could also mean more capital in the hands of a wealthy few, increasing the property values of once middle-class areas in almost every major American city.

The stock market also indirectly influences public services and infrastructure. Pension funds , a major part of government spending for employees at the local, state, and federal levels, are significantly invested in the stock market. The returns generated from these investments can influence the financial health of pension funds, affecting the retirement security of millions of people—beyond the many more individuals who don't have pensions and are invested in the market directly through 401(k)s, mutual funds, and individual retirement accounts.

What's the Difference Between the Bond Market and the Stock Market?

Worldwide, the bond market is larger than the stock market, with about $130 trillion in bonds outstanding and about $101 trillion in stock market capitalization, according to the last data available. The bond and stock markets serve different purposes and offer different risk-reward profiles for investors. In the bond market, investors buy and sell debt securities, typically issued by governments (local, state, and federal) or corporations. When you invest in bonds, you're essentially lending money for regular interest payments and the return on the bond's face value at maturity.

The stock market involves buying and selling shares and derivatives (instruments whose value correlates in some way to particular stocks) of publicly traded companies. Investing in stocks means buying a piece of ownership in a company. Stocks offer the potential for higher returns than bonds since investors can get both dividends when the company is profitable and returns when the stock price goes up. They also have a higher risk, as stock prices can be more volatile.

What Is an Alternate Trading System?

Alternative trading systems are platforms for matching large buy and sell transactions and are not regulated like exchanges. Dark pools and many cryptocurrency exchanges are private exchanges or forums for securities and currency trading and run within private groups.

Who Helps an Investor Trade on the Stock Market?

Stockbrokers act as intermediaries between the stock exchanges and the investors by buying and selling stocks. Portfolio managers are professionals who invest portfolios, or collections of securities, for clients. Investment bankers represent companies in many different ways, such as helping private companies that want to go public via an IPO or planning for mergers and acquisitions.

The stock market is where shares of companies and other financial instruments are bought and sold. It's a network of all-stock trading where investors and traders buy and sell stocks. These trades determine stock prices, reflecting the company's perceived value and market conditions. The stock market is also where companies raise capital and from which investors can grow their wealth. It thus plays a vital role in the global economy. Even if you don't trade on the stock market directly, it influences the products you buy, the type of jobs available, and the retirement you might plan.

Financial Industry Regulatory Authority. " Advancing Market Regulation and Transparency ."

U.S. Securities and Exchange Commission. " About Trading and Markets ."

World Federation of Exchanges. " Number of Listed Companies - August 2023 ."

Securities and Exchange Commission. " Investor Bulletin: REITs ."

U.S. Securities and Exchange Commission. “ What We Do .”

Macrotrends. " S&P 500 Historical Returns ."

U.S. Securities and Exchange Commission, Historical Society. " The Institution of Experience: Self-Regulatory Organizations in the Securities Industry, 1792–2010 ."

Securities Industry and Financial Markets Association. " 2023 Capital Markets Fact Book ."

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Essay on Marketing

Students are often asked to write an essay on Marketing in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Marketing

The world of marketing.

Marketing is about spreading the word on products and services. It helps companies connect with customers.

Understanding Customers

Effective marketing begins with understanding what customers want and need. Companies study people’s preferences and behaviors.

Creating Products

Using customer insights, businesses develop products that solve problems or bring joy.

Communication is Key

Marketing involves telling people about products through ads, social media, and more. Clear communication is crucial.

Building Brands

Adapting and growing.

Marketing strategies change based on feedback. Companies adapt to stay relevant and successful.

Marketing is like sharing stories that connect what people need with what companies offer. It’s an exciting way to make products part of our lives.

Also check:

250 Words Essay on Marketing

Understanding the power of marketing.

Marketing: a concept that shapes the modern world. It’s more than just ads and promotions; it’s the engine driving business success. Let’s explore its significance.

The Essence of Marketing

At its core, marketing is all about connecting products or services with people’s needs and desires. It’s about creating value, not just selling. Effective marketing answers the question, “Why should customers choose us?”

Segmentation and Targeting

Value creation through branding.

Branding isn’t just a logo; it’s the emotions and perceptions associated with a product. Strong brands build trust and loyalty, allowing companies to command premium prices.

The Digital Revolution

The digital age has revolutionized marketing. Social media, search engines, and online ads allow for precision targeting and personalized communication. It’s not about bombarding, but about engaging.

Content is King

Analyzing and adapting.

Marketing isn’t a one-shot deal. It’s a constant process of analyzing results and adapting strategies. Tools like analytics help track what works and what doesn’t, leading to informed decisions.

Ethics in Marketing

With great power comes great responsibility. Marketing should be ethical, transparent, and respectful. Deceptive practices might bring short-term gains, but they erode trust in the long run.

The Bottom Line

In a nutshell, marketing is the bridge that connects what you offer with those who need it. It’s not just about selling but about creating lasting value. Understanding its principles can propel businesses toward success in the modern world.

500 Words Essay on Marketing

Marketing: connecting the dots for successful business.

Marketing is like a magical thread that weaves businesses and customers together, creating a world where products and services find their perfect match. In this modern age, new-age techniques like Virtual and Augmented Reality (VR/AR), Chatbots and Conversational Marketing, Programmatic SEO , Social Commerce, and Neuromarketing have added exciting dimensions to this field. Let’s delve into the basics of marketing and explore how these techniques have transformed the way businesses reach out to us.

Imagine you’ve baked the most delicious cookies in town. You want everyone to know how tasty they are. That’s where marketing comes into play. Marketing involves all the activities that help you promote and sell your products or services. It’s about understanding what people want, creating something they’ll love, and then letting them know it exists.

Meeting New Friends: Customers and Businesses

In the world of marketing, two important players dance together: customers and businesses. Customers are people like you and me who need things. Businesses are the ones that make those things. Marketing helps these two groups find each other.

Traditional vs. Modern Marketing

Traditional marketing used to be all about newspapers, TV ads, and posters. But today, things have changed a lot. Businesses use new-age techniques to grab our attention in creative ways. Virtual and Augmented Reality (VR/AR) let us experience products almost like they’re real. Chatbots talk to us on websites and social media, making shopping feel like chatting with a friend. Social Commerce lets us buy things through platforms like Instagram and Facebook, as if we’re shopping with friends online.

Getting Found: SEO

Think about searching for something online. How often do you go past the first page of search results? That’s why businesses use SEO. It’s like making sure your cookie recipe appears at the top when someone searches for “delicious cookies.” This technique helps businesses get noticed by improving their online visibility.

Understanding Your Brain: Neuromarketing

Ever wondered why some ads just stick in your head? Neuromarketing dives into how our brains respond to ads. Businesses use this technique to create ads that connect with us on a deeper level. It’s like making sure your cookie commercial triggers happy thoughts every time you see it.

Chatting with Businesses: Conversational Marketing

Have you ever had a chat with a robot on a website? That’s Conversational Marketing. Businesses use chatbots to talk to us, answer our questions, and even help us choose the right products. It’s like having a helpful assistant while shopping.

Shopping in Your Pajamas: Social Commerce

Putting it all together.

Marketing is like a puzzle where every piece matters. Businesses create amazing products, use modern techniques like VR/AR, Chatbots, Programmatic SEO, Social Commerce, and Neuromarketing to make us notice them, understand us better, and make shopping a breeze.

In conclusion, marketing is the bridge that connects what we need with what businesses offer. Through traditional and new-age techniques, it has evolved into a captivating journey that is all about understanding, connecting, and engaging with customers. Whether it’s through the immersive experiences of VR/AR, the friendly conversations of chatbots, the smart visibility of SEO, the emotional impact of Neuromarketing, or the convenience of Social Commerce, marketing continues to shape the way we discover, choose, and enjoy the products and services that make our lives better.

If you’re looking for more, here are essays on other interesting topics:

Scholars on Free Market Economics Essay

To find inspiration for your paper and overcome writer’s block
As a source of information (ensure proper referencing)
As a template for you assignment

The Idea of Free Market Economy

Marxian economics, contributions of plato to the field of economics, the role of technology in globalization, global economic issues.

A discussion on free market economy is interesting because it presents the views of various scholars. From classical scholars such as Thomas Ricardo and Adam Smith to recent scholars such as Karl Marx, the idea of demand and supply is believed to influence the prices of goods and services in the market. In this regard, free market economy means that the government should try as much as possible to keep off from economic activities of the country in case economic growth and development is to be achieved.

This is amazing because the government is thought by many to influence each aspect of life yet economics scholars argue that the market should be allowed to exist according to its own logics. It is also fascinating to note that the market is self-regulating and self-checking implying that producers would probably manufacture goods that would suit the market. Manufactures would frequently check the buying power of consumers before producing goods (Sobel, 2002).

The government does not have any power to set the price of a good. In fact, Adams Smith observed that the government should only provide an enabling environment for individual fulfillment. This means the state would only exist to offer important services that facilitate business activities such as provision of transport and communication networks, provision of security and advisory services. However, some scholars posit that the government should always be involved in economic activities.

For instance, the state should regulate the activities of traders through licensing and approving products. This is because human beings have issues related to health. Businesspersons could perhaps offer any product to the market without considering the health and security of people.

Some observe that the government should only intervene in the market whenever there is an economic turmoil or crisis, such as the one witnessed in 2007 in the US. In this regard, the government needs to withdraw immediately normalcy and constancy is restored in the market.

The idea of market logics is very important since it would help an individual in making policies in future. The idea would be remembered because many people think that the government should always control the activities of businesspersons. Whenever prices go up, people put much pressure on their respective governments to lower prices. They do not understand that prices are affected by the demand and supply.

Historical Schools of Thought in Economics Regarding the Relationships among Factors of Production

Each school of thought had its own definition of the phrase factors of production. However, scholars have not been able to determine the most powerful factor among the four factors. What is surprising is that each continent has its own definition. For instance, the time of entrepreneur is perceived to be the most dominant factor among others in the Australian perspective.

Time would therefore influence the performance of the organization. In other words, it would mean that production of goods and services is influenced by the availability of time. Neoclassical scholars, as well as other economies that support the basics of the free-market economy, usually share this view.

Critics of neoclassical theory observe that entrepreneurship is simply a type of labor, which should not be treated in a special way. From a Marxian perspective, labor is an important factor of production that influences the rest. This is because labor is employed in producing capital goods (Friedman, 2007).

A theory formulated in France before Adam Smith suggested that production of goods and services is influenced by the relationships between the poor and the rich. The theory was referred to as physiocracy. According to the theory, four factors of production exist, including capital, entrepreneurship, land, and labor. Classical theorists, such as Adam Smith, David Ricardo, and their adherents, believed that resources influence the production process.

The classical theorists went a notch higher to discuss the distribution of costs and value in the production process. To Ricardo and Smith, land would refer to natural resources such as air, soil, water, and minerals. The entrepreneur converts the natural resources into usable products. From land, the owner could perhaps earn capital, which is referred to as rent. Labor is another factor of production that refers to human effort applied in the manufacturing process.

Through labor, an individual receives wages. The last factor of production is the capital stock, which refers to manufactured goods and services. In other words, it is popularly referred to as the means of production. Capital stock is the most important because it is employed in producing other goods. For instance, machinery and raw materials are used to manufacture finished products.

Those intellectuals who utilized the works of Marx, as well as other works, to define the economy formulated Marxian ideals. It should be noted that Marxian economics is different from the radical views of Karl Marx. This topic is of interest because many people rarely distinguish between Marxian economics and Marxism. Marx utilized the writings of classical scholars such as Adam Smith and Thomas Malthus to formulate his theory on capitalism.

In his analysis, Smith postulated that division of labor is an important component of economic growth. This means that economic growth would be achieved if workers were to specialize in certain areas. Smith noted that labor is a resource that could be faced out of the market.

This means that some forms of labor would be eliminated with time. However, Smith commented that market forces were self-regulating implying that the government would not interfere in any way. Marx based his argument on the findings of Smith (Bottomore, 1998).

Marx found out that capitalism was responsible for massive economic growth in most parts of Europe. Since capitalism had taken root in Europe, workers underwent some form of suffering since their services were not needed. Marx differed with Malthus on the role of capitalism as regards to population increase. Malthus had earlier noted that population increase was a result of biological pressure whereas Marx noted that surplus population was caused by capitalism.

It is interesting to learn that capitalism is responsible for the increase of population. States would want its people to multiply in order to obtain a large workforce, which would push the economy forward. Marx referred to this sort of population increase as the reserve army of labor.

Before Marx conducted an analysis on economics, Ricardo had suggested that any good is priced based on the cost of labor. However, Marx went against Ricardo’s postulation to suggest that a product is valued more as compared to the worker in the capitalist society. This is a shocking revelation, which might be hard to forget.

Plato was one of the classical philosophers who contributed greatly to the development of modern economics. Even though he lived more than 2000 years ago, his contributions are still valid in the modern society. Plato observed that the state had a bigger role to play in the lives of people. The state could either make or destroy an individual, based on the choice of the philosopher King.

According to him, the state destroyed his teacher, Socrates, because he interfered with the status quo by urging youths to rise against the ruling class. His ideas on the division of labor are still applied in the modern society. Plato believed that certain professions were important than others, such as construction, farming, and curing the sick.

In this regard, Plato observed that each person should play his or her role faithful if economic stability were to be achieved in a state. The philosopher King has the role of protecting the people by coming up with effective policies that would encourage trade. In this case, the philosopher King should be an intelligent person meaning that he or she should have adequate education.

The philosopher King should ensure that Justice prevails, by protecting the helpless in society. It is only through wisdom that a leader would know what to do in order to promote the social and economic welfare of the poor. In society, the role of soldiers is to offer security. Soldiers are spirited and courageous people because they risk their lives to ensure that justice prevails.

They work hand in hand with the philosopher King to guarantee tranquility in society. Citizens have a sole responsibility of ensuring that taxes are paid in time. The populace is highly appetitive implying that they need to be guided. It is the role of the philosopher king and soldiers to ensure that taxes are paid in time. Citizens must support the King by paying taxes.

However, Plato was against democracy because he believed that democracy is the tyranny of the multitude. In other words, democracy is the worst form of government that should never be allowed to exist in any economy.

Plato advocated for communism because he believed that individual possessions were to be treated as the belongings of the community. Such goods would be used effectively to promote the social welfare of the community. Moreover, Plato suggested that communal belongings were the property of the state. The state had the right to use the belongings of an individual for the good of the public.

This is a common phenomenon even in the modern society (Postone, 1993). The government has always interfered with individual property to promote the welfare of the society. For instance, land is considered the property of the state and therefore, the state has the right to take it from an individual to construct important structures such as schools and hospitals. This is amazing because an individual will never be given any form of property by the government.

In the modern society, goods and services are produced and are consumed almost at the same time. This is attributed to globalization where geographical distance is no longer an issue to businesses. Goods produced in the US and Europe could reach other parts of the world such as Asia and Africa within a day. Technological advancements have redefined business techniques in the modern world.

Marketing strategies have also changed greatly because people use sophisticate methods, such as the use of social media. Companies all over the world utilize the social media such as Facebook and Tweeter to reach out to their target markets. It is surprising to note that people in the US are affected by conflicts in the Middle East. The world is now considered a global village because a misunderstanding in one part of the world affects businesses globally.

When the fuel prices go up in one continent, the prices of goods and services are affected in other continents. The recent Arab uprisings show that countries are no longer self-reliant but instead they depend on one another. The economic crisis witnessed in the US and Europe affected businesses globally. All these changes in the international system are attributed to the advancements in technology.

The Arab uprisings were well coordinated through the social media, particularly Facebook and Tweeter (Harvey, 2010). Through globalization, citizens in Middle East realized that their governments were not doing enough to promote their social an economic welfare.

The poor were becoming poorer while the rich enjoyed themselves with state resources. This could be compared to the standards of living in Europe and the US whereby the state ensures that each person enjoys societal resources.

Technological innovations, particularly the invention of a computer, have promoted many sectors of the economy. Each sector in the economy depends on technology for development. In the transport sector, the development of modern transportation systems, such as air transport, has boosted the world economies. No one knows what tomorrow might bring because of technological innovations.

The major problem facing many economies in the world is the issue of sustainability. Due to human activities such as mining, farming, and settlement, the environment has been destroyed, particularly in the developing countries. The population pressure has forced governments to resettle people in areas initially covered by forests. This has led to global climate change meaning that human activities have affected the rainfall pattern.

Currently, weather pollution is a global issue that has threatened world security. Countries of the west argue that the poor states should seek for alternative methods of development other than coming up with industries that are known to emit dangerous gases that affect the environment. Such industries include mining plants that emit harmful substances such as copper, mercury, and lead.

The same plants are known to generate waste products that are dumped in the sea, which affect aquatic life. On the other hand, the poor states argue that the developed states should set up a considerable amount of money, which is to be used to conserve the environment. This is because they emit harmful products in large quantities. The US and Japan are the leading nations in generating harmful chemicals that affect the global environment (Harvey, 2010).

The issue of sustainable economic growth has led to the formation of various world bodies such as the UNEP to oversee the preservation of the environment. However, the environment is yet to be conserved because no country is ready to forfeit its economic development strategy in favor of conserving the environment.

Global conferences, such as the Geneva and Rio conferences have been held successfully but states lack the good will to implement the provisions of world environmental bodies. What is fascinating is that states appreciate the fact that the environment needs to be conserved yet they are not willing to drop their economic strategies to conserve the environment.

Bottomore, T. (1998). A Dictionary of Marxist Thought . Oxford: Blackwell.

Friedman, M. (2007), Price Theory. New York: Macmillan.

Harvey, D. (2010). A Companion to Marx’s Capital. London: Verso.

Postone, M. (1993). Time, Labor, and Social Domination: A Reinterpretation of Marx’s Critical Theory. Cambridge: Cambridge University Press.

Sobel, J. (2002). Can We Trust Social Capital? Journal of Economic Literature , 40(1).

Market Structures: Monopolistic Competition
Ethonomics and Corporate Social Responsibility
The Future of Family Planning and Fertility in Iran
Marx vs. Weber on Capitalism
Capitalism in Adam Smith’s and Karl Marx's Views
Concept of Market Equilibrium in Business
Realizing Development Objectives: Neoliberalism Requirements
The Concept of Sustainable Development Robs the Poor World of Any Possibility of Convergence With the Rich World
Community Economic Development
How innovation leads to economic development
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Essay on Marketing: Top 9 Essays on Marketing

Essay on‘Marketing’. Find paragraphs, long and short term papers on ‘Marketing’ especially written for school and college students.

Essay on Marketing

Term Paper Contents:

Essay on the Challenges and Opportunities of Marketing

Essay # 1. Introduction to Marketing:

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Marketing is everywhere. Everything from presenting yourself for a job interview to selling your products includes marketing. Main objective of any company is to gain profits which can be achieved only through marketing of the products. Marketing enables the companies to create demand and earn profits. If these two aspects are not taken care of, then the company will not survive in the market.

“Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stakeholders.” – (American Marketing Association)

“Marketing is a social process by which individuals and groups obtain what they need and want through creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” – (Philip Kotler)

Thus it can be safely said that a company reaches its customer through marketing and communicates to them about the products and services offered by the company.

ADVERTISEMENTS: (adsbygoogle = window.adsbygoogle || []).push({}); Essay # 2. Evolution of Marketing :

In earlier days, an organization was mainly concerned with production of goods. It used to believe on mass production and paid less or negligible attention on quality of the product and the customer’s demand.

After some time, the focus of organization shifted from production of the product to the sale of the product. The concept of marketing emerged gradually in 1970’s after the production and sales era. It took many years for organizations to realize that a customer is the key for making profits in the long run. The marketing concept is evolved through various stages.

These stages are explained below:

1. Production Era :

The production era began with the Industrial Revolution in the 17th century and continued till 1920s. Say’s law – Supply creates its own demand – was applicable in this era. The demand for products was more than the supply in the market; thus, it was a seller’s market. In the production era, the main aim of an organization was to manufacture products faster and at low prices. In this era, customers were concerned only about the availability of products and no importance was given to features and quality of products.

2. Sales Era :

The sales era came into existence in 1920s and continued till the mid of 1950s. This era was marked by the great depression of 1923. The depression proved that manufacturing products was not everything because the sale of the products was also important for organizations to earn profit.

Thus, the need for developing promotion and distribution strategies emerged to sell products. The organizations started advertising their products to increase their sales. Many organizations created specialized market research departments to collect and analyze the prevailing market data.

3. Marketing Era :

The sales era merely focused on selling the goods and ignored the consumers’ needs and demands. The year 1970 marked the advent of marketing era. In the marketing era, organizations realized the importance of customers and started designing the products as per customers’ needs.

Therefore, the marketing era led to the development of customer-centered activities over the production and selling activities. Organizations came up with different techniques, such as customer survey, to collect and analyze data for understanding the customer’s expectations, needs, and wants.

ADVERTISEMENTS: (adsbygoogle = window.adsbygoogle || []).push({}); Essay # 3. Approaches to the Study of Marketing:

The meaning of marketing is different to different people. In common parlance, marketing is the process of selling something at a market place. To a salesman it means selling whereas to an advertising manager it means advertising. To some it means the study of individual commodities and their movement in the market place, to some others marketing means the study of institutions and persons who move their products or study of the economic contributions.

Thus, there are different approaches to the study of marketing:

1. Commodity Approach:

The commodity approach focuses a specific commodity and includes the sources and conditions of supply, nature and extent of demand, the distribution channels used and the functions, such as buying, selling, financing, advertising storage etc. various agencies perform. Prof. Paul Mazur defined as “the delivery of a standard of living to society. Prof. Malcolm McNair expanded the definition to “the creation and delivery of a standard of living”.

2. Institutional Approach:

The institutional approach focuses on the study of various middlemen and facilitating agencies.

3. Functional Approach:

The functional approach considers different kinds of functions recognized for their repetitive occurrences and necessarily performed to consummate market transactions. Converse, Huegy and Mitchell define marketing as the “business of buying and selling and as including those business activities involved in the flow of goods and services between producers and consumers.” American Marketing Association, perhaps, gives more factual or descriptive definition. It defined marketing as the performance of business activities that direct the flow of goods and services from producer to consumer or user.

4. Managerial Approach:

The managerial approach concentrates on the decision making process involved in the performance of marketing functions at the level of a firm. Howard, Phelps and Westing and Lazo and Corbin are the pioneers of the managerial approach.

5. Societal Approach:

The societal approach consider the interactions between the various environmental factors (socio-logical, cultural, political, legal) and marketing decisions and their impact on the well- being of society. Kotler, Feldman and Gist, were the main proponents of the societal approach.

6. Systems Approach:

The systems’ approach is based on Von Bartalanffy’s general systems theory. He defined system as a “set of objects together with the relationships among them and their attributes”. This approach recognizes the inter-relations and inter-connections among the components of a marketing system in which products, services, money, and equipment and information flow from marketers to consumers that largely determine the survival and growth capacities of a firm.

7. Modern Concept:

The new managerial awareness and desire reflected in the consumer orientation for all all-out commitment to the market consideration and to connect all marketing operations to the consumer needs has given birth to a new operational concept. Felton views the marketing concept as “a corporate state of mind that insists on the integration and coordination of all marketing functions that, in turn, are welded with all other corporate functions, for the basic objective of producing maximum long-range corporate profits.

According to Kotler, the marketing concept is a customer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organizational goals. According to McNamara,” marketing concept is … a philosophy of business management, based upon a company- wide acceptance of the need for customer orientation, profit orientation, and recognition of the important role of marketing in communicating the needs of the market to all major corporate departments”.

Lazo and Cobin describe marketing concept as ” the recognition on the part of management that all business decisions of a firm must be made in the light of customer needs and wants; hence, that all marketing activities must be under one supervision and that all activities of a firm must be coordinated at the top, in the light of market requirements”. King has given one of the most comprehensive descriptions of the marketing concept. He defined it as, “a managerial philosophy concerned with the mobilization, utilization and control of total corporate effort for the purpose of helping consumers solve selected problems in ways compatible with planned enhancement of the profit position of the firm”.

These definitions suggest that marketing is only concerned with the movement of goods and services from the plant to the consumer. This is thus a production-oriented definition more appropriate for a sellers’ market and dangers in case of buyers’ market. In fact, marketing is related with the sophisticated strategy of attempting to offer what the consumer may want and at a profit.

ADVERTISEMENTS: (adsbygoogle = window.adsbygoogle || []).push({}); Essay # 4. Objectives of Marketing:

According to Peter F. Drucker, “Marketing means such a perfect understanding of the customer that the product fits him totally and sells itself. Marketing would result in a customer who is ready to buy all that, what should be needed then is to make the product available.”

Organization’s marketing strategies are designed in tune with various marketing objectives.

The objectives of marketing aim at:

1. Creating demand for the products by identifying the needs and wants of customers. The consumers get familiar with the usage of products through different promotional programs, such as advertising and personal selling. This helps in creating demand for the products by the customers.

2. Increasing the market share of the organization. The marketing efforts, such as promotion, create the product awareness in the market. The product awareness helps in capturing the reasonable share in the market by organization.

3. Building the goodwill of the organization in the market. Every organization tries to earn reputation in the market by providing quality goods to the customers. It builds its goodwill by popularizing products supported by advertising, reasonable prices, and high quality.

4. Increasing profits and achieving long-term goals through customer satisfaction. All the marketing activities revolve around the customer. These activities fulfill the organization’s long-term goal of profitability, growth, and stability by satisfying the customer’s demands. All the departments, such as production, finance, human resource, and marketing, coordinate with each other to fulfill the customer’s expectations keeping the maximization of profit as the focus.

Essay # 5. Marketing Process:

Marketing Process —– The marketing process is one that involves the following chain of business activities:

1. Identification and study of the desires, needs, and requirements of the^ consumers;

2. Testing the validity of the consumers’ reaction in respect of product features, price, distribution outlets, new product concepts, and new product introduction;

3. Matching the consumers’ needs with the firm’s offerings and capabilities;

4. Creating effective marketing communications and programmes with emphasis on lower price, mass distribution channels and mass advertising to reach numerous market segments so that the consumers know about the product’s availability; and

5. Establishment of resource allocation procedures among the various marketing components like sales promotion, advertisement, distribution, product design, etc.

Outline of functions in the Marketing Process : In order to place the goods in the hands of the consumers, an integrated group of activities is involved in marketing. Marketing functions cover all those activities which are required for the journey of goods from the producer to the consumer. Goods require some preparations, undergo many operations and pass several hands before they reach the final consumer.

In consideration of the above factors, Clark has divided the modem marketing process into three broad categories as under:

(i) Concentration

(ii) Dispersion

(iii) Equalisation.

These are explained below.

1. Concentration – In a marketing process, concentration is that business activity in which the goods flow from many manufacturers/producers toward a central point or market. If we think of international trade, we find that the customers of a particular corporation or firm world reputation are scattered in different countries and even located thousands of miles, away, and the products are transhipped to points accessible to than. Similar scene is found even in the case of national trade. With the development of trade and commerce, the efforts in the direction of concentration activity have to place more stress on the functions like collection, storage, transportation and inventory of goods in the central markets, and processing of customer’s orders. In addition, the aspects of financing and risk-bearing are also to be taken into consideration.

In India, the concentration activity is undertaken by the Governments at the Central and State levels. Food example, The Food Corporation of India undertakes this activity in case of grains, rice, sugar, etc.

2. Dispersion – In a marketing process, dispersion is that business activity in which the goods flow from the central locations to the final consumers. The wholesalers and retailers play a great role in this activity. This activity involves many other supporting activities like classification, gradation, storage and transportation of goods. The functional aspects of finance and risk-bearing need important considerations.

In India, the agencies like The State Trading Corporation of India, The Minerals and Metals Trading Corporation of India, and The Food Corporation of India undertake this dispersion or distribution activity in respect of certain specified goods. Sane large scale manufacturing companies have, of late, undertaken this activity as a part of their marketing activities.

3. Equalisation – In a marketing process, equalisation refers to the adjustment of supply to demand on the basis of tint, quality, and quantity. This process helps to maintain the state of equilibrium between the forces of demand and supply. The primary responsibility of a business unit towards the consumers and customers is to make available the right products of right qualities at the right tine, in right quantity, at the right place and at the right price. The equalisation activity can serve these objectives.

Essay # 6. Integrated Marketing Communication Process:

Marketers operate is a very dynamic environment characterised by changing customer needs and wants, severe competition, changing process technology, advancements in information technology, government regulations, etc. That is why, they are adopting Integrated Marketing Communication (IMC).

Integrated Marketing Communication (IMC) involves integration of company’s various communication channels to deliver a clear, consistent and compelling message about the company and its products and brands. Most of the companies communicate with target customers by using promotion tools like advertising, personal selling, sales promotion, public relations and direct marketing. Through each of these tools, some message is transmitted to the target customers. IMC calls for careful blending of these promotional tools to ensure effective communication.

Integrated Marketing Communication (IMC) requires developing a total marketing communication strategy that recognises that all of a firm’s marketing activities (not just promotion) communicate with its customers. Everything a marketer does sends a message to the target market.

The EMC approach is an improvement over the traditional approach of treating various promotional activities as totally separate. It helps to develop the most suitable and effective method to contact customers and other stakeholders.

Often different tools play different roles in attracting, informing and persuading target customers. These tools are carefully coordinated under IMC so that they provide the same clear and consistent information about the company and its products/brands.

IMC leads to a total marketing communication strategy aimed at building strong customer relationships by showing how the company and its products can help customers solve their problems. It ties together all of the company’s messages and images.

The company’s television and print advertisements have the same message, look, and feel as its e-mail and personal selling communications. And its public relations materials project the same image as its Website or social network presence.

Communication Process:

Definition of Communication:

The term ‘communication’ is derived from the Latin word ‘communis’ which means common. That means if a person communicates with another, he establishes a common group of understanding. According to Newman, Summer and Warren, “Communication is an exchange of facts, ideas, opinions or emotions by two or more persons”.

Communication does not mean merely sending or receiving message. It involves understanding also. It is, in fact, a bridge of meaning and understanding between two or more people. Thus, communication is a two- way process.

The salient features of communication are as follows:

(i) Communication involves at least two persons—one who sends the message and the second who receives the message.

(ii) Communication is a two-way traffic. The process of communication is not completed until the message has been understood by the receiver. Understanding is an essential part of communication, but it does not imply agreement.

(iii) The basic purpose of communication is to create an understanding in the mind of the receiver of information.

(iv) Communication may take several forms, e.g., order, instruction, report, suggestion grievance, observation, etc. The message may be conveyed through words spoken or written, or gestures.

Elements of Communication:

Communication is a process involving exchange of facts, viewpoints and ideas between persons placed in different positions in the organisation to achieve mutual understanding as shown in Fig. 11.5. The communication process starts when the sender or communicator has a message communicate to some other person known as receiver. It will be completed when the receiver gets the information and sends feedback to the communicator.

The essential elements of communication are described below:

(i) Sender or Communicator:

The person who conveys the message is known as communicator or sender. By initiating the message, the communicator attempts to achieve understanding and change in the behaviour of the receiver. In case of marketing it is the marketer (sender) who starts the communication process.

(ii) Message:

It is the subject-matter of any communication. It may involve any fact, opinion or information. It must exist in the mind of the communicator if communication process is to be initiated. In marketing, the marketer’s message relates to product, price and place.

(iii) Encoding:

The sender of information organises his idea into a series of symbols (words, signs, etc.) which, he feels, will communicate to the intended receiver or receivers. This is called encoding of message. Communication may take place through physical gestures also.

(iv) Media or Communication Channel:

The communicator has to choose the channel for sending the information. Communication channels are the media through which the message passes. It may be either formal or informal. In marketing, media may be salespersons, advertisement and publicity.

(v) Receiver:

The person who receives the message is called receiver. The communication process is incomplete without the existence of receiver of the message. It is the receiver who receives and tries to understand the message. The receiver in case of marketing is the prospective or present customer.

(vi) Decoding:

After the appropriate channel or channels are selected, the message enters the decoding stage of the communication process. Decoding is done by the receiver. Once the message is received and examined, the stimulus is sent to the brain for interpreting, in order to assign some type of meaning to it. It is this processing stage that constitutes decoding. The receiver begins to interpret the symbols sent by the sender, translating the message to his own set of experiences in order to make the symbols meaningful.

(vii) Response:

Response refers to the set of reactions that the receiver has after being exposed to the message. In case of advertising, a response may mean developing a favourable attitude towards the product as a result of an advertising campaign. However, in many cases, measuring such responses is not easy.

(viii) Feedback:

Communication is completed when the communicator receives feedback information from the receiver. The feedback may reveal that the receiver has understood the message. It may also contain information about the action taken by the receiver on the basis of message sent by the communicator. Thus, feedback is the backbone of effective communication.

(ix) Noise:

Noise is a very common thing we observe in our day-to-day interaction with others. At times it affects adversely the effectiveness of communication. For example, if a person is talking over the phone to another and there is a noise around him, he will feel great difficulty in listening to the person at the other end of the phone. Even the noise can affect the voice of the sender of the message.

Hurdles or Difficulties in Marketing Communication:

There are four factors which might create hurdles or problems in communication between the marketer and the target customer.

These hurdles include noise, selective attention, selective distortion and selective retention as discussed below:

Noise is a sort of interfering sound in the communication process anywhere along the way from the sender to the receiver and vice versa. It can be sound of running bus, two persons talking close at hand or someone shouting around. Noise of any kind has the potential of creating disruption or barrier to effective communication. The sources of noise can be both internal and external. Noise within the office can be controlled, but it is very difficult to control the external noise.

Noise is one of the biggest obstacles in marketing communication. For example, a driver’s need to provide safety to the traffic sidetracks the role of billboards, banners, etc. during disturbed weather conditions —wind, dust storm, rain, etc. Similarly, too much advertisement exposure during the day of purchase of tyre for a car, would disturb the planned purchasing.

These constitute noise in the communication process. The level of noise may not allow a customer to receive the message as intended. The effectiveness of communication depends upon the level of congruity and compatibility between different elements of the communication.

(ii) Selective Attention:

A person may be exposed to hundreds or thousands of ads or brand communications in a day. Because a person cannot possibly attend to all of these, most stimuli will be screened out. This process is called selective attention. Because of this, the marketers have to work hard to attract consumer’s notice. Generally, people are more likely to notice stimuli that relate to a current need.

Thus, a person who is motivated to buy a car is most likely to notice car ads. The process of selective attention explains why advertisers make extra efforts to grab the audience’s attention through fear, music, or bold headlines.

(iii) Selective Distortion:

Selective distortion is the tendency to interpret information in a way that fit one’s perception. Consumers often distort information to be consistent with prior brand and product beliefs. Thus, the target audience will hear what fits into their belief systems.

As a result, receivers often add things to the message that are not there and do not notice other things that are there. The advertiser’s task is to strive for simplicity, clarity, interest and repetition to get the main points across.

(iv) Selective Retention:

People retain in their long-term memory only a small fraction of the messages that reach them. If the receiver’s initial attitude towards the brand is positive and he rehearses support arguments (that is, tells himself things such as the product is in fashion or that it is reasonably priced or that it delivers good value, etc.), the message is likely to be accepted and have high recall.

If the initial attitude towards the brand is negative and the person rehearses counter arguments (that is, tells himself that the product is highly overpriced or that the competing products offer more value to customers or that the brand is not doing well in the market, etc.) the message is likely to be rejected but to stay in long-term memory.

Thus, the advertiser’s task is two-fold here. He not only has to create an initial favourable attitude towards the brands but also through his ads communicate to the audience strong points about the brands so that the customers can rehearse the same and the brand is positively placed in the long-term memory of the customers.

Essay # 7. Role of Marketing in Economic Development :

In today’s era of globalization role of marketing is increasing to fulfill different needs and requirements of people. Due to increase in scale of production and expansions of markets, producers need support of marketing tools to distribute their goods and services to the real customer.

High competition in market and product diversification has increased the marketing activities like advertising, storage, sales promotion, salesmanship etc. Now high profits can be attained by high sales volume and good quality of products and services. Marketing has acquired an important place for the economic development of the whole country. It has also become a necessity for attaining the objective of social welfare and high quality of life.

The importance of marketing can be explained as under:

(a) Importance of Marketing to a Firm:

Marketing is considered to be the prime activity among all the business activities. Success of any business depends on success of marketing. Peter F. Drucker has rightly said that, “Marketing is the business.” Objective and goals of any organization can be achieved through efficient and effective marketing polices. The success of an enterprise depends to a large extent upon the success of its marketing activities.

The importance of marketing to the firm can be explained as under:

1. Marketing in Business Planning and Decision Making:

Marketing research is helpful in searching opportunities and potential in market. It is necessary for an organization to decide what can be sold before deciding that what can be produced. Unless and until these key decisions are taken, it is not practical to take the decisions regarding production, quality of product, type of product and quantity of production etc.

Marketing is very helpful in taking all such decisions therefore its plays an important role in business planning. Marketing provides valuable information regarding production policies, pricing policies, advertisement and sales promotion policies of competitors, so that a suitable policy may be formulated by the top management.

2. Increase in the Profits:

The main objective of every firm is to increase the profitability by successful operations of its activities. Maximization of profits can be possible only through the successful operations of its activities. Marketing department need the help of other departments as well for discharging its duties successfully, marketing department coordinate with other departments like finance, production, to fulfill the needs of customers and regular supply according to market demand.

3. Flow of Marketing Communication:

Integrated marketing communication makes it possible to flow marketing information to intermediaries, publics and customers. Marketing acts as a medium of communication between the society and the firm. Various information regarding trends, needs, attitudes, fashions, taste preferences etc., are collected by marketing department.

(b) Importance of Marketing to the Society:

1. To Uplift Standard of Living:

Ultimate objective of marketing is to produce goods and services for the society according to their needs and tastes at reasonable prices. Marketing discovers the needs and wants of the society, produces the goods and services according to their needs, creates demand for these goods and services encourages consumers to consume them and thus improves the standard of living of the society. By advertising utility and importance of products and services are communicated to the people.

2. To Decreases the Total Marketing Cost:

Next important responsibility of marketing is to control the cost of marketing. Distribution cost and production cost can be decreased by creation of high demand in market. Decrease in cost of production will have two impacts, firstly the high profitability of organization and secondly to increase in the market share of the firm.

3. Increase in the Employment Opportunities:

Marketing provides direct and indirect employment in society. Employment opportunities are directly related with the development of marketing. Successful operation of marketing activities requires the services of different enterprises and organizations such logistics, warehousing, transportation, retailing finance, etc.

4. In controlling Business Fluctuations:

Business fluctuations like recession and depression causes unemployment, and deflation. Marketing helps in protecting society against all these problems. Marketing helps in innovation and discovery of new markets for the goods, modifications and alterations in the quality of the product and development of alternative uses of the product. It reduces the cost of production and protects the business enterprise against the problem of recession.

5. Increase Per Capita Income:

Marketing operations create, maintain and increase the demand for goods and service. Marketing activities flow money from one part of economic system to other. By generation of new employment opportunities it helps to increases income of people.

Marketing plays an important role in the development of a country. Most of developed countries like USA, Japan, and Germany are having strong marketing system, they are moving towards global marketing. Industrial growth and development need support of marketing, large scale of production requires new markets. In these countries, the production exceeds the demand it need marketing system to be much more effective so that the produced goods and services can be sold.

Marketing has a vital role to play in the development of an underdeveloped and developing economy. In developing economies the industrialization and urbanization is increasing at a faster rate and so the importance of marketing is also increasing as it is required for selling the produced goods and services. A rapid development of underdeveloped economy is possible only if the modern techniques of marketing are used in these countries marketing activities are increasing at a fast rate in developing countries.

Essay # 8. Importance of Marketing :

Role of Marketing in a Firm :

Efficient marketing management is a pre-requisite for the successful operation of any business enterprise. A business organisation is differentiated from other organisations by the fact that it produces and sells products.

The importance of marketing in modern business is discussed below:

Marketing is the beating heart of the business organisation. The chief executive of a business cannot plan, the production manager cannot produce, the purchase manager cannot purchase, and the financial controller cannot budget until the basic marketing decisions have been taken. Many departments in a business enterprise are essential for its growth, but marketing is still the sole revenue producing activity. Marketing function is rightly considered the most important function of management.

Marketing gives top priority to the needs of customers. Quality of goods, storage, display, advertisement, packaging, etc. are all directed towards the satisfaction of customer.

Marketing helps in the creation of place, time and possession utilities. Place utility is created by transporting the goods from the place of production to consumption centres. Time utility is created by storing the goods in warehouses until they are demanded by customers. Possession or ownership utility is created through sale of goods. The significance of marketing lies in the creation of these utilities to satisfy the needs of the customers and thereby earn profit. It a firm is able to satisfy its customers, it will have better chances of survival and growth even in the fast changing environment.

Marketing generates revenue for the business firm. Marketing is an important activity these days, particularly in the competitive economies. Marketing generates revenue for the business enterprises. No firm can survive in the long-run unless it is able to market its products. In fact, marketing has become the nerve-centre of all human activities.

Role of Marketing in the Economy :

Marketing plays a significant role in the growth and development of an economy. It acts as a catalyst in the economic development of a country by ensuring better utilisation of the scarce resources of the nation. Since a business firm generates revenues and earns profits by its marketing efforts, it will engage in better utilisation of resources of the nation to earn higher profits.

Marketing determines the needs of the customers and sets out the pattern of production of goods and services necessary to satisfy their needs. Marketing also helps to explore the export markets.

Marketing helps in improving the standards of living of people. It does so by offering a wide variety of goods and services with freedom of choice. Marketing treats the customer as the king around whom all business activities revolve. Besides product development, pricing, promotion, and physical distribution of products are carried out to satisfy the customer.

Marketing generates employment for people. A large number of people are employed by modern business houses to carry out the functions of marketing. Marketing also gives an impetus to further employment facilities. In order to ensure that the finished product reaches the customer, it passes through wholesalers and retailers and in order to perform numerous jobs, many people are employed.

On the whole, marketing leads to economic development of a nation. It increases the national income by bringing about rise in consumption, production and investment. It mobilises unknown and untapped resources and also facilitates full utilisation of production capacity and other assets. It helps in the integration of industry, agriculture and other sectors of the economy. It also contributes to the development of entrepreneurial and managerial talent in the country.

Essay # 9. Challenges and Opportunities of Marketing:

A large number of changes have taken place in the recent years which have influenced the field of marketing as discussed below:

1. Globalisation :

The term ‘globalisation’ means the process of integration of the world economy into one huge market through the removal of all trade barriers or restrictions among countries. In India, restrictions on imports and exports and inflow and outflow of capital and technology have been lifted by the Central Government so that Indian business may become globally competitive.

The broad features of globalisation are as follows:

(i) Free flow of goods and services across national frontiers through removal or reduction of trade barriers.

(ii) Free flow of capital across nations.

(iii) Free flow of technology across nations.

(iv) Free movement of human resources across nations.

(v) Global mechanism for the settlement of economic disputes.

The aim of globalisation is to look upon the world as a ‘global village’ which would allow free flow of goods, capital, technology and labour between different countries. Because of globalisation, there has been a tremendous impact on marketing strategies of business firms, particularly engaged in international marketing. They have to design product, price, promotion, place or distribution strategies to meet the challenges of global marketing.

2. Information Technology (IT) :

Information technology has enabled real-time access and sharing of digital information through digital networks, information database, and computer graphics. It has brought about many changes in the business landscape.

Electronic technology has facilitated purchase and sale of goods and services electronically. E-Commerce can be used not only to market product, but also to build better customer relationships. Thus, marketers are facing new challenges as regards booking of e-orders, e-deliveries of intangible products, receiving e-payments and Customer Relation Management (CRM).

3. Increased Leisure Time :

As a result of shorter working week, vacations, and labour-saving devices available for domestic use, most wage-earners now enjoy more leisure time. So there has grown a market for articles used for recreational purposes to enjoy the leisure time. In the developing countries also, cinema shows, holiday trips, sports and games have come into importance.

4. Changing Role of Women :

Throughout the world more and more women are taking up jobs and have gained economic independence to a large extent. They accept even challenging jobs. They also exert greater influence on buying decisions of their families. It may happen that husband buys a commodity according to the decision of the wife. This has necessitated special study of the buying motives of the working women.

5. Demand for Services :

Over the years, consumers’ demand for services is on the rise as in case of tour and travel, educational, medical, repair and maintenance services, etc. Due to growing complexity, business firms also need expert services like accounting, taxation, advertising, customer care, etc.

6. Increased Competition :

Business has become more competitive these days and this has brought about many changes in the field of marketing, e.g., product differentiation, competitive pricing, competitive advertising, customer support services, etc.

7. Social Emphasis :

Marketing is now concerned with the long-term health and happiness of consumers and well-being of society. Marketers in are getting involved in improving the quality of life of consumers and preventing or minimising the evil effects of environmental pollution on the society by practising green marketing.

Emerging Concepts in Marketing :

1. Social Marketing:

It refers to the design, implementation, and control of programs seeking to increase the acceptability of a social idea, cause, or practice among a target group. For instance, a recent publicity campaign for prohibition of smoking in Delhi explained the place where one can and can’t smoke in Delhi.

2. Relationship Marketing:

It is the process of creating, maintaining, and enhancing strong value-laden relationships with customers and other stakeholders. For example, British Airways offers special lounges with showers at many airports for frequent flyers. Thus, providing special benefits to valuable the customers to strengthen bonds will go a long way in building relationships.

To achieve relationship marketing, a marketer has to keep in touch with the regular customers, identify most loyal customers to provide additional services to them, design special recognition and reward schemes, and use them for building long-term relationships.

3. Direct Marketing:

It means marketing through various advertising media that interact directly with consumers, generally calling for the consumer to make a direct response. Direct marketing includes Catalogue Selling, Mail Order, Tele computing, Electronic Marketing, Selling, and TV Shopping.

4. Service Marketing:

It is applying the concepts, tools, and techniques, of marketing to services. Service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Services may be financial, insurance, transportation, banking, savings, retailing, educational or utilities.

5. Non-Business Marketing:

Marketing is applied not only to business firms but also to non-business organisations. Voluntary institutions are adopting principles and practices of marketing to promote their ideologies, schemes and programs among the target groups.

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Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters

The Justice Department, together with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit today against RealPage Inc. for its unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments. RealPage’s alleged conduct deprives renters of the benefits of competition on apartment leasing terms and harms millions of Americans. The lawsuit was filed today in the U.S. District Court for the Middle District of North Carolina and alleges that RealPage violated Sections 1 and 2 of the Sherman Act.

The complaint alleges that RealPage contracts with competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates and other lease terms to train and run RealPage’s algorithmic pricing software. This software then generates recommendations, including on apartment rental pricing and other terms, for participating landlords based on their and their rivals’ competitively sensitive information. The complaint further alleges that in a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, concessions, lease terms, and other dimensions of apartment leasing. RealPage also uses this scheme and its substantial data trove to maintain a monopoly in the market for commercial revenue management software. The complaint seeks to end RealPage’s illegal conduct and restore competition for the benefit of renters in states across the country.

“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” said Attorney General Merrick B. Garland. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents. Using software as the sharing mechanism does not immunize this scheme from Sherman Act liability, and the Justice Department will continue to aggressively enforce the antitrust laws and protect the American people from those who violate them.”

“Today’s complaint against RealPage illustrates our corporate enforcement strategy in action. We identify the most serious wrongdoers, whether individuals or companies, and focus our full energy on holding them accountable,” said Deputy Attorney General Lisa Monaco. “By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices — undermining competition and fairness for consumers in the process. Training a machine to break the law is still breaking the law. Today’s action makes clear that we will use all our legal tools to ensure accountability for technology-fueled anticompetitive conduct.”

“RealPage’s egregious, anticompetitive conduct allows landlords to undermine fair pricing and limit housing options while stifling necessary competition,” said Acting Associate Attorney General Benjamin C. Mizer. “The Department remains committed to rooting out illegal schemes and practices aimed at empowering corporate interests at the expense of consumers.”

“As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Today, we filed an antitrust suit against RealPage to make housing more affordable for millions of people across the country. Competition – not RealPage – should determine what Americans pay to rent their homes.”

The complaint cites internal documents and sworn testimony from RealPage and commercial landlords that make plain RealPage’s and landlords’ objective to maximize rental pricing and profitability at the expense of renters. For example:

RealPage acknowledged that its software is aimed at maximizing prices for landlords, referring to its products as “driving every possible opportunity to increase price,” “avoid[ing] the race to the bottom in down markets,” and “a rising tide raises all ships.”
A RealPage executive observed that its products help landlords avoid competing on the merits, noting that “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”
A RealPage executive explained to a landlord that using competitor data can help identify situations where the landlord “may have a $50 increase instead of a $10 increase for the day.”
Another landlord commented about RealPage’s product, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing…”

The complaint alleges that RealPage’s agreements and conduct harm the competitive process in local rental markets for multi-family dwellings across the United States. Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. As a result, RealPage’s software tends to maximize price increases, minimize price decreases, and maximize landlords’ pricing power. RealPage also trained landlords to limit concessions (e.g., free month(s) of rent) and other discounts to renters. The complaint also cites internal documents from RealPage and landlords touting the fact that landlords have responded by reducing renter concessions.

The complaint separately alleges that RealPage has unlawfully maintained its monopoly over commercial revenue management software for multi-family dwellings in the United States, in which RealPage commands approximately 80% market share. Landlords agree to share their competitively sensitive data with RealPage in return for pricing recommendations and decisions that are the result of combining and analyzing competitors’ sensitive data. This creates a self-reinforcing feedback loop that strengthens RealPage’s grip on the market and makes it harder for honest businesses to compete on the merits.

RealPage Inc., is a property management software company headquartered in Richardson, Texas.

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Working papers are not edited, and all opinions and errors are the responsibility of the author(s). The views expressed do not necessarily reflect the views of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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