What is a Market - Definition and Different types of Markets

A set up where two or more parties engage in exchange of goods, services and information is called a market. Ideally a market is a place where two or more parties are involved in buying and selling.

The two parties involved in a transaction are called seller and buyer.

The seller sells goods and services to the buyer in exchange of money. There has to be more than one buyer and seller for the market to be competitive.

Monopoly – Monopoly is a condition where there is a single seller and many buyers at the market place. In such a condition, the seller has a monopoly with no competition from others and has complete control over the products and services.

In a monopoly market, the seller decides the price of the product or service and can change it on his own.

Monopsony – A market form where there are many sellers but a single buyer is called monopsony. In such a set up, since there is a single buyer against many sellers; the buyer can exert his control on the sellers. The buyer in such a form has an upper edge over the sellers.

Types of Markets

1. Physical Markets – Physical market is a set up where buyers can physically meet the sellers and purchase the desired merchandise from them in exchange of money. Shopping malls, department stores, retail stores are examples of physical markets.
2. Non Physical Markets/Virtual markets – In such markets, buyers purchase goods and services through internet. In such a market the buyers and sellers do not meet or interact physically, instead the transaction is done through internet. Examples – Rediff shopping, eBay etc.
3. Auction Market – In an auction market the seller sells his goods to one who is the highest bidder.
4. Market for Intermediate Goods – Such markets sell raw materials (goods) required for the final production of other goods.
5. Black Market – A black market is a setup where illegal goods like drugs and weapons are sold.
6. Knowledge Market – Knowledge market is a set up which deals in the exchange of information and knowledge based products.
7. Financial Market – Market dealing with the exchange of liquid assets (money) is called a financial market.

Financial markets are of following types:

1. Stock Market – A form of market where sellers and buyers exchange shares is called a stock market.
2. Bond Market – A market place where buyers and sellers are engaged in the exchange of debt securities, usually in the form of bonds is called a bond market. A bond is a contract signed by both the parties where one party promises to return money with interest at fixed intervals.
3. Foreign Exchange Market – In such type of market, parties are involved in trading of currency. In a foreign exchange market (also called currency market), one party exchanges one country’s currency with equivalent quantity of another currency.
4. Predictive Markets – Predictive market is a set up where exchange of good or service takes place for future. The buyer benefits when the market goes up and is at a loss when the market crashes.

Market Size

The market size is directly proportional to two factors:

• Number of sellers and Buyers
• Total money involved annually

Defining Marketing for the 21st Century

The 21st century has seen the advent of the new economy, thanks to the technology innovation and development. To understand the new economy, it is important to understand in brief characteristics and features of the old economy. Industrial revolution was the start point of the old economy with focus on producing massive quantities of standardized products. This mass product was important for cost reduction and satisfying large consumer base, as production increased companies expanded into new markets across geographical areas. The old economy had the organizational hierarchy where in top management gave out instructions which were executed by the middle manager over the workers.

In contrast, the new economy has seen the buying power at all time thanks to the digital revolution. Consumers have access to all types’ information for product and services. Furthermore, standardization has been replaced by more customization with a dramatic increase in terms of product offering. Purchase experience has also changed as well with the introduction of online purchase, which can be done 24 × 7 with products getting delivered at office or home.

Companies have also taken advantage of information available and are designing more efficient marketing programs across consumers as well as the distribution channel. Digital revolution has increased speed of communication mobile, e-mail SMS, etc. This helps companies take faster decisions and implement strategies more swiftly. 

Marketing is art of developing, advertising and distributing goods and services to consumer as well as business. However, marketing is not just limited to goods and services it is extended to everything from places to ideas and in between. This brings forth many challenges within which marketing people have to take strategy decisions. And answer to these challenges depends on the market the company is catering to, for consumer market decision are with respect to product, packaging and distribution channel. For business market, knowledge and awareness of product is very essential for marketing people as businesses are on the lookout to maintain or establish a credential in their respective market. For global market, marketing people have to consider not only culture diversity but also be careful with respect to international trade laws, trade agreement, and regulatory requirements of individual market. For non for profit organization with limited budgets, importance is related to pricing of products, so companies have to design and sell products accordingly.

Marketing philosophy employed by any given company has to be mix of organization interest, consumer interest and societal interest. In production philosophy, companies focus is on numbers, high production count, which reduces cost per unit and along with mass distribution. This kind of concept is usually making sense in a developing market where there is the need of product in large numbers. The product philosophy talks about consumers who are willing to pay an extra premium for high quality and reliable performance, so companies focus on producing well made products. The selling concept believes in pushing consumers into buying of products, which under normal circumstance, they would be resistant. The marketing concept believes consumer satisfaction, thereby developing and selling products keeping focus solely on customer needs and wants. The customer philosophy believes in the creation of customized products, where in products is design looking at historical transaction of consumers. The last philosophy is the societal concept which believes in developing products, which not only generate consumer satisfaction but also take into account well being of society or environment.

Digital revolution and 21st century have made companies fine tune the way they conduct their business. One major trend observed is the need of stream lining processes and systems with the focus on cost reduction through outsourcing. Another trend observed in companies is, encouragement to entrepreneur style of work environment with glocal (global-local) approach. At the same time, marketers of companies are looking forward to building long term relationship with consumers. This relationship establishes platform understanding consumer needs and preference. Marketers are looking at distribution channels as partners in business and not as the customer. Companies and marketers are making decisions using various computers simulated models.

Understanding Organization and Organization Culture

What is an organization ?

An organization is nothing but a common platform where individuals from different backgrounds come together and work as a collective unit to achieve certain objectives and targets. The word organization derived from the Greek work “organon” is a set up where people join hands to earn a living for themselves as well as earn profits for the company. An organization consists of individuals with different specializations, educational qualifications and work experiences all working towards a common goal. Here the people are termed as employees.

The employees are the major assets of an organization and contribute effectively in its successful functioning. It is essential for the employees to be loyal towards their organization and strive hard in furthering its brand image. An organization can’t survive if the employees are not at all serious about it and treat their work as a burden. The employees must enjoy whatever they do for them to deliver their level best.

What is culture ?

The attitude, traits and behavioral patterns which govern the way an individual interacts with others is termed as culture. Culture is something which one inherits from his ancestors and it helps in distinguishing one individual from the other.

What is organization culture ?

Every human being has certain personality traits which help them stand apart from the crowd. No two individuals behave in a similar way. In the same way organizations have certain values, policies, rules and guidelines which help them create an image of their own.

Organization culture refers to the beliefs and principles of a particular organization. The culture followed by the organization has a deep impact on the employees and their relationship amongst themselves.

Every organization has a unique culture making it different from the other and giving it a sense of direction. It is essential for the employees to understand the culture of their workplace to adjust well.

Organization A

In organization A, the employees are not at all disciplined and are least bothered about the rules and regulations. They reach their office at their own sweet time and spend their maximum time gossiping and loitering around.

Organization B

This organization follows employee friendly policies and it is mandatory for all to adhere to them. It is important for the employees to reach their workplace on time and no one is allowed to unnecessarily roam around or spread rumours.

Which organization do you feel would perform better ? — Obviously organization B

The employees follow a certain culture in organization B making it more successful than organization A.

No two organizations can have the same culture. The values or policies of a non-profit organization would be different from that of a profit making entity or employees working in a restaurant would follow a different culture as compared to those associated with education industry or a manufacturing industry.

Broadly there are two types of organization culture:

• Strong Organization Culture: Strong organizational culture refers to a situation where the employees adjust well, respect the organization’s policies and adhere to the guidelines. In such a culture people enjoy working and take every assignment as a new learning and try to gain as much as they can. They accept their roles and responsibilities willingly.
• Weak Organization Culture: In such a culture individuals accept their responsibilities out of fear of superiors and harsh policies. The employees in such a situation do things out of compulsion. They just treat their organization as a mere source of earning money and never get attached to it.

Management as a Process

As a process, management refers to a series of inter - related functions. It is the process by which management creates, operates and directs purposive organization through systematic, coordinated and co-operated human efforts, according to George R. Terry, “Management is a distinct process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish stated objective by the use of human beings and other resources”. As a process, management consists of three aspects:

1. Management is a social process - Since human factor is most important among the other factors, therefore management is concerned with developing relationship among people. It is the duty of management to make interaction between people - productive and useful for obtaining organizational goals.
2. Management is an integrating process - Management undertakes the job of bringing together human physical and financial resources so as to achieve organizational purpose. Therefore, is an important function to bring harmony between various factors.
3. Management is a continuous process - It is a never ending process. It is concerned with constantly identifying the problem and solving them by taking adequate steps. It is an on-going process.

What is Management?

Management is a universal phenomenon. It is a very popular and widely used term. All organizations - business, political, cultural or social are involved in management because it is the management which helps and directs the various efforts towards a definite purpose. According to Harold Koontz, “Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals and can co-operate towards attainment of group goals”. According to F.W. Taylor, “Management is an art of knowing what to do, when to do and see that it is done in the best and cheapest way”.

Management is a purposive activity. It is something that directs group efforts towards the attainment of certain pre - determined goals. It is the process of working with and through others to effectively achieve the goals of the organization, by efficiently using limited resources in the changing world. Of course, these goals may vary from one enterprise to another. E.g.: For one enterprise it may be launching of new products by conducting market surveys and for other it may be profit maximization by minimizing cost.

Management involves creating an internal environment: - It is the management which puts into use the various factors of production. Therefore, it is the responsibility of management to create such conditions which are conducive to maximum efforts so that people are able to perform their task efficiently and effectively. It includes ensuring availability of raw materials, determination of wages and salaries, formulation of rules & regulations etc.

Therefore, we can say that good management includes both being effective and efficient. Being effective means doing the appropriate task i.e, fitting the square pegs in square holes and round pegs in round holes. Being efficient means doing the task correctly, at least possible cost with minimum wastage of resources.

Management can be defined in detail in following categories :

1. Management as a Process
2. Management as an Activity
3. Management as a Discipline
4. Management as a Group
5. Management as a Science
6. Management as an Art
7. Management as a Profession

Maslow’s Hierarchy of Needs Theory

Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This theory is a classical depiction of human motivation. This theory is based on the assumption that there is a hierarchy of five needs within each individual. The urgency of these needs varies. These five needs are as follows-

1. Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In other words, physiological needs are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and emotional safety and protection. For instance- Job security, financial security, protection from animals, family security, health security, etc.
3. Social needs- Social needs include the need for love, affection, care, belongingness, and friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect, confidence, competence, achievement and freedom) and external esteem needs (recognition, power, status, attention and admiration).
5. Self-actualization need- This include the urge to become what you are capable of becoming / what you have the potential to become. It includes the need for growth and self-contentment. It also includes desire for gaining more knowledge, social- service, creativity and being aesthetic. The self- actualization needs are never fully satiable. As an individual grows psychologically, opportunities keep cropping up to continue growing.

According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs is significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the five needs into two categories - Higher-order needs and Lower-order needs. The physiological and the safety needs constituted the lower-order needs. These lower-order needs are mainly satisfied externally. The social, esteem, and self-actualization needs constituted the higher-order needs. These higher-order needs are generally satisfied internally, i.e., within an individual. Thus, we can conclude that during boom period, the employees lower-order needs are significantly met.

Implications of Maslow’s Hierarchy of Needs Theory for Managers

ü	As far as the physiological needs are concerned, the managers should give employees appropriate salaries to purchase the basic necessities of life. Breaks and eating opportunities should be given to employees.
ü	As far as the safety needs are concerned, the managers should provide the employees job security, safe and hygienic work environment, and retirement benefits so as to retain them.
ü	As far as social needs are concerned, the management should encourage teamwork and organize social events.
ü	As far as esteem needs are concerned, the managers can appreciate and reward employees on accomplishing and exceeding their targets. The management can give the deserved employee higher job rank / position in the organization.
ü	As far as self-actualization needs are concerned, the managers can give the employees challenging jobs in which the employees’ skills and competencies are fully utilized. Moreover, growth opportunities can be given to them so that they can reach the peak.

The managers must identify the need level at which the employee is existing and then those needs can be utilized as push for motivation.

Limitations of Maslow’s Theory

• It is essential to note that not all employees are governed by same set of needs. Different individuals may be driven by different needs at same point of time. It is always the most powerful unsatisfied need that motivates an individual.
• The theory is not empirically supported.
• The theory is not applicable in case of starving artist as even if the artist’s basic needs are not satisfied, he will still strive for recognition and achievement.

 http://www.managementstudyguide.com/maslows-hierarchy-needs-theory.htm

Goal Setting Theory of Motivation

n 1960’s, Edwin Locke put forward the Goal-setting theory of motivation. This theory states that goal setting is essentially linked to task performance. It states that specific and challenging goals along with appropriate feedback contribute to higher and better task performance. In simple words, goals indicate and give direction to an employee about what needs to be done and how much efforts are required to be put in. The important features of goal-setting theory are as follows:

ü	The willingness to work towards attainment of goal is main source of job motivation. Clear, particular and difficult goals are greater motivating factors than easy, general and vague goals.
ü	Specific and clear goals lead to greater output and better performance. Unambiguous, measurable and clear goals accompanied by a deadline for completion avoids misunderstanding.
ü	Goals should be realistic and challenging. This gives an individual a feeling of pride and triumph when he attains them, and sets him up for attainment of next goal. The more challenging the goal, the greater is the reward generally and the more is the passion for achieving it.
ü	Better and appropriate feedback of results directs the employee behaviour and contributes to higher performance than absence of feedback. Feedback is a means of gaining reputation, making clarifications and regulating goal difficulties. It helps employees to work with more involvement and leads to greater job satisfaction.
ü	Employees’ participation in goal is not always desirable.
ü	Participation of setting goal, however, makes goal more acceptable and leads to more involvement.
ü	Goal setting theory has certain eventualities such as: Self-efficiency- Self-efficiency is the individual’s self-confidence and faith that he has potential of performing the task. Higher the level of self-efficiency, greater will be the efforts put in by the individual when they face challenging tasks. While, lower the level of self-efficiency, less will be the efforts put in by the individual or he might even quit while meeting challenges. Goal commitment- Goal setting theory assumes that the individual is committed to the goal and will not leave the goal. The goal commitment is dependent on the following factors: Goals are made open, known and broadcasted. Goals should be set-self by individual rather than designated. Individual’s set goals should be consistent with the organizational goals and vision.

Advantages of Goal Setting Theory

• Goal setting theory is a technique used to raise incentives for employees to complete work quickly and effectively.
• Goal setting leads to better performance by increasing motivation and efforts, but also through increasing and improving the feedback quality.

Limitations of Goal Setting Theory

• At times, the organizational goals are in conflict with the managerial goals. Goal conflict has a detrimental effect on the performance if it motivates incompatible action drift.
• Very difficult and complex goals stimulate riskier behaviour.
• If the employee lacks skills and competencies to perform actions essential for goal, then the goal-setting can fail and lead to undermining of performance.
• There is no evidence to prove that goal-setting improves job satisfaction.

McClelland’s Theory of Needs

David McClelland and his associates proposed McClelland’s theory of Needs / Achievement Motivation Theory. This theory states that human behaviour is affected by three needs - Need for Power, Achievement and Affiliation. Need for achievement is the urge to excel, to accomplish in relation to a set of standards, to struggle to achieve success. Need for power is the desire to influence other individual’s behaviour as per your wish. In other words, it is the desire to have control over others and to be influential. Need for affiliation is a need for open and sociable interpersonal relationships. In other words, it is a desire for relationship based on co-operation and mutual understanding.

The individuals with high achievement needs are highly motivated by competing and challenging work. They look for promotional opportunities in job. They have a strong urge for feedback on their achievement. Such individuals try to get satisfaction in performing things better. High achievement is directly related to high performance. Individuals who are better and above average performers are highly motivated. They assume responsibility for solving the problems at work. McClelland called such individuals as gamblers as they set challenging targets 

for themselves and they take deliberate risk to achieve those set targets. Such individuals look for innovative ways of performing job. They perceive achievement of goals as a reward, and value it more than a financial reward.

The individuals who are motivated by power have a strong urge to be influential and controlling. They want that their views and ideas should dominate and thus, they want to lead. Such individuals are motivated by the need for reputation and self-esteem. Individuals with greater power and authority will perform better than those possessing less power. Generally, managers with high need for power turn out to be more efficient and successful managers. They are more determined and loyal to the organization they work for. Need for power should not always be taken negatively. It can be viewed as the need to have a positive effect on the organization and to support the organization in achieving it’s goals.

The individuals who are motivated by affiliation have an urge for a friendly and supportive environment. Such individuals are effective performers in a team. These people want to be liked by others. The manager’s ability to make decisions is hampered if they have a high affiliation need as they prefer to be accepted and liked by others, and this weakens their objectivity. Individuals having high affiliation needs prefer working in an environment providing greater personal interaction. Such people have a need to be on the good books of all. They generally cannot be good leaders.

http://www.managementstudyguide.com/mcclellands-theory-of-needs.htm

 To bring Maslow’s need hierarchy theory of motivation in synchronization with empirical research, Clayton Alderfer redefined it in his own terms. His rework is called as ERG theory of motivation. He recategorized Maslow’s hierarchy of needs into three simpler and broader classes of needs:

• Existence needs- These include need for basic material necessities. In short, it includes an individual’s physiological and physical safety needs.
• Relatedness needs- These include the aspiration individual’s have for maintaining significant interpersonal relationships (be it with family, peers or superiors), getting public fame and recognition. Maslow’s social needs and external component of esteem needs fall under this class of need.
• Growth needs- These include need for self-development and personal growth and advancement. Maslow’s self-actualization needs and intrinsic component of esteem needs fall under this category of need. 

The significance of the three classes of needs may vary for each individual.

Difference between Maslow Need Hierarchy Theory and Alderfer’s ERG Theory

ü	ERG Theory states that at a given point of time, more than one need may be operational.
ü	ERG Theory also shows that if the fulfillment of a higher-level need is subdued, there is an increase in desire for satisfying a lower-level need.
ü	According to Maslow, an individual remains at a particular need level until that need is satisfied. While according to ERG theory, if a higher- level need aggravates, an individual may revert to increase the satisfaction of a lower- level need. This is called frustration- regression aspect of ERG theory. For instance- when growth need aggravates, then an individual might be motivated to accomplish the relatedness need and if there are issues in accomplishing relatedness needs, then he might be motivated by the existence needs. Thus, frustration/aggravation can result in regression to a lower-level need.
ü	While Maslow’s need hierarchy theory is rigid as it assumes that the needs follow a specific and orderly hierarchy and unless a lower-level need is satisfied, an individual cannot proceed to the higher-level need; ERG Theory of motivation is very flexible as he perceived the needs as a range/variety rather than perceiving them as a hierarchy. According to Alderfer, an individual can work on growth needs even if his existence or relatedness needs remain unsatisfied. Thus, he gives explanation to the issue of “starving artist” who can struggle for growth even if he is hungry.

Implications of the ERG Theory

Managers must understand that an employee has various needs that must be satisfied at the same time. According to the ERG theory, if the manager concentrates solely on one need at a time, this will not effectively motivate the employee. Also, the frustration- regression aspect of ERG Theory has an added effect on workplace motivation. For instance- if an employee is not provided with growth and advancement opportunities in an organization, he might revert to the relatedness need such as socializing needs and to meet those socializing needs, if the environment or circumstances do not permit, he might revert to the need for money to fulfill those socializing needs. The sooner the manager realizes and discovers this, the more immediate steps they will take to fulfill those needs which are frustrated until such time that the employee can again pursue growth.

Expectancy Theory of Motivation

The expectancy theory was proposed by Victor Vroom of Yale School of Management in 1964. Vroom stresses and focuses on outcomes, and not on needs unlike Maslow and Herzberg. The theory states that the intensity of a tendency to perform in a particular manner is dependent on the intensity of an expectation that the performance will be followed by a definite outcome and on the appeal of the outcome to the individual. The Expectancy theory states that employee’s motivation is an outcome of how much an individual wants a reward (Valence), the assessment that the likelihood that the effort will lead to expected performance (Expectancy) and the belief that the performance will lead to reward (Instrumentality). In short, Valence is the significance associated by an individual about the expected outcome. It is an expected and not the actual satisfaction that an employee expects to receive after achieving the goals. Expectancy is the faith that better efforts will result in better performance. Expectancy is influenced by factors such as possession of appropriate skills for performing the job, availability of right resources, availability of crucial information and getting the required support for completing the job.

Instrumentality is the faith that if you perform well, then a valid outcome will be there. Instrumentality is affected by factors such as believe in the people who decide who receives what outcome, the simplicity of the process deciding who gets what outcome, and clarity of relationship between performance and outcomes. Thus, the expectancy theory concentrates on the following three relationships:

• Effort-performance relationship: What is the likelihood that the individual’s effort be recognized in his performance appraisal?
• Performance-reward relationship: It talks about the extent to which the employee believes that getting a good performance appraisal leads to organizational rewards.
• Rewards-personal goals relationship: It is all about the attractiveness or appeal of the potential reward to the individual.

Vroom was of view that employees consciously decide whether to perform or not at the job. This decision solely depended on the employee’s motivation level which in turn depends on three factors of expectancy, valence and instrumentality.

Advantages of the Expectancy Theory

• It is based on self-interest individual who want to achieve maximum satisfaction and who wants to minimize dissatisfaction.
• This theory stresses upon the expectations and perception; what is real and actual is immaterial.
• It emphasizes on rewards or pay-offs.
• It focuses on psychological extravagance where final objective of individual is to attain maximum pleasure and least pain.

Limitations of the Expectancy Theory

• The expectancy theory seems to be idealistic because quite a few individuals perceive high degree correlation between performance and rewards.
• The application of this theory is limited as reward is not directly correlated with performance in many organizations. It is related to other parameters also such as position, effort, responsibility, education, etc. 

http://www.managementstudyguide.com/expectancy-theory-motivation.htm

Implications of the Expectancy Theory

ü	The managers can correlate the preferred outcomes to the aimed performance levels.
ü	The managers must ensure that the employees can achieve the aimed performance levels.
ü	The deserving employees must be rewarded for their exceptional performance.
ü	The reward system must be fair and just in an organization.
ü	Organizations must design interesting, dynamic and challenging jobs.
ü	The employee’s motivation level should be continually assessed through various techniques such as questionnaire, personal interviews, etc.