The Role of Marketing

1. Markets bring together buyers and sellers of goods and services. In some cases, such as a topical anesthetic fruit stall, buyers and sellers discover physically. In other cases, such as the stock mart, business can be transacted over the telephone, almost by remote control. We need not go into these details. Instead, we use a oecumenical definition of markets. 2. What the term market means A market is a shorthand expression for the process by which syndicates decisions about consumption of alternative goods, firms decisions about what and how to produce, and workers decisions about how much and for whom to work ar all reconciled by adjustment of pricesPrices of goods and of resources, such as labour, machinery and land, adjust to ensure that scarce resources are used to produce those goods and services that friendship demands. 4. Economics studies markets and prices Much of economics is devoted to the study of how markets and prices enable society to solve the problem of wh at, how, and for whom to produce. Suppose you buy a hamburger for your lunch. What does this have to do with markets and prices? You chose the caf because it was fast, convenient and cheap.Given your desire to eat, and your limited resources, the low hamburger price told you that this was a good way to satisfy your appetite. You probably prefer steak but that is more expensive. The price of steak is high enough to ensure that society answers the for whom question about lunchtime steaks in favour of someone else. 5. The sellers viewpoint Now think about the sellers viewpoint. The caf owner is in the business because, assumption the price of hamburger meat, the rent and the wages that must be paid, it is still possible to sell hamburgers at a profit.If rents were higher, it might be more moneymaking to sell hamburgers in a cheaper area or to switch to luxury lunches for rich executives on expense accounts. The student behind the counter is working in that respect because it is a s uitable part-time transaction which pays a bit of money. If the wage were much lower it would hardly be worth working at all. Conversely, the job is unskilled and there are plenty of students looking for such work, so owners of cafes do not have to offer very high wages. 6. Prices guide your decisionPrices are guiding your decision to buy a hamburger, the owners decision to sell hamburgers, and the students decision to take the job. Society is allocating resources meat, buildings, and labour into hamburger production through the price system. If nobody liked hamburgers, the owner could not sell enough at a price that covered the cost of run the caf and society would devote no resources to hamburger production. Peoples desire to eat hamburgers guides resources into hamburger production.However, if cattle contracted a disease, thereby reducing the parsimonys ability to produce meat products, competition to purchase more scarce supplies of beef would bid up the price of beef, hamb urger producers would be strained to raise prices, and consumers would buy more cheese sandwiches for lunch. Adjustments in prices would encourage society to reallocate resources to reflect the increased scarcity of cattle. 7. We have adopted a general definition of markets There were several markets involved in your purchase of a hamburger. You and the caf owner were part of the market for lunches.The student behind the counter was part of the local labour market. The caf owner was part of the local wholesale meat market and the local market for rented buildings. These descriptions of markets are not very precise. Were you part of the market for lunches, the market for prepared food, or the market for sandwiches to which you would have turned if hamburgers had been more expensive? That is why we have adopted a very general definition of markets which emphasises that they are arrangements through which prices influence the allocation of scarce resources.