Understanding Markets and Trade - Class V

The arrangement between the merchant and the weavers is an example of a putting-out system, whereby the merchant supplies the raw material to the weavers and receives the finished product. The merchant distributes work among the weavers based on the orders he has received for cloth. The weavers get the yarn from the merchant and supply him the cloth. Thus, the merchant gives orders for what is to be made.

The buying process starts when a buyer recognizes a problem or need. The need can be triggered by internal or external stimuli. Marketers need to identify the circumstances that trigger a particular need so that they can develop marketing strategies that trigger consumer interest.

The merchant supplies the cotton cloth produced by the weavers to a garment-exporting factory. The garment exporting factory will use the cloth to make shirts. The shirts will be exported to foreign buyers. Among the foreign buyers are businesspersons from the US and Europe who run a chain of stores.

Marketers often use the term market to cover various groupings of customers. They view the sellers as constituting the industry and the buyers as constituting the market. They talk about need markets, product markets, demographic markets, and geographic markets or they extend the concept to cover other markets, such as voter markets.

The foreign businesspersons run a chain of stores. These large stores do business strictly on their own terms. They demand the lowest prices from the supplier and sell the products by making huge profits. In addition, they set high standards for quality of production and timely delivery. Thus, we can say, the foreign businessperson makes huge profits in the market.

The arrangement between the merchant and the weavers is an example of a putting-out system, whereby the merchant supplies the raw material and receives the finished product. The merchant distributes work among the weavers based on the orders he has received for cloth. The weavers get the yarn from the merchant and supply him the cloth.

The foreign businessperson makes huge profits in the market. Compared to this, the garment exporter makes only moderate profits. On the other hand, the earnings of the workers at the garment export factory are barely enough to cover their day-to-day needs.

The weavers depend on merchants for the raw materials and markets. Thus, the weavers have a lot of power. They give orders for what is to be made and pay a very low price for making the cloth. The weavers have no way of knowing who they are making the cloth for or at what price it will be sold.  At the cloth market, the merchants sell the cloth to the garment factories. In this way, the market works more in favour of the merchants.

Exporter is a person or a company authorized by government agency to move the goods out of the border of a country. The value of goods is received from the overseas buyer by the exporter, as he is considered the seller of goods. The exporter receives export order against goods to be exported.

A trader who sells goods in small quantities to the buyers is known as a retailer. Traders purchase the goods from the wholesaler and then sell the final goods to the consumers. Example of retailers is neighbourhood shops, shops in malls, hawkers, vendors etc.

In a market, the people in between the producer and the final consumer are the traders. The wholesaler is the trader who buy goods in large quantity from various producers. They are the traders who are the first one to buy goods in large quantities from the producer. They then sold the goods to small traders known as retailers.

Retailers cannot be classified based on the quantity of goods. Dealing in bulk quantities would make them a wholesaler. They are connecting link between the consumers and whole sellers.
 
Retailers are of many categories and they are classified on the following basis;

• Size
• Goods
• Price
• Ownership

Marketing means sale and purchase of goods and products. Earlier the products were made keeping in mind the generality of the use and customers used to buy such products and bring them into use to avail their productivity. . According to the modern view of marketing, a producer or a manufacturer needs to understand the needs and wants of the customer. It relies on sensing, increasing, servicing and satisfying the needs and wants of the customer, both current and potential. As the customer is the focus of this entire process in the modern view, he is the 'King'.

Market is the place where activities of sale and purchase take place at wide scale. The market places are also called Bazaars. It has many shops of different goods and commodities. People spend their money to take goods and services whereas the sellers earn profit by sale. It can be a place physically like mall or virtually like Flipkart etc.

Trade is the activity of buying, selling and exchanging goods or services between people, firms and country. It creates a link between producer and consumers.

Itinerant means traveling from place to place. Itinerant retailers have no fixed place of business. The Kisan Mandi or Market is itinerant retailing where retailers bring their  produce or product, invest small amount of capital, sell them and earn profit and move to next place.

The whole sellers buy goods directly from the consumers in stock or in bulk quantity. They further sell it to the retailers to earn profit. This way they become connecting link between retailer and producer. The retailer further sells it to the customers.

Retailers buy goods from whole sellers who buy directly from the producers in massive or bulk quantity. The retailers buy goods as per their need and requirement of sale and sell them to the consumers. 

The whole seller directly buys goods from the manufacturer of producers and sell them to retailers in small quantities. The whole sellers deal in one item in large quantity and sell them to different retailers to earn maximum margin profits.

Big Bazaar is a fixed shop retailer as they carry on their business at a fixed place where customers can reach and make their purchases.

Retailers purchase goods from the wholesalers and pass them on to the customers. Retailers are of many types and can be classified based on several categories. However, broadly they can be classified as Itinerant retailers and Fixed shop retailers.

• Fixed shop retailers are those that carry on the business of sale of goods in fixed shops, where customers can easily reach and make purchases.

• Itinerant or movable retailers are those that sell their goods by moving from place to place. They deal in low priced goods for regular use like vegetables, fruits, toys, etc. They are also known as hawkers, paddlers, street traders, etc.

In basic economic terminology, a seller is someone who offers goods for sale, often referred to as a salesman in a retail context.

The arrangement between the merchant and the weavers is an example of a putting-out system, whereby the merchant supplies the raw material and receives the finished product. The merchants purchase the yarn i.e the raw material and give instructions to the weavers about the kind of cloth that is to be made. Thus, the weavers do not have to spend their money on the purchase of raw material. Also, the problem of selling the finished cloth in the market is taken care of by the merchants.

The shop owner in the weekly market store the things they sell at home. Most of them are helped by their family members and hence they do not need to hire workers. They also don't need to incur expenditure like rent, electricity, fees to the government, and wages to the workers.

When shops are in permanent buildings, they incur a lot of expenditure. They need to pay rent, electricity, fees to the government and wages to the workers. In weekly markets, the shop owners store the things at their home which they sell in the market. so they don't need to incur a lot of expenditure like rent, electricity, wages, and government fees.

In a weaver’s cooperative, the weavers form a group and take up certain activities collectively. They procure yarn from the yarn dealer and distribute it among the weavers. The cooperative also does the marketing. So, the role of the merchant is reduced, and weavers get a fair price on the cloth.

A mall is a place which has multi-storey buildings and each building has various shops of different items like clothing, cosmetics, crockery, toys, etc. The Malls are Air Conditioning with lifts and escalator which are for the convenience of people. There are parking facilities and several other facilities for entertainment.

Workers’ wages are fixed according to their skills. The highest paid among the workers are the tailors. Women are employed as helpers for thread cutting, buttoning, ironing and packaging. These jobs have the lowest wages.

Goods that we purchase from the market are produced in factories, farms and in homes. However, we don't buy the goods directly from the factories or from the farm. We purchase the goods from the traders who buy the goods from factories and farms.

The arrangement between the merchant and the weavers is an example of a putting-out system, whereby the merchant supplies the raw material and receives the finished product. The merchants purchase the raw material and give instructions to the weavers about the kind of cloth that is to be made. This arrangement is prevalent in the weaving industry in most regions of India.

The arrangement between the merchant and the weavers is an example of a putting-out system, whereby the merchant supplies the raw material and receives the finished product. The merchants purchase the raw material and give instructions to the weavers about the kind of cloth that is to be made. This arrangement is prevalent in the weaving industry in most regions of India.

The example of shops in neighbourhood is dairy, groceries from departmental stores, pharmacy, stationery, eatables, fruit vendors, vegetable hawkers etc.

The farmers harvest the cotton which requires high levels of inputs such as fertilisers and pesticides. The merchant supplies the cotton cloth produced by the weavers to exporters. The exporters use the cloth to make shirts and are exported to foreign businessmen who run a chain of stores.

The foreign businesspersons run a chain of stores. These large stores do business strictly on their own terms. These businessmen also have money and own the factories, the large shops, large land holdings, etc. They demand the lowest prices from the supplier and sell the products by making huge profits. The poor also depends on them for various things. Thus, the foreign businessperson gains the most in the market.

The weavers depend on the merchants both for raw materials and markets. At the cloth market, the merchants sell the cloth to the garment factories. In this way, the market works more in favour of the merchants.

Advantages of chain market are as follows:-

The market chain connects producers to consumers through various intermediaries, eventually reaching the final point of sale, such as a supermarket or retail shop.

Following are the characteristics of a mall:-

Small-scale retailers are those retailers which have fixed business premises and operate through unit stores or small shops located in residential areas or markets. They mainly include small shops on the roadside, general stores etc. They sell a limited variety of products for regular use like stationery, grocery, etc. They also provide services like goods on credit and home delivery to their customers.

Neighborhood shops are valued for their convenience (proximity) and the personal relationship between the buyer and seller, which often includes credit facilities.

Set of organizations interdependent on each other that help in making market offerings available to the customer is called Marketing Channel. Most goods and services are distributed through a network of marketing channels. It is seen as a channel which starts from production and ends at consumption.

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily or frequent consumption and have a high return for the manufacturing company.

A wholesaler may be defined as the middlemen who operate between the producers (from whom they purchase goods) and the retailers (to whom they sell goods). Wholesaler refers to any individual or business firm selling goods in relatively large quantities to buyers(retailers) other than the ultimate consumers. Thus the manufacturers who sell their products directly to retailers may also be regarded as wholesalers.

A network of delivering products to the customer which is composed of distributors, suppliers, and manufacturing company is classified as Value delivery network. It is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system.

1. 1-C. Advertising leads to loss of livelihood for small businessmen. Small businessmen could not afford to advertise their products regularly that lead to a decrease in the sale of their goods.
   2. 2-A. It is seen that packaged products increased brand preference among people. People think packaged products to be safe to use as compared to unpacked products.
   3. 3-B. Advertisement connects a person to a particular product. People feel connected when they saw the repeated advertisement of the products they use.

Exports and imports come under the purview of Ministry of Commerce. The Ministry of Commerce is the nodal agency for the formulation of policies for increasing the export of the country in various commodities.