Product Market Factor Market

Irrespective of the fact whether the market  is pure or impure , perfect or imperfect there are variety of force operating  in a market depending upon whether in that market, goods are being transacted or service are being transacted. Good may differ in details such as single use consumer goods or consumer durables or producer durables (capital goods single use producer goods e.g., industrial raw materials or durable use machineries as parts) and so on. The demand supply forces operate with full force in such markets, but the relative push and/or pull of these factors depend on the nature of goods traded and transacted. For example, if the commodity is perishable, then the supply compulsions and storage inadequate may dictate the price. To liquidate the inventory position and to activate the production line in their factories, the producers manufacturing consumer durables may enter into cut-throat competition in the market which may reduce price to the advantage of the buyers. Sometime, the buy-back arrangement is an element of such competition in the market.

Coming to the market for service or what is conventionally referred by the economics a “factor market”, the businessman confront sometime standardized and organized market or sometimes unorganized and heterogeneous market. Such description is often applied to labor market or the real estate market. In each of these markets, there are different factors and force pointing.

The organized money and capital market including the commercial  bank and the non-banking financial intermediariateiy may be under control to central bank or central government so that they may be not be in a position to charge indiscriminately high rate of interest. Sometimes, in a view of facilitating competition among the providers of financial services, such institution may be allowed to operate with some degree of flexibility within a given range of interest rates specified by the authorities.

In the case of the former, the customer is looking forward to safety, economy and comfort; whereas in the case of later, the customer is looking forgoer to safety, security, survival and life. Obviously the service market cannot be compared with goods markets. There is a nice fashion which considers ‘goods’ along with the ‘service’ provided, including after sale service, as ‘product’.Toursim is one such product variety. Thus the product is both tangible and intangible.  

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