Market of means of production: features of formation and characteristics

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

For the modern economy, the market of means of production is the most important backbone link. It is necessary for the effective performance of the functions of supplying enterprises with the necessary resources. Further in the article, we will consider the characteristics of the market for the means of production and its features.

General information

The market of means of production and capital is a complex of relations that arise in the framework of the sale and purchase of material and technical resources.

Restructuring the logistics system provides for a gradual rejection of centralized funding and rigid attachment of consumers to manufacturers and suppliers. Instead, there is a transition to free trade.

The market for the means of production is a system of horizontal links that objectively exist between enterprises. It is based on competition.

Operating conditions

The market for the means of production is formed and develops under the condition of economic responsibility andproducer autonomy. For this you need:

1. Denationalization.
2. Creation and development of the necessary market infrastructure.

Last provides:

1. Trade and intermediary activities.
2. Provision of services in the sale of products.
3. Providing information support. This, in particular, is about the study of supply and demand, legal, scientific and technical consultations.
4. Providing manufacturing services: repair, installation, quality control, product manufacturing.
5. Timely delivery of materials.
6. Provision of credit and financial settlement services.
7. Providing resources for rent, leasing.

To implement all these functions, it is necessary to create an extensive network of intermediaries. These include wholesalers, sales/services, marketing centers, and commodity exchanges.

In addition, you must provide:

1. Freedom for economic actors.
2. Legal support.
3. Responsibility of market participants for the results of their activities.
4. Free pricing.
5. High level of staff qualifications.

Transition to market

Required for the normal functioning of the market:

1. Creating a regulatory framework.
2. Denationalization of trade, formation of horizontal ties.

Besides this, all monopoly must be eliminated. Market for means of production (localmarket or regional trading platform) involves the sale of resources in different ways. For example, a factory can freely sell materials directly to the consumer, scarce goods can be distributed partially through intermediaries, or the entire volume of production can be sold in bulk.

The following stages of the formation of the capital goods market are distinguished:

1. Beginner.
2. Main (main).
3. Final.

Warehousing

It acts as one of the key elements of the modern capital goods market. As calculations show, the level of efficiency of warehouse management must be increased by 30-35% at least. The lagging behind of this segment hinders the provision of a normal structure and volume of reserves in the sphere of the national economy. Currently, most (about 80%) of the resources are with consumers. To remedy the situation, it is necessary to intensively develop the material and technical base.

Features of the initial stage

At the first stage of formation of the market of production means, material resources are saturated. It is carried out through the public distribution system or in the course of trade in the framework of pure competition in local markets.

The capital goods market includes:

1. Inventory Sales Services.
2. Supply bases.
3. Leasing companies.
4. Dealers.
5. Specialized stores.
6. Fairs.
7. Consignment stores.

Sales and supply depots

In the market of means of production, regional, regional, republican supply bases can occupy their segment. For this, the existing material and technical base (warehouses, shops) is used, and retail or commission sales are organized. Supply bases are considered a key link in the resource supply system.

To the market of means of production are sales services. They carry out wholesale of resources, establish direct contacts with intermediaries and consumers, study demand, market conditions, and make forecasts.

Types of stocks

To ensure the continuity of the supply of production tools to the market, suppliers must have a certain amount of products in the right assortment in the warehouses of suppliers. Such commodity stocks are divided into seasonal, insurance and current.

The latter make up the bulk of the total amount of products in stock. It is due to them that uninterrupted supply is mainly ensured. Such stocks are periodically updated.

Seasonal stocks are formed depending on the specifics of the production activities of companies in need of production facilities. For example, agricultural enterprises, especially those engaged in crop production, are characterized by cyclical work. At each cycle, production must be provided with sufficient resources. Thus, field work is carried out mainlyspring, summer and autumn. Accordingly, during these seasons, the demand for fuel and lubricants increases significantly. In winter, as a rule, repairs are carried out. Accordingly, spare parts and repair materials will be in demand this season.

Insurance reserves are designed to ensure the activities of enterprises in extreme situations (during a natural disaster, man-made disaster, etc.).

Market segmentation

Obviously, different consumers need different products. To satisfy a wide variety of needs, manufacturers and sellers identify consumer groups that are most likely to respond positively to the proposed goods. Accordingly, enterprises focus their production primarily on them.

In this case, it is very appropriate to recall the essence of the Pareto law. It is based on statistics. According to this law, 20% of consumers purchase 80% of goods of a particular brand for various reasons (quality, appearance, etc.). The remaining 80% of buyers purchase only 20% of products, most likely by accident. Due to these features of the capital goods market, enterprises tend to target their products to 20% of buyers.

Thus, segmentation is the division of the market into groups of consumers who need different products and to which different marketing methods should be applied. In turn, a market segment is a group of buyers who respond in the same way to the offered products and marketing incentives.

Purpose of segmentation

The distribution of consumers into groups allows:

1. To better understand not only the needs of customers, but also their individual characteristics (motives for action, personality characteristics, etc.).
2. Ensure a better understanding of the essence and nature of competition.
3. Concentrate different resources in the most profitable areas of their use.

When drawing up marketing plans, the characteristics of specific market segments are taken into account. This, in turn, ensures that marketing tools are highly targeted to the needs of specific groups.

Segmentation criteria

Their choice is carried out at the initial stage of the distribution of consumers into groups. At the same time, it is necessary to distinguish between the criteria for segmenting the market for consumer products, goods for industrial purposes, etc.

When dividing the consumer market, demographic, geographical, behavioral, socio-economic and other criteria are used. Geographic segmentation involves division into administrative-territorial units - regions, cities, districts, etc.

When distributing consumers of the market for production and technical purposes, the following are taken into account:

1. Geographic location.
2. Type of consumer enterprise.
3. Purchase volume.
4. Destination for the use of acquired production assets.

It should be noted thatSegmentation can be carried out only by one criterion or by successive consideration of several criteria. In the latter case, too small a division of the market must be avoided. Small segments are unprofitable for commercial development.

Dealer Activities

Dealer is a commercial trading intermediary company that sells at its own expense and on its own behalf. With consumers and manufacturers of production means, such organizations enter into relationships on a contractual basis.

Recently, more and more often dealerships are being created in the markets of production facilities. They are an open specialized area where products, a workshop, a warehouse are located.

A dealer can represent the interests of one or several manufacturers in a particular region or municipality. Its tasks include market research, advertising, sales and maintenance of production facilities, repairs, supply of spare parts and consumables, etc.

Leasing companies

These firms are quite firmly entrenched in the capital markets. Leasing companies provide enterprises with equipment and machinery for rent with the possibility of subsequent redemption. This form of resource acquisition is beneficial to many businesses that do not have the financial means to purchase new equipment.

Extra

One of the promising forms of realization of production assets is the sale of products through specializedthe shops. In addition, exhibitions-fairs, where partners meet and lucrative agreements are concluded, have gained wide popularity.

A promising direction for the development of the market of production facilities is the creation of joint concerns, enterprises, unions, etc. with foreign counterparties.

Of course, not the last role belongs to a variety of rental centers. These market players provide satisfaction to the needs of small businesses, private entrepreneurs.

Conclusion

The market for means of production, like any other trading platform, is in constant motion: supply, demand, the number of consumers and producers change. These and many other factors have a great influence on the functioning of the market.