Whenever we talk about business, two terms are of utmost importance, market and industry. Any conversation for business cannot be complete without these two terms. There is a clear difference between them and they cannot be confused with one another. Market implies to an area where buyers and sellers meet and trade through demand and supply forces. An industry is a gathering of firms that manufacture a particular type of product or may be involved in providing specific services. Hence, an industry is developed solely by producers.
Definitions and explanations
An industry refers to numerous firms that are established to manufacture a particular type of product. Some firms might be involved in providing specific services to the general population. These are altogether called an industry. Even though the firms are all more or less identical to one another, different industries have different structures and the number of firms that make up an industry can also be different. Examples of industries include the film industry, the music industry, the furniture industry, the fruits industry and the sweets industry etc.
Firms that comprise an industry build homogeneous products through strict policies of quality control. This is why these products are flawless substitutes of one another. In some cases, a set of firms might offer slightly differentiated products which are also matching alternatives, but they are not completely identical substitutes. Hence, all the firms are involved in the production of a certain type of product for target customers.
Furthermore, the economical concept of industry revolves around the production and sale of a certain category of goods. That is why the system is regulated by a set of rules that are being consistently monitored and are even transformed according to the latest market update. Some other factors are also taken into account like environmental security and protection while producing the goods, and latest technological interventions to facilitate production.
The word market is a flexible term that covers a wide range of concepts. Basically, the word market is used to describe a place where buyers and sellers meet to trade. They might meet directly or through middleman to conduct the trade. We can observe that there are countless markets placed all around the world. As such, all markets vary in their purpose, nature, size and, even structure etc.
Furthermore, the word market also refers to a group of customers. It covers the concept of association between a specific product or service and its target consumers. For example, in common conversation, when we speak of a specific product and its market we are referring to its demand. Several institutions might be set up to safeguard the interests of consumers and regulate business activity in the market.
Since every product and service has a market in which it competes with similar products and services, it also gets involved in promotion so that finally, purchase can take place. Consumers in a market are satisfied with products that have the highest of quality, lowest of prices, ease of accessibility, upfront customer service, etc. The core forces working behind every market are supply and demand.
Difference between industry and market
The main difference between industry and market is detailed below:
An industry is a collection of firms, companies or some other form of businesses that offer similar or identical products or services to targeted customers and are also facing an internal competition against each other. A market on the other hand is a place of trade where buyers and sellers come together so that goods and services can be exchanged smoothly.
2. Concept of development
The concept of market and industry can be differentiated easily on the basis of their underlying development. A market is created by demand. The market establishes the initial link of economic relations between a product and its consumers. This follows the establishment of a sound industry. Industry is essentially formed by producers.
3. Effect of technology
Technological breakthroughs and innovative strategies in production can revolutionize and completely modify the industry. On the other hand the market itself, and the sellers and buyers who act as participants of the market only react to these changes.
4. Economic concept
The vast concept of market refers to the associations established between a product or service and target customers for trading purposes. The concept of industry strictly refers to the production and sale of a single category of goods.
5. Variety of products
A market comprises a very large variety of discriminating products. However an industry can only work on a single product and its matching substitutes.
6. How do they diminish?
When the demand for a product diminishes its market is wiped out. On a similar note, if the market for a certain product diminishes the industry cannot exist as there will be no purpose for it.
7. Is regulated by
There are institutions protecting the interests of the buyers and regulating trading activity in the market and the behavior of its participants. The industry is regulated by various self-imposed laws such as the needs of the consumers and the rules of supply and demand which need to be balanced consistently with discretion.
Industry versus market – tabular comparison
A tabular comparison of industry and market is given below:
|Collection of companies involved in producing a category of product or service||A market is a place where buyers and sellers come together to conduct trade.|
|Concept of development|
|An industry is formed by producers.||A market is created by demand.|
|Effect of technological advancements|
|An industry is transformed.||A market only reacts to it.|
|Production and sale of a single category of goods.||Associations established between a product and target customers.|
|Variety of products|
|Works on a single product category.||Comprises a large variety of discriminating products.|
|How do they diminish?|
|Diminishes in the absence of demand.||Diminishes in the absence of market.|
|Is regulated by|
|Is regulated by institutions that safeguard buyer interests.||Is regulated by self-imposed laws – the needs of the consumers and the rules of supply and demand.|
Conclusion – industry vs market
Industry and market are essential for each other and help in running business functions smoothly.Both of these are economic concepts influenced by supply and demand. The terms can be easily differentiated. While the concept of market is large and flexible an industry is inflexible and constitutes only a small sector of the economy. These terms define the core functions needed for any business