What is a Market System? (2024)

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• What is a Market System?

A market system is the network of buyers, sellers and other actors that come together to trade in a given product or service.

The participants in a market system include:

• Direct market players such as producers, buyers, and consumers who drive economic activity in the market
• Suppliersof supporting goods and services such as finance, equipment and business consulting
• Entities that influence thebusiness environmentsuch as regulatory agencies, infrastructure providers and business associations

A market system can be specific to a product (coffee, mangoes, dairy) or a cross-cutting sector (finance, labor, business development services). A market system’s strength depends on how well the participants obtain financing, launch businesses and adopt new technologies and best practices.

One example where TechnoServe has experience is the poultry market system:

Direct Market Players

Producers: The farmers who grow chicken and eggs for sale. The market system may include small-, medium- and large-scale producers.

Buyers: In many market systems, the product will change hands before reaching the consumer. The poultry market system will likely have intermediaries who buy and sell before the chickens and eggs reach consumers.

Consumers: The people who eat the chickens and eggs after buying them from a retailer or restaurant

Suppliers of Supporting Goods and Services

Feed producers and suppliers: Poultry feed is made up of grains such as corn and soybeans. These feedgrains have their own market systems, but they are also an important element of the poultry market system.

Equipment suppliers: Good poultry production requires specialized equipment for feeding, watering, nesting, and housing the chicks.

Hatcheries: Even small-scale chicken farmers often purchase commercially produced day-old chicks to grow, rather than raising chickens from their own eggs.

Veterinary services: Chickens need to be vaccinated, and ill birds may be treatable. Producers may seek veterinary advice if their flocks fall ill.

Banks: Poultry producers may benefit from loans in order to upgrade equipment or expand.

Entities that Influence the Business Environment

Government: Livestock regulations, trade rules, food safety laws and other government actions can affect the poultry industry.

Infrastructure providers: Roads, electricity, telephone service and mobile technologies all can facilitate transactions.

Industry association: An association can work for the common benefit of the industry by advocating for favorable policies, finding investment support and promoting branding and collective advertising.