market maker

(noun)

A person or company who undertakes to quote at all times both a buy and a sell price for a financial instrument.

Examples of market maker in the following topics:

  • Market Maker

    • Market makers provide liquidity to securities markets by submitting both bids and asks on a security.
    • They are the market makers.
    • Market makers are a company or individual that quotes both an ask price and a bid.
    • For this reason, many exchanges (such as the New York Stock Exchange and American Stock Exchange) have designated market makers for certain securities.
    • The financial reason why market makers do this is because the ask price that they submit will always be slightly higher than their bid.
  • Types of Market Organizations

    • There are three main types of market organization that facilitate trading of securities: auction market, brokered market, and dealer market.
    • In the U.S., over-the-counter trading in stock is carried out by market makers that make markets in OTCBB and Pink Sheets securities using inter-dealer quotation services such as Pink Quote (operated by Pink OTC Markets) and the OTC Bulletin Board (OTCBB).
    • Dealer markets, also called quote-driven markets, centers on market-makers (or dealers) who provide the service of continuously bidding for securities that investors want to sell and offering securities that investors want to buy.
    • Most foreign exchange trading firms are market makers and so are many banks.
    • The market maker sells to and buys from its clients and is compensated by means of price differentials for the service of providing liquidity, reducing transaction costs and facilitating trade.
  • Marketing Information Systems

    • A marketing information system is a management information system designed to support marketing decision making.
    • Marketing intelligence is the province of entrepreneurs and senior managers within an agribusiness.
    • A marketing information system is a management information system designed to support marketing decision making.
    • Jobber (2007) defines it as a "system in which marketing data is formally gathered, stored, analysed and distributed to managers in accordance with their informational needs on a regular basis. " Kotler, et al. (2006) define it more broadly as "people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. "
  • Market Power

    • Such firms are often referred to as "price makers. " In contrast, firms with limited to no market power are referred to as "price takers. "
    • A firm usually has market power by virtue of controlling a large portion of the market.
    • However, market size alone is not the only indicator of market power.
    • A monopoly, a price maker with market power, can raise prices and retain customers because the monopoly has no competitors.
    • An oligopoly may also be a price maker with market power, as firms may be able to collude and control the market price or quantity demanded.
  • B2B vs. Consumer Marketing: Similarities and Differences

    • Consumer marketing, or business-to-consumer (B2C) marketing, sales are made to individuals who are the final decision makers, though they may be influenced by family members or friends.
    • Sales representatives and marketers are often assigned to market to individuals who act as influencers or decision-makers in the customer organization.
    • For example, B2B marketers often present products and their benefits in private presentations to key decision-makers.
    • Marketing to a business and marketing to an individual are similar in terms of the fundamental principles of marketing.
    • Both B2C and B2B marketing objectives reflect the fundamental principles of the marketing mix, and in both situations, the marketer must always:
  • Market Share

    • For a very basic example, let's look at the market for baubles.
    • Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity.
    • Market share is a key indicator of market competitiveness—that is, how well a firm is doing in terms of its competition.
    • However, increasing market share may be dangerous for makers of fungible hazardous products, particularly products sold into the United States market, where they may be subject to market share liability.
    • Although market share is likely the single most important marketing metric, there is no generally acknowledged best method for calculating it.
  • Introduction to Firms with "Market Power"

    • Many agricultural markets are close to pure competition.
    • The crucial factor is the demand for the firm's output must be negatively sloped: the firm becomes a "price maker."
    • The extent to which a firm is a price maker (i.e. has market power) is partially determined by the price elasticity of demand in the relevant price range.
    • Note that when the seller selects a price (price maker) the demand function determines the quantity that will be purchased.
    • Monopoly is the market structure that is usually associated with the greatest market power.
  • Marketing Performance Metrics

    • Marketing metrics are numeric data that allow marketers to evaluate their performance against organizational goals.
    • Marketing metrics provide frameworks that public relations specialists, brand managers and marketing directors can use to evaluate marketing performance, as well as back their marketing plans and strategies.
    • ROMI, a relatively new metric, is marketing contribution attributable to marketing (net of marketing spending), divided by the marketing "invested" or risked.
    • [Incremental Revenue Attributable to Marketing * Contribution Margin (%) - Marketing Spending] / Marketing Spending ($)
    • Quantitative metrics and analysis can help decision makers make more accurate decisions and better predict risks associated with decisions.
  • The Value of Analytics in Decision Making

    • Analytics help decision makers determine risk, weigh outcomes, and quantify costs and benefits associated with decisions.
    • Predictive analytics help decision makers to predict the outcome(s) of a decision before it is implemented.
    • By carefully considering what is not known, decision makers can build confidence in the estimates that inform their choices.
    • Forecasting consumer behavior in response to a new product or marketing initiative are examples of the use of predictive analytics.
    • Most management reporting—such as sales, marketing, operations, and finance—uses this type of analysis.
  • Evaluate the Results

    • Decision makers must evaluate the results of a decision to improve the processes and outcomes of future decisions.
    • The objective of evaluating outcomes is for the decision maker to develop insight into the decision.
    • Insight can be obtained by referencing key business metrics such as increased revenue, lowered costs, larger market share, or greater consumer awareness.
    • It can also be valuable for decision makers to step back and examine the process by which a decision was made.
    • How the decision maker dealt with uncertainty or bias can be examined in the face of the results that have transpired.
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