Posted in Marketing and Strategy Terms, Total Reads: 605
Definition: Transparent Market
A market is said to be transparent when the degree of information asymmetry is low in the market. This implies that much information is shared between buyers and sellers. This includes price transparency i.e. cost of producing a good or service, its selling price and availability or supply in the market. A high level of transparency in market results into high level of knowledge with buyers leading to reduced intermediation.
In a transparent market, there are factors other than price and quality that act upon it. Social, environmental and other value-add features influence buyers, right from those in a retail store to those in a stock exchange. This forces brands and their parent companies to let their consumers know more about the nitty-gritties of their process.
For example, Honest- an online clothing store shares with its buyers even the smallest production details along with the impact of its products on a social and environmental level. It takes one step further by divulging the information about how much the company pays to each of its employees for each product produced by it.