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Functions of Marketing snd its functionaries
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- 2. MARKETING FUNCTIONS •Any singleactivity performed in carrying a product from the point of its production to the ultimate consumer may be termed as a marketing function.
- 3. Thomsen has classifiedthe marketing functions into three broad groups 1. Primary Functions : • Assembling or procurement • Processing • Dispersion or Distribution
- 4. 2. Secondary Functions: • Packing or Packaging • Transportation • Grading, Standardization and • Quality Control • Storage and Warehousing • Price Determination or Discovery • Risk Taking • Financing • Buying and Selling • Demand Creation • Dissemination of Market • Information
- 5. 3. Tertiary Functions: • Banking-Insurance • Communications – posts &Telegraphs • Supply of Energy – Electricity
- 6. • Kohls andUhl have classified marketing functions as follows: • 1. Physical Functions : • Storage and Warehousing • Grading • Processing • Transportation • 2. Exchange Functions : • Buying • Selling • 3. Facilitative Functions : • Standardization of grades • Financing • Risk Taking • Dissemination of Market • Information
- 7. Huegy and MitchellClassification 1. Physical Movement Functions : • Storage • Packing • Transportation • Grading • Distribution 2. Ownership Movement Functions : • Determining Need • Creating Demand • Finding Buyers and Sellers • Negotiation of Price • Rendering Advice • Transferring the Title to Goods
- 8. 3. Market ManagementFunctions : • Formulating Policies • Financing • Providing organization • Supervision • Accounting • Securing Information
- 9. Packaging • Packaging isthe first function performed in the marketing of agricultural commodities. • It is required for nearly all farm products at every stage of the marketing process. • The type of the container used in the packing of commodities varies with the type of the commodity as well as with the stage of marketing. • For example, gunny bags are used for cereals, pulses and oilseeds when they are taken from the farm to the market. • For packing milk or milk products, plastic, polythene, tin or glass containers are used. • Wooden boxes or straw baskets are used for packing fruits and vegetables.
- 10. Advantages of Packaging 1.It protects the goods against breakage, spoilage, leakage or pilferage during their movement from the production to the consumption point. 2. It facilitates the handling of the commodity, specially such fruits as apples, mangoes, etc., during storage and transportation. 3. It helps in quality-identification, product differentiation, branding and advertisement of the product, e.g., Hima peas and Amul butter.
- 11. Transportation • Transportation orthe movement of products between places • It is one of the most important marketing functions at every stage, i.e., right from the threshing floor to the point of consumption. • All agricultural commodities have to be brought from the farm to the local market and from there to primary wholesale markets, secondary wholesale markets, retail markets and ultimately to the consumers • Transportation adds the place utility to goods
- 12. Advantages of TransportFunction: • Widening of the Market • Narrowing Price Difference Over Space • Creation of Employment • Facilitation of Specialized Farming • Transformation of the Economy • Mobility of the Factors of Production
- 13. Transportation Cost: • Thetransportation cost accounts for about 50 percent of the total cost of marketing. • It is higher when the produce is transported by bullock carts than when it is carried by other means. • The efficiency of transportation depends on the speed and the care with which goods move from one place to another, the extent of the facilities provided.
- 14. Factors affecting thecost of transportation: • Distance • Quantity of the Product: • Mode of Transportation • Condition of Road • Nature of Products • Availability of Return Journey consignment • Risk Associated
- 15. •GRADING AND STANDARDIZATION •Grading and standardization is a marketing function which facilitates the movement of produce. • Without standardization there is confusion and unfairness as well. • Standardization is a term used in a broader sense. Grade standards for commodities are laid down first and then the commodities are sorted out according to the accepted standards.
- 16. • Products aregraded according to quality specifications. • But if these quality specifications vary from seller to seller,. • there would be a lot of confusion about its grade. The top grade of one seller may be inferior to the second grade of another. • This is why buyers lose confidence in grading. • To avoid this eventuality, it is necessary to have fixed grade standards which are universally accepted and followed by all in the trade.
- 17. Standardization • Standardization meansmaking the quality specifications of the grades uniform among buyers and sellers over space and over time. • They are established on the basis of certain characteristics-such as weight, size, colour, appearance, texture, moisture content, staple length, amount of foreign matter, ripeness, sweetness, taste, chemical content, etc. • Standardization means making the quality specifications of the grades uniform among buyers and sellers over space and over time.
- 18. Grading • Grading meansthe sorting of the unlike lots of the produce into different lots according to the quality specifications laid down. • Each lot has substantially the same characteristics in so far as quality is concerned. • It is a method of dividing products into certain groups or lots in accordance with predetermined standards. • Grading follows standardization. • It is a sub-function of standardization
- 19. Types of Grading •Fixed Grading / Mandatory Grading: • This means sorting out of goods according to the size, quality and other characteristics which are of fixed standards. These do not vary over time and space. • it is compulsory to grade the produce according to these grade specifications. • Individuals are not free to change these standards. • The use of mandatory standards is compulsory for the export of the agricultural commodities to various countries.
- 20. • Permissive /Variable Grading: • The goods are graded under this method according to standards, which vary over time. • The grade specifications in this case are fixed over time and space, but changed every year according to the quality of the produce in that year. • Under this method, individual choice for grading is permitted. In India, grading by this method is not permissible.
- 21. • Based onthe degree of supervision • Under the centralized grading system, an authorized packer either sets up his own laboratory manned by qualified chemists or seeks access to an approved grading laboratory set up for the purpose by the state authorities / co-operatives / associations /private agencies. • Grading in respect of commodities such as ghee, butter and vegetable oils • The decentralized grading system is implemented by State Marketing Authorities under the overall supervision and guidance of the Directorate of Marketing and Inspection. • This is followed in those commodities which do not require elaborate testing arrangements for quality assessment. • The examples are fruits, vegetables, eggs, cereals and pulses. For these commodities, the grade of the produce is determined on the basis of physical characteristics.
- 22. STORAGE • Storage isan important marketing function, which involves holding and preserving goods from the time they are produced until they are needed for consumption. • Storage is an exercise of human foresight by means of which commodities are protected from deterioration, and surplus supplies in times of plenty are carried over to the season of scarcity. • The storage function, therefore, adds the time utility to products.
- 23. The storage ofagricultural products is necessary for • Agricultural products are seasonally produced, but are required for consumption throughout the year. The storage of goods, therefore, from the time of production to the time of consumption, ensures a continuous flow of goods in the market. • Storage protects the quality of perishable and semi – perishable products from deterioration. • Some of the goods, e.g., woolen garments, have a seasonal demand. To cope with this demand, production on a continuous basis and storage become necessary. • It helps in the stabilization of prices by adjusting demand and supply.
- 24. Risks in Storage •Quantity Loss • Quality Deterioration • Price Risk
- 25. PROCESSING • The processingactivity involves a change in the form of the commodity. • This function includes all of those essentially manufacturing activities which change the basic form of the product. • Processing converts the raw material and brings the products nearer to human consumption. • It is concerned with the addition of value to the product by changing its form.
- 26. advantages of theprocessing function are • It changes raw food and other farm products into edible, usable and palatable forms. • The processing function makes it possible for us to store perishable and semi –perishable agricultural commodities. • Examples of the processing of the products in this group are: drying, canning and pickling of fruits and vegetables, frozen goods, conversion of milk into butter, ghee and cheese and curing of meat with salting / smoking.
- 27. • Processing satisfiesthe needs of consumers at a lower cost. If it is done at the door of the consumer, it is more costly than if it is done by a firm on large scale. • Processing saves the time of the consumers and relieves them of the difficulties and botherations experienced in processing • Processing serves as an adjunct to other marketing functions, such as • transportation, storage and merchandising. Processing widens the market. • Processed products can be taken to distant and overseas markets at a lower cost.
- 28. Buying and selling •Buying and selling is the most important activity in the marketing process. At every stage, buyers and sellers come together. • goods are transferred from seller to buyer, and the possession utility is added to the commodities. • The number of times the selling-and-buying activity is performed depends on the length of the marketing channel. • In the shortest channel where no middleman is involved, this activity takes place only once, i.e., the producer or farmer sells and the consumer purchases.
- 29. • in thecase of farm commodities, selling/buying activities are undertaken each time • when the produce moves from the farmer to the primary wholesaler, from the wholesaler to the retailer, and from the retailer to the consumer. • The buying activity involves the purchase of the right goods at the right place, at the right time, in the right quantities and at the right price.
- 30. methods of buyingand selling of farm products • Under Cover of a Cloth (Hatha System) • Private Negotiations. • Quotations on Samples taken by Commission Agent • Dara Sale Method • Moghum Sale Method • Open Auction Method a) Phar System of Open Auction b) Random Bid System of Open Auction c) Roster Bid System of Open Auction • Close Tender System:
- 31. MARKET INFORMATION: • Marketinformation is an important marketing function which ensures the smooth and efficient operation of the marketing system. • Accurate, adequate and timely availability of market information facilitates decision about when and where to market products. • Market information creates a competitive market process and checks the growth of monopoly or profiteering by individuals. • It is the lifeblood of a market.
- 32. Types of MarketInformation Market information is of two types • Market Intelligence: This includes information relating to such facts as the prices that prevailed in the past and market arrivals over time. These are essentially a record of what has happened in the past. • Market News: This term refers to current information about prices, arrivals and changes in market conditions. This information helps the farmer in taking decisions about when and where to sell his produce.
- 33. Criteria for GoodMarket Information: a) Comprehensive: b) Accuracy: c) Relevance: d) Confidentiality: e) Trustworthiness f) Equal and Easy Accessibility: g) Timeliness:
- 34. FINANCING: • No businessis possible nowadays without the financial support of other agencies • the owned funds available with the producers and market middlemen (such as wholesalers, retailers and processors) are not sufficient. • The financial requirements increase with the increase in the price of the produce and the cost of performing various marketing services.
- 35. Factors affecting CapitalRequirements • Nature and Volume of Business: • Necessity of Carrying Large Stocks: • Continuity of Business during Various Seasons: • Time Required between Production and Sale: • Terms of Payment for Purchase and Sale: • Fluctuations in Prices: • Risk-taking Capacity:
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