BACKGROUND:
The prime purpose of marketing is to design the mechanism to put commodities in the hands of final users. These products are to move from the place of origin to the place of destination. This flow of goods is not a simple task, nor even automatic. Many marketing activities must be performed to attain the said aim which is highly specialised and are called as functions. These functions are performed within the broad frame-work of marketing mechanism which involves three distinct and major processes. These three processes are Concentration, Equalization and Dispersion.
A. THE PROCESS OF CONCENTRATION:
It is the first process of marketing Concentration implies bringing the goods at a single point, to make possible convenient and economical distribution. That is, collection of commodities for the purpose of distribution is called as 'Concentration'. This process is inevitable for consistent and efficient marketing activities.
Why Concentration?
The process of concentration assumes all the more greater proportion, because of the following reasons:
1. Small-Lot Production: Small lot production is the outstanding feature of such products that are marketed in natural form i.e., all the agricultural produce and dairy
products like milk, cheese, butter, eggs, meat etc. Thus, to bring about economy in transport costs, to make possible other marketing services such as grading and standardization, for the benefit of consumers, and to avoid waste of time, all cereals as wheat, jawar, grams, staple products like cotton, tea, jute, etc., are to be concentrated at a point.
2. Assembly of Parts: Some manufactured products require greater amount of assembly work. Because of specialization, different-spare parts of a product are produced in different corners of the country, or parts of the world. To make finished producers, assembly is quite essential. To make assembly, concentration is unavoidable. For instance, to have a fully designed bicycle, eighty spare-parts are to be assembled; to have an automobile in ready state two thousand and five hundred parts must be assembled. It is so with radio, T.V. set, aero plane, typewriter etc.
3. To Ensure Continuous and Ready Supply: For the consumers, availability of goods is not the only worry. What is more important is, that such supply must be ready and continuous. This is true essentially in case of foreign trade. Thus, Indian onions were in greater demand, but due to failure of Indian growers to ensure continuous supply, the demand is falling steeply and foreigners are depending on other sources of supply. India, therefore, lost sizeable amount of foreign exchange on this account. This process of 'Concentration' is performed by products, wholesalers and their agents.
B. THE PROCESS OF DISPERSION:
This is the last aspect of two fold movement of goods. There is no charm and meaning in mere concentration. Concentration takes place because of 'dispersion'. Further the process of 'dispersion' becomes means of distributing the goods which are concentrated for the whole army of consumers. I have touched dispersion process secondly, instead of equalization, for the purpose of better understanding.
Why Dispersion?
Certain reasons elucidate the justification of the dispersion process:
1. Scattered Buyers: The customers, for a particular commodity, are not located at the points of production or concentration. They are widely scattered along the length and breadth of the nation. For instance, Indian mangoes are world famous and they are to be distributed wherever there is a demand. Toilet soap-cakes and perfume sticks (agarbatti) of India are famous in sophisticated nations of the west and east. They, depend on dispersion process much, to enjoy these products:
2. Production for Consumption: The production of commodities takes place with an objective, on placing them in the hands of consumers. The aim of production is to find out the customers for such goods and services at a profitable and acceptable price. This also calls for dispersion, as there is no meaning for production in absence of consumption. This process is managed well by wholesalers, agents and retailers.
C. THE PROCESS OF EQUALIZATION:
Between these two diametrically opposite processes, there is another process, which is more significant. This is the process of 'Equalization'. It is the process by means of which the supply of goods, ready for sale, is adjusted to the demand for them. It implies the reconciliation of supply to demand through storage, and transportation in required quantity and quality. Professor Tousley, Clark and Clark, define this process as "it consists of adjustments of supply to demand on the basis of time, quality and quantity."
Why Equalisation?
Following factors fortify the solid ground in favour of equalization:
1. Seasonal-Production against Continuous Consumption: There are very many commodities that are produced in a particular season, where as, they are consumed throughout the year. All agricultural produces like paddy, wheat, cotton, jawar, tobacco, fruits and vegetables do come under this category. This seasonal supply is to be matched with continuous demand and it is the aim of equalization.
2. Continuous Production against Seasonal Consumption: Similarly there are goods which are having seasonal demand, .where as production is round the clock. For instance, water proof-materials like rain-coats, hats, plastic articles, covers, shoes, umbrellas, and again winter products like sweaters, muflers, jerseys, pullovers, woollen socks, gloves etc., are produced throughout the year but are demanded in the respective seasons. Thus, continuous supply is to be adjusted to the seasonal demand through the warehouses.
3. Quality Needs Differ: Individual requirements, in terms of quality, differ widely i.e., tastes, fashions, habits, likes and dislikes differ from person to person. For instance, take buying of a radio-set and a ready-made dress; different people prefer different products of similar type like Murpy, Philips, Nelco, Bush, Amzel etc. If one likes a maxi another likes bell bottom pant and Kurta set, still another likes Judo wear etc. Such variety requirements are to be met fully, to survive and succeed.
4. Quantity Needs Differ: As the individual names differs. Thus quantity needed also differs. Thus, the cloth that an individual requires for a shirt or maxi, depends on the structure and dimension of body, individual styles, pattern of tailoring etc. Further the quota of food that is taken by an individual differs widely. For instance, the amount of tea powder consumed by a family depends on the drinking capacity, the size of the family, income-frequency of guests visiting the house etc. These factors make the quantity demanded to differ from family to family. Here, such variations in quantities are to be adjusted.
The process of equalization is shouldered by middlemen may be agent or merchant. The process of equalization starts when concentration ends and ends when dispersion starts.
To conclude, these processes of marketing are the soul of marketing mechanism.Each process is not independent but mutually interdependent. The above explanation has proved amply that these processes are essential ingredients of marketing efforts.
FUNCTIONS OF MARKETING
Marketing involves certain activities to make the goods move from producers to consumers. Tousley, Clark and Clark have defined a marketing function as "a major specialized activity performed in marketing". Marketing consists of operations and an operation may be performed several times either by a producer or by a middleman, till the commodity finally reaches in the hands of consumers. It is an act, operation of service, by which the original producer and final consumers are linked together. Many marketing professors and experts like I.F. Pyle, Converse Huegy, Mitchell, Duddy and Revezon, Clark and Clark and others have given their own classifications. These writers have listed from five to as many as hundred and fifty functions. But here, we follow the standard and the renowned classification given by Professors Tousley, Clark and Clark.
Marketing Functions Classified:
The designed tree explains easily and clearly the various functions of marketing on next page:
A. FUNCTIONS OF EXCHANGE:
Exchange implies the transfer of goods and services for money or money's worth. Exchange brings about change in the ownership of goods. It is a two way process involving two separate but supporting activities viz., buying and selling. They are complementary to one another but not contradictory.
1. Selling: Goods are made for profitable sale. Selling is the sum total of all those activities that push the commodities to the buyers or consumers at a profitable price. It is the process that involves personal and impersonal efforts made in persuading the prospective customers to buy a commodity or service. It is concerned with the activities that convert the desire into demand. Rather creation of demand, its maintenance and expansion, is the soul of sales efforts. This function of selling embraces elements which together make a sound selling function.
(i) Product-Planning and Development: A satisfactory product is the starting point of effective marketing- efforts. Product-planning is planning or forecasting what consumers want in terms of quantity, quality, time, place, price etc., whereas, product-development refers to making available such goods to meet the requirements of consumers as demanded by them.
(ii) Contactual Function: It is the set of those activities that pertains to finding out and locating the consumers and establishing and maintaining relation with them.
(iii) Demand Creation: It includes such special efforts to induce and persuade the prospective users to purchase the products of the seller only. These efforts may be personal i.e., salesmanship and, or impersonal i.e., advertising and other devices of sales-promotion.
(iv) Negotiation: Negotiations as to terms of quality, quantity, price of the product, time and mode of transport, payment etc., are to be made with the prospective buyers.
(v) Contractual: Once the terms and conditions are settled between buyers and sellers, a final contract would be entered into, where legally, ownership of goods passes on from seller to the buyer.
2. Buying: Buying is another function of exchange that refers to all such activities involved in the assembling of goods, under a single ownership and control. Buying implies "business" rather than buying for consumption, as is the case with the consumers. Its immediate purpose is to bring commodities together where they are wanted, for use in production or for final consumption. This buying function has following five
elements :
(i) Planning Assortments: Business buyers are to study their own market conditions, in order to know the type, quantity and quality of goods that are required by final users. Depending on this decision, actual stocking of goods starts. So, selection of various consumer-oriented goods is the base.
(ii) Contactual: It is clothed with the selection of various sources of supply, keeping in touch with them, to get the goods quickly, reasonably, sufficiently and regularly.
(iii) Assembly: The modern methods of production and distribution have made this element, all the more important. The commodities produced at different places, in different seasons, in various lots, are to be brought together such agglomerative activities can be called as assembly.
(iv) Negotiation: Buyers and sellers negotiate the terms and conditions of price, quantity, quality, mode and time of delivery, transport, payment etc.
(v) Contractual: It is the last phase that binds the parties of exchange, by means of a contract where the titles to the goods, move from sellers to business buyers.
B. FUNCTIONS OF PHYSICAL SUPPLY:
These are the functions that are related with creation of place and time utilities. It is said, earlier, that marketing involves physical involvement i and the physical involvement is the actual movement of products that is attained by means of transportation and warehousing facilities.
1. Transportation:
Transportation is the physical means, to move the goods and people from a place to another. Transportation is an essential spoke in the wheel of marketing. The goods are moved from a place where they are not required, to the place where they are demanded. It is responsible for the creation of place utility. The network of transport can be compared to the 'nerve system' of a body, through which blood flows easily and quickly and keeps the body working as an eternal force and ,entity. Goods are sent to the market in number of ways like railways, road ways, air ways and water ways. The speed and cost determine the selection of a particular type of transportation. Transportation is a necessary function of marketing, as markets are geographically away from production centres.
2. Storage:
Storage, is equally important, that, it creates time utility. The products are to be preserved from the time of production to the time of consumption, as they cannot be sold immediately. To keep, in fact, the quality of the products, special arrangements' are made for holding the goods. This being done by storage and warehousing system. It does help in postponing the consumption to futurity. As goods are produced well in anticipation of demand, storage and warehousing functions occupy a place of 'free wheel'. Storage is the base of consumers to get the goods as and when they need ispeculater's can take advantage of anticipated price fluctuations; prices can be equalized over a period of time; quality of products can be equalized over a period of time; quality of products can be improved by seasoning.
C. FACILITATING FUNCTIONS:
In addition to the above four functions of exchange and physical supply, there are still four functions that facilitate the process of exchange. They are' financing, risk-bearing, matket information and standardization. These can be called as auxiliary funlictions as they lubricate the machinery of marketing.
1. Financing:
Finance is the base for all marketing activities. It smoothens the process of exchange and acts as a lubricating oil to the wheel of marketing: Modern marketing requires vast financial resources in the form of fixed and circulating assets like land, building, furniture and fixtures, show-rooms, materials, labour and stock of goods. Again, the gap created by credit transactions is to be plugged. This process of
providing funds for marketing activities, is known as 'financing'. Long term capital is. made available by issue of debentures and shares. Financing has two clear sides, finance getting and financing the process of marketing. Finance getting includes credit too. A marketing organisation gets credit from banks and other trading concerns to tide over seasonal difficulties. It extends its scope of granting credit to customers and middlemen. Of late, 'consumer credit' is playing a significant part in promoting the Sales.
2. Risk-Bearing:
Market risks are inherent, so long as the process of exchange continues. Many risks are involved in marketing which bring about changes in ownership, place etc. Risk is a danger of loss, arising out of unforseen circumstances in the future i loss is caused by such events as fire, flood, tornado, theft, mismanagement, physical deterioration caused by changes in fashions, -prices etc. It is human tendency to apply his intelligence or skill to reduce the possible losses, in different ways. These risks are to be shouldered, shifted or reduced. In absence of such risk-bearing function, exchange would not have been possible and profitable on' such a grand scale that we witness today. Commodity exchanges, insurance companies are the specialized institutions that extended their helping hand in shifting the risks at a reasonable cost.
3. Market Information:
The much desired success of marketing depends, on correct and timely decisions. These decisions are based on market information or market intelligence. Market information includes all facts, estimates, opinions, views, regarding the market weather. This function is having three aspects viz., collection, interpretation and dissemination. This information relates, to what products are to be stocked? which is in demand? what sellers plan to sell and in what quantity? of what quality people what to buy? their tastes, habits, fashions, income, population, preferences, motives etc. This information collected must be adequate, timely and accurate, as the work of a marketing executive is to orient his efforts, efforts of his dealers towards marketing the products. Hence, one should have up-to-date information, about customers,dealers and internal operations to achieve ultimate goal.
4. Standardization:
It is the last function that helps to tackle certain major problems of marketing. It is related with the division of commodities into distinct groups, each having common characteristics. This function involves four steps viz., fixing the standards, grading, inspecting, and labelling. A 'standard' is a 'norm' 'grade' a 'category'. Such standards are fixed, basing on physical characteristics of products like size, shape, colour, taste, chemical content, sweetness, ripeness etc. Thus, standard is a specification. The act of grading is called as standardization. After grading or sorting the products, inspection is done and lastly labels are fixed, as a matter of reference and proof. Standardization assuming is more and. more significant, as the standardized products are easily bought and sold. In fact, grading starts where standardizing ends. Standardizing and grading are important to efficient marketing. Every function of marketing is deeply and favourably affected. Many ticldish problems are solved, as it encourages, grades, futures trading, reduces costs of physical supply, makes possible- easily, and substantial finance at lesser cost.
To give the whole picture, in a nutshell, buying and selling constitute the two primary functions of marketing. The remaining functions are in sense, facilitative. Transportation and storage have to d~ with physical factor i they add place and time utility. Standardization involves establishment of certain criteria to which the goods must confirm. Financing and risk- bearing play an important role in the scheme of marketing. Finally, marketing information serves as a guide for determining what the trader will pay, and what will be the costs of receiving .and distributing the goods.
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