Livestock Economics, Marketing and Business Management

FACILITATIVE FUNCTIONS - STANDARDISATION,RISK BEARING, MARKET INFORMATION AND MARKET INTELLIGENCE

Risk Bearing

• It is accepting the possibility of loss when marketing a product.

Physical risks

• Physical risks are those results in the destruction of the product itself and are due to fire, accident, rain etc.
• Risk attached to such natural hazards is often transferred to institutions (Insurance companies) that specialize in assuming such risk.

Market risks

• Market risks are those which occur due to the changes in product prices and changes in consumer demand for the products.
• Market risks can be reduced through accurate forecasting and market research.

Marketing Information

• In the field of marketing, information is of great importance. Like men, money, machines and materials and information is also a vital input.
• As defined by Philip Kotler, Marketing information system is continuing & interacting structure of people, equipment & procedure designed to gather, sort, analyze, evaluate, distribute, pertinent, timely and accurate information for use by marketing decision makers, to improve their marketing planning, execution and control.
• Three type of information come out of the systems are

• Recurrent information
• Monitored information
• Requested information

Sources of marketing information

• Sources of marketing information are
  • Exeutive experience
    • It is the direct counter part of the casual experience that we accumulate from the process of every body living.
  • Internal reports
    • Come from the authorities that work as specialists for the firms.
  • Marketing research
    • Studies are conducted using methods of enquiry, observation and experimentation and by using available internal reports.
  • Marketing models
    • At a general level, sources may include for example, daily news papers, technical journals, hand books, and reference materials, government publication, corporation annual reports and computer data bases.

Functions of Marketing Information System (MKIS):

• MKIS should perform the following six functions.
  • Assembly -Searching and gathering marketing data
  • Processing - Editing, tabulating and summarizing data
  • Analysis - Computation (percentages and ratios), combining sales and costs data and other mathematical tasks.
  • Storage and retrieval - Indexing, filing and locating data.
  • Evaluation - Determining the accuracy of information.
  • Dissemination - Routing useful information to appropriate decision-makers.

Marketing Intelligence

• A marketing intelligence system is a set of procedures and sources used by managers to obtain their everyday information about pertinent developments in marketing environment.
• It is a product of market research and marketing research. In marketing intelligence, marketing managers scan the environment in four ways.
  • Undirected viewing
  • Conditioned viewing
  • Informal search
  • Formal search
    • Marketing managers carry on marketing intelligence mostly on their own by reading books, news papers and trade publications, talking to customers, suppliers and other outsiders and talking with other managers, personnels within the company.
    • Well-recognized companies take additional step to improve the quality and quantity of marketing intelligence. First they train and motivate the 'sales force' to spot and report new development. Sales representatives are company's " eyes and ears".
    • They are in an excellent position to pick up information missed by other means. The company must sell its sales force on their importance as intelligence gatherers. The sales force should be provided with easy reports to fill out. Sales representatives should know which type of information to be sent to different manager.
    • Secondly, the company motivates distributors, retailers and other middlemen to pass along important intelligence.

Marketing Cost

• It is the actual expense incurred in buying goods and services from producers to ultimate consumer.
• It is the difference between final price paid by consumer for a commodity and price received by the primary producer.
• It includes assembling charges, handling charges, transport and storage cost, processing cost, profit margin to different intermediaries, etc.

Market (Price) Spread

• Marketing cost is measured by the concept called market or price spread .
• Price spread is the difference between price paid consumer and price received by producer.
• Market spread is expressed in percentage of consumer's rupee.

Marketing Channel

• Marketing channel can be defined as path through which a product moves from producer to consumer.
• There are mainly tow types of marketing channel i.e Organized and Unorganized.
• Organized marketing channel involve participation of government institution or co-operative federation.E.g Tamil Nadu Co-operative Milk producer's Federation. It is basically a service motive organization where consumer price will not have any violent fluctuation.
• Unorganized marketing channel has many participation of private traders having profit motive e.g. Private milk vendors.

Factor affecting marketing channel

1. Consumer distribution
2. Product characteristics
3. Characteristics of consumer
4. New marketing technologies
5. Changes in management
6. Changes in policies of government
7. Cost requirement

Value chain

• Marketing channel adds value to commodities when goods pass through. To reduce exorbitant price rise in the value chain, market integration is carried out. There are two types of market integration namely vertical or horizontal .
• Vertical integration occur when firms confine activities of different channel. e.g. wholesaler doing functions of both retailer and wholesaler.
• Sometime producers convert their produce from raw material ready to cook or to ready eat forms.In this case value chain is maintained with heavy investment on value addition process , cold chain, specialized transportation vehicle, etc.,
• Horizontal integration occur when firms gain control over other firms by performing similar activities at same level in marketing channel.