Horti-Business Management (2+0)

Types of market integration

1. Horizontal integration

• This occurs when a firm or agency gains control of other firms or agencies performing similar marketing functions at the same level in the marketing sequence. In this type of integration, some marketing agencies combine to form a union with a view to reducing their effective number and the extent of actual competition in the market. It is advantageous for the members who join the group.
2. Vertical integration

• This occurs when a firm performs more than one activity in the sequence of the marketing process. It is a linking together of two or more functions in the marketing process within a single firm or under a single ownership. This type of integration makes it possible to exercise control over both quality and quantity of the product from the beginning of the production process until the product is ready for the consumer. It reduces the number of middle men in the marketing channel.
a) Forward integration

• If a firm assumes another function of marketing which is closer to the consumption function, it is a case of forward integration. Example: wholesaler assuming the function of retailing
b) Backward integration

• This involves ownership or a combination of sources of suppl. Example: when a processing firm assumes the function of assembling/purchasing the produce from the villages.
3. Conglomeration

• A combination of agencies or activities not directly related to each other may, when it operates under a unified management, be termed a conglomeration.