Application in this Thesis

1.0 Introduction 2.0 Objectives 3.0 Main Content

3.1 Exchange Functions 3.1.1 Buying 3.1.2 Selling 3.2 Physical Functions 3.2.1 Storage

3.2.2 Transportation 3.2.3 Processing 3.3 Facilitating Functions 3.3.1 Standardisation 3.3.2 Financing 3.3.3 Risk Bearing

3.3.4 Market Intelligence 4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment 7.0 References/Further Reading

1.0 INTRODUCTION

Market in the ordinary language means a place where buyers and sellers meet to transact business, i.e. physical market, e.g. Oja Oba, Isinkan markets, etc. Such markets abound in many cities and villages in West Africa. The regularity of holding such markets varies widely. Some are held daily, some weekly, others at some periodic intervals such as once in every five or nine days.

However, in the real sense, a market may be defined as an institution where the exchange of goods and services takes place, i.e. it is the interaction of the forces of demand and supply. Marketing on the other hand is the sum total of all business activities involved in the movement of commodities from production to consumption. This definition is

95 applicable to the marketing of industrial goods as well as to that of agricultural commodities.

Marketing system has two distinct dimensions. One of those dimensions is the institutions, organisations and enterprise which participated in a market and the second is the functions that those participants perform.

The institutions of marketing are those individuals and business organisations that perform the various marketing functions. Marketing functions are the major specialised activities performed in the marketing system.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain the meaning and scope of marketing

 identify the various marketing functions.

3.0 MAIN CONTENT 3.1 Exchange Functions

These are those activities involved in the transfer of goods, i.e. buying and selling activities which form the heart of marketing. They mark the point at which prices are set and transfer of title of goods takes place.

3.1.1 Buying

The buying function involves seeking out the sources of supply, assembly and all activities connected with purchase.

3.1.2 Selling

The selling function is more that passively accepting the prices offered.

It embraces all that is called merchandising. It involves all decisions on the unit of sale, the best channel of distribution, advertising and all promotional activities.

3.2 Physical Functions

These are those activities that involve handing, movement and physical change (i.e. processing) of the actual commodity.

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3.2.1 Storage Function

This function is concerned with the holding of goods and making them available at the desired time. It may be concerned with the activities of elevators in holding large quantities of raw materials until they are needed for further processing. It may be the holding of supply of finished goods as the inventories to processors, wholesalers and retailers.

3.2.2 Transportation Function

The transport function is chiefly one of making the product available where it is needed without adding unreasonably to the overall cost of the produce. Adequate performance of this function requires consideration of alternative routes and types of transportation with a view to achieving timeliness, maintaining produce quality and minimising costs.

3.2.3 Processing

Most agricultural produce is not in a form suitable for direct delivery to the consumer when it is first harvested. Rather it needs to be changed in some way before it can be used. The form changing activity is one that adds value to the product.

For example, changing green coffee beans into roasted beans, cassava into garri or livestock feed, ripe fruit bunches into palm oil, etc.

increases the value of the product because the converted product has greater utility to buyers. How the produce is to be changed and the methods to be used in bringing about such changes are marketing decisions.

3.3 Facilitating Functions

The facilitating functions include product standardisation, financing, risk bearing and market intelligence. Facilitating functions are those activities, which enable the exchange process to take place. Facilitating functions are not a direct part of either the exchange of title or the physical movement of produce.

3.3.1 Standardisation

Standardisation is concerned with the establishment and maintenance of uniform measurements of produce quality and/or quantity. This function simplifies buying and selling as well as reducing marketing costs by enabling buyers to specify precisely what they want and suppliers to communicate what they are able and willing to supply with respect to

97 both quantity and quality of product. In the absence of standard weights and measures, trade either becomes more expensive to conduct or impossible altogether. Among the most notable advantages of uniform standards are:

 price quotations are more meaningful

 the sale of commodities by sample or description becomes possible

 small lots of commodities, produced by a large number of small producers, can be assembled into economic load if these supplies are similar in grade or quality.

3.3.2 Financing

In almost any production system, there are inevitable lags between investing in the necessary raw materials (e.g. machinery, seeds, fertilisers, packaging, flavourings, stocks, etc.) and receiving the payment for the sale of produce. During these lag periods, some individuals or institution must finance the investment. The question of where the funding of the investment is to come from, at all points between production and consumption is one that marketing must address.

Consider the problem of a food manufacturer who wishes to launch a range of chilled products in a developing country where few retail outlets have the necessary refrigeration equipment. This is a marketing problem, which might be solved by the food manufacturer buying refrigerators and lending these to retailers (or arriving at a hire-purchase arrangement with retailers). Marketing is also concerned with the financing of the enterprise itself. Here, again, some creative solutions can be developed. Where internal financing is sufficient for the purposes in view, an enterprise in a developing country can look to several alternatives including; development banks, commercial banks, share issues and credit cooperatives.

3.3.3 Risk Bearing

In both the production and marketing of produce, the possibility of incurring losses is always present. Physical risks include the destruction or deterioration of the produce through fire, excessive heat or cold, pests, floods, earthquakes, etc. Market risks are those of adverse changes in the value of the produce between the processes of production and consumption.

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A change in consumer taste can reduce the attractiveness of the produce and is therefore, also a risk. All of these risks are borne by those organisations, companies and individuals.

3.3.4 Market Intelligence

As far as possible, marketing decision should be based on sound information. The process of collecting, interpreting and disseminating information relevant to marketing decisions is known as market intelligence. The role of market intelligence is to reduce the level of risk in decision-making.

Through market intelligence, the sellers find out what the customer needs and wants. The alternative is to find out through sales or the lack of them. Marketing research helps establish what products are right for the market, which channels of distribution are most appropriate, how best to promote products and what prices are acceptable to the marketers.

4.0 CONCLUSION

In this unit, you have learnt that market is not just a place where buyers and sellers meet to buy and sell but any arrangement whereby buyers and sellers are in close touch with one another for the purpose of business transaction either by telephone or postal system.

You also learnt the various marketing functions involved in carrying out marketing activities of either industrial or agricultural products.

5.0 SUMMARY

In this unit, you have learnt the:

 concept of market and marketing

 various functions performed in marketing activities of industrial or agricultural products.

6.0 TUTOR-MARKED ASSIGNMENT

1. Define the concepts of market and marketing as regard industrial or agricultural products.

2. Briefly discuss the major functions performed in the marketing of industrial or agricultural products.

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7.0 REFERENCES/FURTHER READING

Adekanye, T. O. (1988). Readings in Agricultural Marketing. Nigeria:

Longman Nigeria Ltd.

Crawford, I. M. (2001). “Agricultural and Food Marketing Management.”

http://www.fao.org/DOCREP/004/W3240E/W324E00HTM

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UNIT 2 TYPES OF MARKET