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 Marketing Efficiency

Marketing efficiency is essentially degree of market performance. In this sense the concept is broad and dynamic. 

Jasdanwalla: The term marketing efficiency may be broadly defined as the effectiveness or competence with which a market structure performs its designated function.

Clark: Marketing efficiency has been defined as having the following three components:

(i)               The effectiveness with which a marketing service is performed;

(ii)              The cost at which the service is performed; and

(iii)            The effect of this cost and the method of performing the service on production and consumption.

Efficient Marketing

The movement of goods from producers to consumers at the lowest possible cost, consistent with the provision of the services desired by the consumer, may be termed as efficient marketing. 

A change reduces the costs of particular function without reducing the consumers satisfaction which indicate the improvement in market efficiency. 

An efficient marketing system for farm products ensures that:

(i)          Increase in the farm production is translated into a proportionate increase in the level of real income in the economy, thereby stimulating the emergence of additional surpluses;

(ii)        Good production years do not coincide with low revenues to the producers achieved through effective storage, proper regional distribution and channelising of latent demand; and

(iii)       Consumers derive the greatest possible satisfaction at the least possible cost.

An efficient marketing system is an effective agent of change and an important means for raising the income levels of the farmers and the levels of satisfaction of the consumers. 

Approaches to the assessment of marketing efficiency :

i. Technical or Physical or Operational Efficiency : 

This aspect of the efficiency pertains to the cost of performing a function. Efficiency is said to have increased when cost of performing a function for each unit of output is reduced. This can be brought about either by reducing physical losses or through change in the technology of the function viz., storage, transportation, handling, and processing. A change in the technique may result either in the reduction of per unit cost (storage cost for a month, transportation cost to a distance of 100 kms or the cost of converting 100 kg of oranges to orange juice) or the increase in the output for a given level of cost.

(ii) Pricing or Allocative Efficiency :

Pricing efficiency means that the system is able to allocate farm products either overtime, across the space or among the traders, processors and consumers (at a point of time) in such a way that no other allocation would make producers and consumers better off.

the pricing efficiency is achieved when following conditions hold:

a.     Price differences between spatially separated markets do not exceed transportation cost;

b.     Intra-year price rise is not more than storage cost; and

c.     Price differences between forms of the product (pulse grain and split dal or wheat grain and wheat flour) do not exceed processing cost.

Know more : Marketing costs, margins and Price spread