2. ▪Integration shows the relationship of the film in a market.
The extent of integration influences the conduct of the firm and
consequently their marketing efficiency.
▪The behavior of a highly integrated market is different from of
disintegrated market.
▪Market different in the extent of integration and therefore, there is a
variation in their degree of efficiency.
3. TYPES OF MARKET INTEGRATION
▪THERE ARE THREE TYPES OF MARKET INTEGRATION
1. HORIZONTAL INTEGRATION.
2. VIRTVERTICAL INTEGRATION.
3. CONGLOMERATION
4. 1. HORIZONTAL INTEGRATION
▪This occurs when a firm of agency gains control of other firms or
agencies performing similar marketing function at the same level in the
marketing sequence.
▪In this type of integration, some marketing agencies combine to form a
union with a view of reducing their effective number and the extent of
actual compilation in the market.
▪It is advantageous for the members who join the group.
5. EFFECTS OF HORIZONTAL INTEGRATION
▪Buying out a competitor in a time bound way to reduce competition.
▪Gaining larger share of the market and higher profits.
▪Attaining economies of scale.
▪Specializing in the trade.
6. ▪ADVANTAGES OF HORIZONTAL INTEGRATION
1. Lower costs.
2. Higher efficiency.
3. Increased differentiation.
4. Increased market power.
5. Reduced competition.
6. Access to new markets.
7. Economics of scale.
8. Economics of scope.
9. International trade.
8. 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 begging of the production
process until the product is ready for the consumer.
▪It reduces the number of middle men in the marketing channel.
9. ADVANTAGES OF VERTICAL INTEGRATION
1. It allows you to invest in assets that are highly specialized.
2. It gives you more control over your business.
3. It allows for positive differentiation.
4. It requires lower costs of transaction.
5. It offers more cost control.
6. It ensures a high level of certainly when it comes to quality.
7. It provides more competitive advantages.
10. DISADVANTAGES OF VERTICAL INTEGRATION
1. It can have capacity balancing problems.
2. It can bring about more difficulties.
3. It can result in decreased flexibility.
4. It can create some barriers to market entry.
5. It can cause confusion within the business.
6. It requires a huge amount of money.
7. It makes things more difficult.
11. EFFECTS OF VERTICAL INTEGRATION
▪More profits by taking up additional functions.
▪Risk reduction through improved market coordination
▪Improvement in bargaining power and the prospective of influencing
prices
▪Lowering costs through achieving operational efficiency.
12. 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.
EFFECTS OF CONGLOMERATION
▪ Risk reduction through diversification.
▪ Acquisition of financial leverage.
▪ Empire - building urge.
13. REASONS FOR MARKET INTEGRATION
▪To remove transaction costs
▪ Foster competition
▪ Provide better signals for optimal generation and consumption
decisions.
▪ Improve security of supply.
14. MEASUREMENT OF MARKET INTEGRATION
The measurement or assessment of the extent of market integration is
helpful in the formation of appropriate policies for increasing the efficiency of
marketing process.
The measurement or assessment of market integration may be attempted at
two levels.
1. Integration among firms of market.
2. Integration among spatially separated markets.
15. INTEGRATION AMONG SPATIALLY SEPARATED MARKETS
▪The extent to which prices in spatially separated markets move together or
are related to transport costs reflects the degree of integration.
▪A two-way analysis of prices in spatially separated markets may be used to
access the degree integration.
1. Price correlations.
2. Spatial price differential and
3. Transportation costs.
