MARKETING EFFICIENCY  MARGINS & COSTS is very important topic to describe the importance of marketing system

2. MARKETING EFFICIENCY
MARGINS & COSTS

3. Presented By Mr. Zeeshan Sarwar

4. MARKETING EFFICIENCY

5. Marketing
Efficiency
Efficiency is common measure of
performance and activity to
optimize of output to input ratio.

6. Types of Marketing Efficiency
ECONOMIC (PRICING)
EFFICIENCY
TECHNICAL EFFICIENCY

7. Economic (Pricing) Efficiency
Economic or pricing efficiency requires the realisation of maximum
output in money terms of a given output with the minimum resources.
This is achieved when markets create and transmit signals to buyers
and sellers on how to allocate resources.
The pricing efficiency concept is reliable when
a) Consumers are provided with viable alternatives in the market place
b) Prices of the alternatives adequately reflect the cost of providing
these
c) Business firms are relatively free to enter and leave the market in
response to Profits or losses based on prices bid by consumers in
the market place.

8. Technical Efficiency
Physical relationship between the inputs and output
Technical efficiency usually depends on using new or known technology
from diverse disciplines such as engineering, food technology, business
management and economics

9. Indicators of
Marketing Efficiency
Following measures are some commonly
used indicators of marketing efficiency:
1) Size of marketing margins
2) Market competition
3) Physical product losses

10. Size of Marketing Margins
These margins should be examined in relation to the cost and the level
of services provided by the marketing system before any firm
conclusions regarding inefficiency can be drawn
Marketing margins consist of two elements: explicit costs and profits.
Expilcit Cost Profit
That cost which is include in the performance of
various marketing functions.
e.g. Transportation and Storage
Income earned by the marketing after all
explicit cost occurred in various performing
marketing function.

11. Market
Competition
If the conditions of perfect competition
like large number of buyers and seller,
market knowledge, homogeneity of
product, no barrier to entry or exit are
fulfilled, it is assumed that market
functioning will be efficient.

12. Physical Product Losses
Another indicator of marketing efficiency is the extent of physical product losses
which occur as a commodity moves through the marketing channels from
producers to consumers.
i.e Transportation, Storage or Processing the largest Physical Losses take place.

13. MARKETING
MARGIN’S

14. Marketing Margins
Difference between the actual price received by producers (farm gate
price) and the price paid by consumers (retail price)
Marketing margins consist of
• Assembling costs
• Processing costs
• Storage costs
• Transportation costs
• Whole-selling
• Retailing costs, government taxes, and profits etc.

15. MARGINS AND MARKETING FUNCTIONS
IN
PAKISTAN
The scope for cutting the distributive margins through improvements in
marketing functions can be analiysed under three of them.
(a) Exchange functions
(b) Physical functions
(c) Facilitating functions.

16. EXCHANGE FUNCTIONS
The price formation for both perishable and non-perishable agricultural
commodities takes place by either the open auction, through under
cover bidding or by the use of private negotiation methods. The open
auction is the most frequently adopted.

17. PHYSICAL FUNCTIONS
The physical functions of transport and storage are frequently held
responsible for widening the price spread between the producer and the
consumer in developing countries. Parallel with the inadequacies in
transport, the storage facilities in Pakistan are also highly inadequate and
inefficient.

18. FACILITATING FUNCTIONS
Facilitating function is the grading and standardization of farm
commodities. The grading and standardization of agricultural
commodities in Pakistan is in its infancy, both in domestic and the
export markets.

19. ROLE OF MIDDLEMEN IN PAKISTAN
In developing countries like Pakistan, high marketing margins are
generally attributed to inefficiencies in the institutional framework.
Middlemen are usually held responsible for farmer’s low share in the
consumer rupee and are blamed for exploiting the farmers. Government
is usually urged to eliminate or minimize the role of middlemen from the
marketing chain in order to increase the welfare of both consumers and
producers.

20. Following factors justify their Presence in large Numbers
• Provision of Credit facilities
• Assumption of risks
• Facilitation to farmer to focus on production operations
• Provision of storage and transport facilities
• Provision of market information and skills
• Social ties

21. OPTIONS FOR MINIMISING THE ROLE OF
MIDDLEMAN
• Group Marketing
• Cooperative Marketing
• Facilitation to farmer to focus on production operations
• Provision of storage and transport facilities
• Provision of market information and skills
• Social ties

22. OPTIONS FOR MINIMISING THE ROLE OF
MIDDLEMAN
• Group Marketing
• Cooperative Marketing
• Direct Marketing
• Contract Farming

23. MARKETING COSTS
Agricultural commodities pass through various intermediaries while
moving along the marketing chain from farmer to the ultimate end user.

24. Types of Marketing Cost
• Product Preparation Costs
• Packaging costs
• Handling costs
• Transport costs
• Product Physical Losses
• Storage costs
• Processing costs
• Capital costs
• Fees, commissions and unofficial payments