Everything you need to know about functions of marketing. A marketing function is a specialised activity performed in marketing. A marketing function is necessary to take goods from the place of origin to the place of consumption.
Thus, it is an act or operation or service in order to link the original producer and the ultimate consumer. The marketing functions are built around the process of marketing involving concentration, equalisation and dispersion.
Marketing process includes marketing functions. These functions help the manufacturer in taking his products from the place of their manufacture to the places of the consumer.
Marketing function is defined as “as act or operation or service through which the product and the final consumer are linked together.” Different writers have classified marketing functions in different ways and there is no unanimity among them regarding classifications.
A. Functions of Exchange – 1. Merchandising 2. Buying 3. Selling
B. Functions of Physical Supply – 1. Transportation 2. Storage
C. Facilitating Marketing Functions – 1. Standardization and Grading 2. Financing 3. Risk Management 4. Marketing Information 5. Promotion.
Additionally, Functions of Marketing Classified into 5 Groups:- 1. Research 2. Product 3. Distribution 4. Management 5. Sales Promotion.
What are the Functions of Marketing?
Functions of Marketing – Classified into 5 Groups: Research, Product, Distribution, Management and Sales Promotion
There were no marketing functions in the early 1900’s for the products were of a standard nature and quality, and were not branded or of different varieties. They were sold in bulk, by the so-called sales organization without enlisting the aid of advertising assembling, grading, and branding.
It was during the 1920’s that the advertising agency received an impetus and was supported both by sellers and buyers. Products were extensively advertised, giving all the facts relating to their quality, price, durability and utility. This marked the beginning of marketing processes receiving support from and the end of the so-called sales organisation. However, during the 1930’s the picture completely changed with the introduction of product differentiation, and wide publicity of goods.
The consumer’s market encouraged manufacturers to establish market research departments in order to determine ways and means of reducing marketing costs and promotion sales. Manufacturers who mainly depended upon costly wholesalers and retailers for the sale of their goods, discontinued this practice and started their own chain stores.
They devised a policy of cash and – trade discount for their customers by utilising the specialized services of super markets, packaging, branding, grading, and offering varied concessions with a view to promoting sales. In fact, particularly after World War II, the different functions of marketing, such as product differentiation, marketing plans, budgeting, coordinating marketing activities and developing marketing executives, became so popular that every manufacturer began to think of production schedules, price schedules, designing, and inventories.
Finally, the 1950’s witnessed a complete revolution and a tragic end of the sales organisation, and gave birth to such marketing process as specialisation, advertising, market research, etc. Thus, a business house is currently concerned with the divisional form of organisation; there are the marketing and manufacturing divisions; there is the finance department, the law, research, industrial relations, and traffic transpiration departments.
The marketing functions may be classified into five groups:
(i) Determining Marketing Objective (Research)
(ii) Developing Marketing Plans (Product)
(iii) Budgeting Sales, Expenses and profits (Distribution)
(iv) Co-coordinating Marketing Activities (Management)
(v) Developing Marketing Executives (Sales Promotion).
The marketing division under research is mainly concerned with actual and potential buyers. It determines why and when the buyers buy goods or are not interested in buying goods; how and where the market for goods can be expended and at what cost. The time limit for expanding the market, and the probable fluctuations in demand and supply—these, too, must be taken into consideration.
The size of the market, its potentiality, trends and profitability must be determined. The department should examine the effectiveness of the various marketing problems and should consider the effects of competition in the line.
The second function is the task of developing new products. In this connection, the marketing section should pay attention to the existing products. If the existing products are not in demand it should find be made in them. Even if it comes to the conclusion that the existing product has become obsolete or useless, the decision to drop it from the market may also be taken, and altogether new products may be introduced.
The question of identification and appearance must be determined so as to ensure that the sale of the product is on the favourable side. Over and above this, the marketing division should consider the setting of prices and the discounts to be allowed to customers. This must be done periodically, depending upon the demand and competition for the products.
The terms of sale and allowances, too, have to be determined from time to time. Besides all this, packaging, guarantees and service policies are some of the other problems that would call for the attention of the marketing department.
Function # 3. Distribution:
This is the third important function pertaining to budgeting sales, expenses and profits. In order to determine these things, the advantages and disadvantages of direct versus indirect sales must be taken into account. Since it is mainly concerned with the distribution of products, details about the type, number, size and location of distributors or dealers must be determined before the product is placed in the market.
The distribution of products further involves contracts and agreements with dealers; and these should be carefully executed. The department should also help and guide resellers in the distribution of products. Last, but not the least, the marketing section should see to it that the products manufactured by the company are properly stored in suitable warehouses and are disposed of through a proper mode of transport.
Function # 4. Management:
The next responsibility of the marketing section is to determine the form or organisation—whether it should be a sole trading concern, or a partnership firm, or a joint stock company. Having determined the nature of the organisation, attention should be concentrated on the staffing of the department. Recruitment, terms of services, fixing of duties and responsibilities—these are some of the problems that will then attract the attention of the management.
Since the business enterprise is dynamic, all the changes and alterations in the tastes of customers are required to be considered, and the necessary change in the technique of production must be introduced. This change in the technique of production demands an immediate change in plant and machinery and the need for training suitable personnel.
All the measures relating to the expansion of the business, reorganisation, compensation, direction and control must be taken as time demands so an to ensure that products are sold on a large scale and benefit both the manufacturer and the consumer.
Under this function, the marketing section aims at promoting the sales of the products. This objective can be rightly achieved if marketing executives are properly trained in their respective disciplines. However, in this regard, the advertising department plays an important role’.
It is therefore, the moral duty of the marketing section to work in close co-operation with the various advertising agencies and evaluate the campaigns that should be undertaken. Displays, catalogues, posters, etc., must be studied from the point of view of sales promotion. The department should undertake wide publicity and, if necessary, special promotion measures, such as exhibits, shows, conferences, etc., may be adopted.
Functions of Marketing – As Classified by Clark and Clark: Exchange, Physical Supply and Facilitating Marketing Functions
The marketing activities linking the primary producer and the ultimate consumer or user represent the movement or flow of the product (possession) and the title (ownership) to the product—from the seller to the buyer. We may have several transactions involving the flow of ownership and possession. The flow of products is achieved through transport and storage. The flow of, ownership rights is achieved through sale or purchase contracts.
In order to bring about such twin flows of ownership and possession, we need middlemen in marketing. They can offer specialised services or functions such as buying, selling, transport, storage, financing, risk bearing and so on. These middlemen’s functions are also called marketing functions.
A marketing function is a specialised activity performed in marketing. A marketing function is necessary to take goods from the place of origin to the place of consumption. Thus it is an act or operation or service in order to link the original producer and the ultimate consumer. The marketing functions are built around the process of marketing involving concentration, equalisation and dispersion.
In the process of marketing, we need constantly the specialised services of middlemen in order to bring about the twin flows of title or ownership and products. These middlemen may be individuals, firms or companies. They constitute the channels of distribution. They are called marketing agencies or institutions. The middleman’s functions are also called marketing functions. Of course, marketing functions can also be performed by producers, manufacturers, consumers or co-operative organisations of producers and consumers.
However, it should be noted that we can eliminate middlemen but never their functions. Middlemen such as wholesalers, retailers and various mercantile agents, e.g. factors, brokers, commission agents, etc., specialise in certain marketing functions and thereby facilitate the entire process of marketing.
Clark and Clark classified marketing functions into three main divisions:
1. Marketing functions involving exchange, e.g., selling and buying.
2. Marketing functions involving physical supply, e.g., storage and warehousing, and transportation.
3. Marketing functions acting as aids to the functions of exchange and functions of physical supply, e.g., risk-bearing or insurance, financing, standardisation and grading, and marketing research and information.
The classification given above is widely accepted. It has practical importance. It covers all vital functions of the process of marketing. It is also theoretically sound.
Marketing involves three basic activities, viz. 1. Concentration, 2. Dispersion, 3. Equalisation. These functions are performed by middlemen such as merchants and mercantile agents.
Marketing management is directly in charge of formulating the marketing mix and conducting the marketing process. Marketing management is in charge of planning, organising, directing and controlling the marketing of goods and accomplish the overall marketing objective, viz. profitable sales with satisfaction of consumer demand.
Marketing research is the starting point in the marketing process to ascertain and identify customer needs and desires through market analysis and investigation. Resources of men, money, materials and management are employed in the marketing system to perform marketing functions and thereby achieve the satisfaction of customer demand (the purpose or mission of marketing).
Marketing process covers marketing functions as well as marketing agencies or channels of distribution. Marketing management operates through marketing agencies or institutions for distribution of goods in the market.
Marketing process includes marketing functions.
Marketing channels co-operate in a series of complementary functions. Marketing functions are the activities of buying, selling, transportation, storage, standardisation and grading, financing, risk bearing and circulating market information. Such a list of marketing functions is more suitable to physical products.
But if we consider the expanded concept of product which includes services also, marketing functions may be:
1. Contractual- The searching of buyers and sellers.
2. Merchandising – Matching the products to customer needs and desires (the market requirements).
3. Pricing – Determining the optimum price.
4. Promotion – Persuading the buyers to favour the firm and its products (creation of customers).
5. Physical distribution – The transport, warehousing, inventory control and order processing.
6. Termination – The negotiation and finalising the terms of sale, e.g., quantity, quality, price, discounts, warranties, service after sale, credit, delivery, etc., and entering into a sale contract leading to transfer of ownership and possession from seller to buyer.
This classification is applicable to physical goods and also to services. It also emphasizes managerial approach to marketing. Marketing management centres round these six functions. Each distribution channel also performs these functions.
Marketing functions are specialised marketing activities of a marketer in each channel of distribution. They may be performed several times in the marketing of a given product. For example, buying, selling, storage, transport, financing and risk bearing are performed by all middlemen at different stages in the marketing process.
At each stage in the machinery of distribution, a marketer will need marketing information for formulating plans, policies and programmes in order to serve customer demand effectively. Marketing functions are a necessary part of the marketing task and must be performed by any marketer if goods are to be placed in the hands of consumers. You can eliminate the middleman, but you cannot eliminate the marketing functions he performs.
Efficient performance (and not elimination) of marketing functions can reduce the cost of marketing. Marketing agencies and institutions usually specialise in certain marketing functions and such specialisation ensures minimisation of marketing costs in the process of marketing. Marketing functions are the means to achieve marketing objectives set by the marketing plans and programmes.
Marketing department is given the main responsibility to carry out the marketing functions. These marketing functions are now oriented toward the customer needs and all marketing decisions are made in the light of customer requirements and for the purpose of satisfying customer demand at minimum expense, with optimum sales volume and profits. Customer-oriented marketing functions can assure survival and prosperity of any business enterprise.
Buying is the primary activity in concentration, while selling is the main activity in dispersion. Transport, storage, standardisation and grading, financing and risk-bearing are involved in concentration as well as in dispersion—the two major parts of the marketing process.
Marketing information (its collection, communication and interpretation) is the common marketing function involved at each stage in the process of marketing. Marketing decisions are based upon up-to-date and reliable marketing information. We have ever- changing marketing environment. Hence, marketing information acts our vital resource in planning-action-control process of management. Marketing information assures accomplishment of marketing objectives.
Function # 1. Exchange (Involving Transfer of Title):
Transfer of ownership is the primary objective of the marketing process. Hence, performance of buying and selling functions assumes a unique importance. Let us describe briefly merchandising, buying and selling functions.
Merchandising covers the activities involved in planning and supervising the adjustment of a product line to customer wants and needs. It is essential in wholesale and retail trade. What is bought has to be resold at a profit. Merchandising function tries to analyse the market and the products to be sold.
On the basis of this analysis of demand, marketer evolves the best combination of resources and methods in order to achieve maximum profitable sales. Merchandising function alone can assure the right product, at the right time, at the right place, at the right price, with the right amount of goods to the right customers.
Merchandising is that part of the marketing process which enables us to take decisions on what to produce or procure, what product is to be added to or deleted from the present product line. It enables proper co-ordination of supply with demand.
2. Buying (Assembling):
Buying is one side of the equation of exchange — the counterpart of selling the other side of exchange. It is carried out by all marketers -the manufacturer, the wholesaler and the retailer. The buying function involves planning of purchases, selection of proper sources of supply, selection of goods to be sold, or to be used in business, assembling of goods in right quantity, at the right place and time and at the right price. In a formal exchange, buyer has to negotiate the terms of price, payment, delivery, etc., and secure normal transfer of title in his favour through a contract of purchase.
The primary purpose of buying is to assemble goods upon demand, for resale or use in production or personal consumption. The buying function plays a very important role when fashion or style is dominant in marketing. Buying skill is essential not only in analysing the market demand but also in buying the requisite supplies.
Selling and buying must complement each other. They are the two sides of the equation of the exchange. All marketing efforts revolve around the selling and buying functions. The selling function is most important in any business. The primary objective in marketing is to sell goods or services at a profit.
Sales provide income to cover costs and yield a profit. Of course, under the customer-oriented marketing process, selling must offer expected consumer satisfaction and service. Profits are rewards to be earned through serving the demand.
The selling function involves a number of subsidiary activities- (a) product planning and development i.e., merchandising, (b) search of buyers, (c) creation of demand through all means of promotion, (d) negotiation of terms of sale such as quality, quantity and price and (e) sale contract leading to transfer of title and possession of goods.
Function # 2. Physical Supply:
The functions of exchange, viz., buying and selling functions provide only transfer of title or ownership right from a seller to a buyer. Change of ownership is usually accompanied by change of possession. Transport offers this particular service and a buyer can enjoy the physical possession only when the goods bought are duly transported from a seller to a buyer.
Transportation as a marketing function assumes unique importance when we have mass production, mass distribution, and ever- widening markets. As the distance between centres of production and centres of consumption increases, the importance of transport expands. The cost of transport must be justified by the resulting creation of place utility. Speedy, economical and efficient transportation can ensure healthy growth of mass production and mass distribution.
Transportation is the movement of products from the centres of production to centres of processing or manufacturing and then from the factories to the markets (right up to consumers’ residences). Thus it is an essential marketing service at every stage in the flow of goods during concentration as well as dispersion in the process of marketing.
Storage creates time utility by holding and preserving stock of goods for different periods of time during the marketing process. Storage enables equalisation process over period of time, whereas transport enables equalisation of supplies place-wise. Hence, transport and storage facilitate the function of physical distribution. Almost all goods entering the market must be stored at numerous points in the journey of goods from the primary producer to the ultimate consumer.
By means of transport and storage a marketer can easily equalise and regulate supplies place-wise and time-wise so that supply can be adjusted with changing market demand in all markets as well as throughout the period. Storage function is necessary in concentration as well as in distribution. It is performed by a manufacturer, wholesaler, retailer or professional warehouse-keepers.
Storage is essential in both agricultural marketing and marketing of manufactured products. Marketers can easily adjust supply with demand (place-wise and time-wise) with the help of transport and warehousing and thereby consumers can have price stability in all markets and at all times. However, cost of transport and warehousing plays a significant role in the total marketing cost. Hence, physical distribution has assumed great importance in the process of marketing.
Function # 3. Facilitating Marketing Functions:
In the process of marketing at every stage in the machinery of distribution/assembling we need a number of auxiliary or facilitating functions to ensure the smooth flow of goods. These functions help the primary functions of buying, selling, transport and storage.
The important facilitating functions smoothening the marketing process are:
3. Risk management,
4. Market information,
5. Promotion devices such as- personal selling, advertising, packaging, branding and after-sale services.
1. Standardisation and Grading:
Standardisation means prescribing basic limits or grades on the basis of which products may be sorted and to which producer of goods must conform. Grading is the actual sorting of a supply of a given commodity as per specified or fixed norms or standards. Please note that standardisation precedes grading and both are closely related activities.
Standardisation is necessary in agricultural as well as manufactured products. Standardisation and grading are important marketing functions as they enable widening of markets. Buying and selling become easier. Consumer confidence can be secured. We can have uniform quality, size, type, etc. Marketing costs also can be reduced considerably.
Financing is the self-blood of industry. It is required for production as well as for marketing. In the modern market, exchange operations are based on money and credit. There is a certain time interval between the purchase of raw materials and the manufacturing of finished products and from the time goods are made till the consumer pays for them.
Our banks and financial institutions undertake this waiting period. Manufacturer gets bank loan for manufacturing and marketing operations. Dealers and traders get bank finance for purchase of goods and for their resale to the customers. Banks help merchants to finance for holding of stocks of goods lying in the warehouses.
At each sale or purchase, a change in ownership takes place and the question of payment of price arises. Hence, marketing is directly linked with the various aspects of money and banking. Bankers are dealers in money market. They provide money and credit or means of payment to business and thereby solve financial problem of business men. The wheels of marketing machine are constantly lubricated by an efficient system of banking and finance. Instruments of credit like cheques, bills, promissory notes and hundies facilitate trade finance.
The financing function in marketing involves the use of capital to finance the marketing agencies (wholesalers and retailers) in their various activities, plus the financing of goods moving into and through the channels of distribution. Manufacturer, wholesaler as well as retailer demand credit for financing their marketing operations. Credit is used at all levels of marketing. Retailers have to use consumer credit liberally to attract customers. Mass markets for costly consumer durables could be created only through installment credit.
3. Risk Management:
In marketing as in other fields of business there are numerous risks or the chances of loss or damage. We have three major marketing risks- (i) Physical loss or damage of goods, (ii) Economic Joss of values in goods, (iii) Credit losses. Marketers can secure regular insurance facilities to protect themselves against physical loss and credit loss. Though the risk of loss cannot be eliminated, it can at least be transferred to insurance companies by insurance policies.
However, there is no insurance coverage as yet available against loss of value caused by a fall in the market demand or price or from new competition. Protection against these losses can be secured only through minimising the losses with the help of able and competent marketing management.
Hedging provides reasonable price insurance service on futures markets. Cold storage and refrigerated cars reduce risk of commodity perishability. However, risk cannot be totally eliminated. Some can be shifted. Others can be minimised. Some are unavoidable. Hence, element of risk is significant in the total cost of marketing. Intelligent management of risk is the main job of a marketer.
4. Marketing Information:
Marketing decisions are no better than the facts upon which they are based. Information is a vital resource in any business. It has to be collected, processed and interpreted. Decisions are based on facts and figures. Market intelligence means spreading of market information among buyers and sellers.
As marketing conditions are dynamic and they may affect industry in any way and to any degree, producers are interested in securing up-to-date information on changing conditions of supply, demand and prices ruling in the markets.
Marketing executives are interested in knowing trends in market demand, supply, prices and related market information. Equipped with latest market information, risk of loss can be reduced in marketing, in pricing, in forecasting market demand and in facing, competition in the market. Securing and using market information is a mark of good marketing management.
Marketing information service has assumed a unique importance in our business system as decision making process in the field of marketing can be based on adequate, up-to-date, reliable and timely information. Modern means of communication can be employed for dissemination of market information. Organised markets, banks, government agencies act as clearing houses of vital market information.
Computer-based marketing information system offers several benefits to marketing managers:
(i) More timely information,
(ii) More complete information,
(iii) More reliable and thorough analysis of data,
(iv) Better understanding of relationship among the elements of marketing system and
(v) More thorough evaluation and consideration of many alternatives. Marketing plans and programmes are now based on information secured through marketing research and marketing intelligence services.
5. Promotion (Marketing Communications):
The ultimate purpose of marketing is to make sales. All types of marketing communications are essential to establish a flow of understanding or communication between sellers and buyers. Promotional activities can be grouped into three basic categories- (i) personal selling, (ii) advertising and publicity and (iii) specialised sales promotion. Modern marketing entirely depends upon these forms of marketing communications.
In a sense, promotion is an integral part of selling function. At present it has assumed a unique importance in marketing. It is also regarded as a tool of non-price competition. Branding and packaging are powerful means of advertising or marketing communication. Buyer behaviour can be favourably influenced only through promotion. Marketers can increase and maintain their market share only through effective promotion or persuasive communication.
Functions of Marketing – 4 Important Social Functions: Survival, Profitability, Service and Social Responsibility
Marketing management is concerned with the following four social functions. Each function has marketing overtone.
Function # 1. Survival:
Survival may be the basic and ultimate objective of a business particularly under changing environment and changing demand and competition. Survival also is the best measure of economic performance and marketing activity. Social responsibility is an essential condition of survival over the long run. Service is the highway to customer satisfaction and, therefore to survival in competition. Marketing strategies are developed to achieve the survival goal.
Function # 2. Profitability:
Business needs profits to justify its existence. Profitability is a basic objective and profit concept is always present in marketing. The basic duty of the marketing manager is, of course, to serve consumer needs profitably in a way which will be in harmony with long-term survival goals. Profit is the reward for risk-bearing and enterprise. It is also the indicator of efficiency. It assures survival and growth. Even public enterprise must show profitability.
However, please note that profiteering is an anti-social activity. It may lead to consumer exploitation. Business concerns resorting to profiteering, adulterating, hoarding, black marketing may be restricted, penalised or put out of market by social pressure, political action, legislative interference or by economic competition. There may be ceiling on prices and profits, e.g., in a public utility concern.
Function # 3. Service:
Under customer-oriented marketing, serving the demand or customers is the central marketing function. It is the guaranteed road even to profitability. Profit is the by-product of consumer satisfaction. Modern business is a vehicle through which man serves society. The concept of service to customers and to society is based on ethical views of marketing practice. Service to consumers is the master key to both survival as well as profits.
Function # 4. Social Responsibility:
Modern business does not live in a vacuum. It lives in a socio-economic environment. Hence, it has an obligation to meet its social responsibilities to its employees, the community and the public, as well as to its owners and customers. A corporation is expected to act as a good citizen in a society. Managers act as both businessmen and citizens.
They must reconcile the conflicts between the economic responsibility and, social responsibility. If business fails to do so, it will invite additional government regulation. It is expected that social responsibility and enlightened self-interest should coincide. Self-regulation can help marketers to fulfill social responsibilities. Marketing strategies are
formulated always in the light of requirements of social responsibilities.
Managers at all levels in an organisation are involved in resolving the conflict and reconciling the following responsibilities:
1. To the society as a whole,
2. To the consumers,
3. To the employees,
4. To the shareholders, and
5. To the Government.
Stakeholders in a firm are numerous and their expectations can be difficult to reconcile; moreover these expectations ate dynamic and they also change with times.
Modern management is faced by:
1. Critical Public,
2. Challenging customers,
3. Powerful labour, and
4. Exacting- shareholders. It is the arbiter of many interests or public affected by business.
It is called upon to provide:
1. Environment free from pollution,
2. Fair prices, fair quality and fair services to customers
3. Fair pay and fair working conditions to employees, and
4. Fair return on shareholders investment.
Modern business operates in a socio-economic environment. It has to demonstrate not only its economic efficiency but also consumer sensitivity and social awareness. Social responsibilities are not merely the talk of the town but also the talk of the world. Business must assess not only the profitability of its actions, but also, the, overall effect those actions have on the society.
Functions of Marketing – Top 12 Functions: Marketing Research, Marketing Planning, Product Design and Development, Standardization and Grading and a Few More
1. Gathering and analyzing marketing information (marketing research)- Gathering and analyzing marketing information is the first function of marketing. It includes collection and analysis of information related to what the customers want to buy, when they are likely to buy, in what quantities do they buy, from where do they buy etc.
2. Marketing planning- Another function of marketer is to develop appropriate marketing plans to achieve the marketing objectives of the organization like specific plan for increasing the level of production, promotion, increasing sales etc.
3. Product designing and development- Marketer, then, takes decision and develops the design of the product to be manufactured. A good design can improve performance of a product and gives a competitive advantage in the market.
4. Standardization and grading- The next function involved in marketing is standardization and grading.
Standardization- Producing products based on predetermined specifications (standards) to achieve uniformity and consistency in the output is called standardization.
Grading- Classifying products into different groups on the basis of quality, size, quantity etc.; is called grading.
5. Packaging and labelling- The marketer, then, design and develop the package for the product and labels it. Packaging and Labelling are considered as the “Pillars of Marketing.” Packaging- Designing and developing the package for the product is called packaging. Labelling- Designing and developing the label to be put on the package is called labelling.
6. Branding- Branding is the process of creating product differentiation through brand names. Example: Videocon washing machine.
7. Customer support services- A very important function of modern marketing is providing customer support services to bring ‘repeat sales’. It includes after sales services, handling customer complaints, credit services, maintenance services, technical services and customer information.
8. Pricing of product- Another function .of marketer is to fix price for the product after considering the pricing objectives, cost of product, competitor’s price etc.
Pricing- Pricing is the process of determining the price of a product or service.
9. Promotion- The next function to be performed by a marketer is promotion of the product or service.
Promotion is the process of informing the customers about the product and persuading them to buy the product.
10. Physical Distribution- Managing physical distribution of the product is another function of a marketer. It involves selection of channel of distribution and mode of transport for taking goods from the producer to the consumers.
11. Transportation- Transportation involves physical movement of goods from the place of production to the place of consumption. The mode of transport depends on the nature of product, cost, location etc.
12. Storage or warehousing- In order to maintain smooth flow of products in the market, the marketer, stores the goods in the warehouses.
Functions of Marketing – Classifications Provided by Eminent Authors: Functions of Exchange, Physical Supply and Facilitating Function
Marketing process includes marketing functions. These functions help the manufacturer in taking his products from the place of their manufacture to the places of the consumer. Marketing function is defined as “as act or operation or service through which the product and the final consumer are linked together.” Different writers have classified marketing functions in different ways and there is no unanimity among them regarding classifications.
Classification of Marketing Functions:
Many writers have classified marketing functions into three categories, namely, Concentration, dispersion and equalisation. Equalisation means, the activity which occur between the process of concentration and dispersion; Clark and Clark have stated that “equalisation consists of a department of supply and demand on the basis of time, quantity and quality.” Pyle has classified all marketing functions into two categories, namely, concentrating and dispersing.
They are given below:
(i) Buying and assembling;
(vi) Risk taking.
(vi) Risk bearing;
In this classification, some functions are included in both the categories. It is argued that functions under one head help to concentrate or assemble the products and under another head they help to disperse the products.
Some writers have classified marketing functions under utility heads.
1. Creating Time and Place Utility (Physical Movement):
(vi) Grade assembly.
2. Creating Possession Utility (Movement of Ownership):
(i) Determining needs;
(ii) Creating demand;
(iii) Finding buyer and seller;
(v) Transporting likes;
3. Creating Form Utility:
(i) Formulating policies;
(v) Securing information;
(vi) Risk bearing.
The above classification includes large number of functions, but some of them (example- accounting and supervision) are non-essential functions.
Clark and Clark have divided the marketing functions, into the following three divisions:
A. Functions of Exchange:
(i) Buying and assembling
B. Functions of Physical Supply:
C. Facilitating Functions:
(ii) Risk taking
(iii) Standardisation and grading
(iv) Market information
This classification has been widely accepted because all the essential marketing functions are included under it. A brief explanation of all these marketing functions is given here.
In the process of transferring title of goods, the two important functions necessary are buying and selling. These are complementary functions. Buying helps the processes to procure goods of required quality and quantity and at a price satisfactory to him. The purpose of selling is to find, buyers to whom goods can be sold at a price satisfactory to the seller.
The function of buying consists of those activities involved in assembling goods under a single ownership. It is done either by businessmen or consumers. Its immediate purpose is to bring goods where they are wanted for production or resale or consumption.
Buying also involves the following subsidiary functions:
(a) The Function of Planning:
The buyers must plan in order to determine their needs. Business buyers must study their own markets to know the quantity and quality of goods they should buy. Consumers must determine the type of products that they desire to possess.
(b) The Contractual Function:
This involves finding out the sources of supply. This function is more relevant in the case of consumers.
(c) The Function of Assembling:
Modern conditions of production, marketing and consumption make assembling an important activity. Goods produced at different places must be assembled in order to serve promptly the needs of manufacturers, wholesalers, retailers and consumers.
(d) Negotiation and Contractual Function:
The terms and conditions of purchase are negotiated with the seller. After this final agreement are made and the transfer of titles take place.
The primary task of marketing is to bring seller and buyer together. It is essential because no exchange can take place until each knows the desires of the other. At all stages of marketing, it is necessarily for someone to sell.
Selling necessary takes the following subsidiary functions:
(a) The Function of Product Planning:
Though product planning is a production function, it is important to marketing also. A satisfactory product is the starting point of entire marketing activity. The seller must offer a product that satisfies the needs and desires of buyers. He must know what kind of goods he should produces and when to produce. He must make them available to buyers at a price they are willing to pay.
(b) The Contractual Function:
This refers to the location of buyers and maintaining contacts with them.
(c) The Function of Demand Creation:
This include all efforts of sellers to induce buyers to purchase their products. In order to increase sales, demand creational efforts like personal selling, advertising, etc. are undertaken by seller.
(d) The Negotiatory Function:
The terms and conditions of sale are negotiated between sellers and buyers. The terms of sale include such matters as qualities and quantities of products, time and method of shipment, time and method of payment and so on.
(e) The Contractual Function:
This involves entering into the final agreement to sell goods including the transfer of its title.
B. Functions of Physical Supply:
This physical supply of goods from the producers to consumers takes place by means of transportation and storage.
The function of exchange will be effective only through the functions of physical exchange:
Transport development makes possible large scale production, specialisation and widens the market. It enables the flow of goods produced at one place to places of consumption the world over. Transportation service has also added to the variety of goods available for consumption. Besides, it has reduced the cost and increased the speed of their physical distribution.
Storage is essential mainly to the process of equalization. Its function is to hold the stocks of goods from the time of their production to the time their use. Goods must be stored for various reasons — goods produced seasonally may be used throughout the year; goods meant for use during the short period may be produced over the longer period, manufacturer store raw material for ready supply, and the goods are also stored in the hope of getting a higher price in future.
C. Facilitating Function:
In addition to the functions of exchange and physical supply, other facilitating functions involved in marketing are financing, risk taking, market information, standardisation and grading.
Normal marketing process needs vast financial resources for investment in land, buildings, furniture and so on; for maintaining the stock of goods and extending credit to buyers. To meet these demands, large capital is necessary and the means by which this capital is supplied is called ‘financing’. There are people who have the skill required to run a business but have no capital.
At the same time, there are many others who have capital but lack the time, the ability or the desire to invest. Again, in some businesses, there are seasonal peaks during which large capital is required. Firms engaged in such businesses should have either huge amount of capital or they must be able to borrow it. The function of finance is to meet such problems.
2. Risk Taking:
The whole of the marketing process involves undoubtedly a risk. The risk is borne by those who take part in marketing. There is risk of loss, fire, flood, theft, deterioration, damage, bad debts, etc. Loss may also arise due to changes in the conditions of supply and demand and changes in value of money.
Some of these risks can be insured against wholly or partly and then there are many others risks which must be borne by the businessmen. The extent to which these risks can be transferred, borne and incurred against are significant in the marketing process.
3. Market Information:
The function of collection, communications, and interpretation of market information is also important to marketing. Modern marketing requires information such as, the number of consumers and their locations, their purchasing power, their product and brand preferences, their motivation and so on.
Many of the major decisions taken by the businessmen are based on their interpretation of the available problems, such as whether to go into a business, when and where to sell, whether to change the existing products or product lines, whether to sell directly or through middlemen, whether to make any change in the price, and the marketing methods to meet the demands of the changing market conditions.
For taking appropriate decisions on all such issues, market information must be accurate and adequate. It must be properly interpreted by those who use it. Decision making process in the field of marketing should be based on adequate, up to date, reliable and timely information.
In view of this, marketing information service has assumed a unique importance in our business system. Modern means of communication can be employed for dissemination of market information. Organised markets, banks, government agencies act as clearing houses of vital market information.
Computer-based marketing information system offers several benefits to marketing managers. These are- (1) more timely information, (2) more complete information, (3) more reliable and thorough analysis of data (4) more thorough evaluation and consideration of many alternatives.
Under the marketing concept, i.e., customer oriented marketing approach, supply becomes the function (result) of demand. Demand is the main controlling factor and demand analysis must be the foundation of all marketing functions. We have four aspects of demand management- (1) analysis and forecasting of demand, i.e., Market research, (2) product planning and development to match the anticipated demand, (3) influencing and stimulating of demand by promotive sales strategy and pricing, (4) serving of demand i.e., physical distribution, service after sale etc.
4. Standardisation and Grading:
The term standardistaion refers to the establishment of standards for products. A standard is a measure of designation for quantity. It consists of list of specifications. It may be based on size, colour, appearance, chemical content, strength, shape, specific gravity; amount of foreign matter, amount of moisture, etc.,
A standard carries the idea of uniformity. It means, the product brought at different places or from different sellers will be of the same quality. When we call a commodity a standard one, we mean that it is of a certain quality which is dependent upon chemical contents, flavour, size, colour, appearance, etc.
When standardised goods are further subdivided into well-defined classes, they are known to have been graded. Established standards for form goods are commonly called grades. In the discussion on marketing, the word grading is used as being synonymous with standardising, but it should be noted that what is most important is the standard, and grading usually follows standardisation.
The term ‘standard’ has a broader significance than ‘grade’. Grading is simply a means of dividing the products of varying quality, size, etc., into lots conforming to certain standards.
Apart from the various functions of marketing stated by Clark and Clark under three categ6ries. There are some other functions which facilitate marketing of goods.
A brief explanation of these functions is given here:
Pricing is the function around which the supply and demand for a product balances. In economic theory, pricing plays a very important part in the equilibrium of a firm under both pure and monopolistic competition. There is in reality, segments of market for each product. Hence, the prevalence of monopolistic or imperfect competition in the market.
Price is the primary source of revenue which every firm tries to maximise. The firm at the same time tries to expand the market in order to sell more. So, the firm is concerned with maximising the sales. This is possible only at a right price.
The price has to be neither at high, which will drive away the buyers, nor low, which will drive away the sellers being in loss. Hence, pricing decision is not only important but also has to be changing. The price set in the beginning has to be reviewed and reformulated from time to time to maximise the sales.
The various factors which influences the pricing decisions are: Objectives of business, competition, Product and promotion policies, Price elasticity, conflicting interests of manufacturer and middlemen, Influence of non-business groups, etc.
The word brand is a comprehensive term. A brand is name, term, symbol or design or a combination of themes, which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competition. A brand identifies the product for a buyer and gives seller a chance to earn goodwill and repeated patronage.
Branding is the practice of giving a specified name to a product or group of products from one seller. The specified name creates individuality in the product and hence, it can be easily distinguished or recognised in the market from the rival products.
The marketer can build up a bright image of his organisation around the brand. Branded products can be easily recognised by the customer in the retail shop. It offers protection to the consumer as it identifies the firm behind the product.
Branding enables the firm of assured control over the market. It creates an exclusive market for the product. Branding, by differentiating a product from the products of competition, enables the brand owner to establish his own price which cannot be easily compared with the prices of competing goods.
iii. Packing and Packaging:
Packing may be defined as the general group of activities in the planning of a product. These activities concentrate on formulating a design of the package and producing an appropriate and attractive container or wrapper for a product.
The container itself can act as a forceful salesmen at the point of purchase or an effective medium of advertisement ensuring impulse buying. Almost every article has to be packed to make a trip to the ultimate consumer. Packing provides handling convenience, maintains freshness and quality of the product, and prevent the damages of adulteration of the product.
Packaging is much more than mere packing. Packaging is marketing necessity. The problem does not want just the product. They want explanation, assurance, confidences and praise; all integrated or combined with a pleasant and eye catching get-up or appearance on the top to gain action i.e., to close the sale.
Thus, a good package ensures ultimate success of the product as a commercial venture. Packaging is an invaluable and to decision making by the customers and is an important clue to buyers. Package is ‘advertising on the shelf’, a means of attractive display in the retailers shops.
iv. Sales Promotion:
Sales promotion is one of the facilitating functions of marketing and is considered to be a key element in marketing strategy. Prospective buyers must be aware of the- (a) want of satisfying characteristics of the products (b) as well as the availability of the product.
Therefore, the talks assigned to the promotions are establishing and maintaining communication with market segments.
These are various methods to achieve these objectives. Amongst the important promotional methods are, personal selling and advertising. Other methods each appropriate and effective under particular circumstances are, packaging, branding, point of purchase display, discount sale, etc.
However, it is the main determination of the proper ‘mix’ of advertising, personal selling and other forms of promotion which is a major problem confronting the marketing management.
Salesmanship involves direct personal contact of the seller or his representative with the buyer. J.S. Knox has defined salesmanship as the art of persuading people to purchase goods which will give lasting satisfaction, by using methods which consume the least time and efforts.
In personal contact, salesmen make direct contact with the buyer and negotiate for the sale of the goods and services. The efficiency in selling is directly dependent upon the skill with which it is carried on and the individuals who perform this task.
Some of the advantages of salesmanship are, the salesman gives advice to the buyers and helps there to take decisions. He clears the buyers doubts, shows samples and demonstration the product. He helps the indecisive buyers to make their minds and done the sales. He also researches out for prospective buyers to create new demand for the product.
It is not just enough for a business enterprise to produce good quality products. These must be made known to the public through sales activities. The task of selling goods and services is made much easier through advertising. Business has found that advertising is a direct aid to the salesman, simply because consumers must be informed about the products before they can bring them.
Advertising thus makes the final job of selling less difficult. Advertising is beneficial to the manufacturer, salesmen, retailers, consumers and to the community in general.
Functions of Marketing – 3 Major Functions: Exchange, Physical Supply and Facilitating Marketing Functions
The major activities in marketing are called functions of marketing. T.N. Beckman and H.H. Maynard, in their book, define marketing function as- “a marketing function may be defined as a major economic activity which is inherent in the marketing process, pervades it through-out and which, through a continuous division of labour, tends to become specialised.” Thus, marketing functions are a specialised and homogeneous group of activities, involved in the marketing of products and services.
The exchange function involves the transfer of ownership from the producer to the customer.
The important functions of exchange, viz. buying, selling and merchandising are explained below:
Buying refers to the purchase of raw materials to be converted into finished products, or the purchase of finished goods for the purpose of resale.
The buying function involves the following:
(i) Selecting the source of supply at favorable terms and conditions and not at the cost of Quality, price, service, reliability, etc.
(ii) Selecting the mode of purchase
(iii) Negotiating the price and terms and conditions of sale
(iv) Transfer of title or ownership
(v) Method of payment, and
(vi) Assembling of goods in the right quantity, right place and at the right time.
The purpose of all marketing activities is to sell goods or services at a profit, in order to achieve the objectives of the organisation.
The Selling Function Involves the Following:
(i) Creativity of demand
(ii) Search of buyers
(iii) Transferring the title of goods through sale of goods
(iv) Negotiating the terms of sale, etc., and
Merchandising is giving products as per the needs and desires of society. This includes activities aimed at planning and adjusting the product line according to the expectations and desires of customers. Thus, this function analyses the market and the probable products that can be sold in such a market.
Goods lying with producers, wholesalers, etc., have to be transported to the place of consumption. This is the function of physical supply and it includes transportation and storage.
Goods can be transported from one place to another using different mode of transportation like roadways, railways, airways, shipping, etc. Thus, it links the producers and consumers spread throughout the world. Mass production and mass selling are impossible without efficient and economical means of transportation. Transportation thus widens the market.
There is a time lag between production and consumption. So, the goods produced must be properly stored so that they can be utilised whenever there is a demand. Warehousing is helpful for the marketing activity of mass production and distribution of goods, and at the same time production can be carried out throughout the year.
3. Facilitating Marketing Functions:
These allied functions are the facilitating of ownership, transfer, and physical distribution of goods and services. In other words, these allied functions have to perform their role to complete the marketing function and ensure the smooth flow of goods and services.
The allied functions are:
In simple terms, standardisation means that goods are of a specified and uniform quality. It refers to the prices of setting down basic standards that the products must conform to, and to ensure that goods actually poses those standards. For example- the ISI mark, bar code for export items, Agmark for quality agricultural products, etc.
Grading is the process of sorting individual units of a product into well-defined classes or grades. For example- in the case of fruits and vegetables it is classified as first quality, second quality, etc. But in the case of manufactured goods, usually goods are of uniform quality. Thus, grading is the dividing of products into different classes of units, possessing similar characteristics of size and quality.
Standardisation and grading are useful marketing functions due to the following advantages:
I. It facilitates the buying and selling of goods, by sample or description.
II. It helps fetch a better price to the seller.
III. It helps in developing different markets for different standards.
IV. Financial institutions will give loans easily, as they help in evaluating collateral security.
V. It helps in developing a wider market, and
VI. Goods can be valued easily. Therefore in case of loss by fire, theft, or any natural calamity, the insurance claim can be calculated on the basis of value of goods.
Branding is the process of assigning a distinctive name to the product, by which it is known and remembered. In India, big business firms brand products with the producer’s name. For example- Godrej hair dye, Modi carpets, Tata Iron and Steel, Bajaj Autos, etc. Branding has the following advantages;
1. It is helpful to the consumer to identify and recognise the product.
2. It can be differentiated from rival products with the help of a distinctive name, or symbol attached to the product, and
3. A registered brand becomes the exclusive property of its owner and protects it from imitations.
Packing refers to wrapping, crating, filling or compression of goods, to protect them from spoilage, pilferage, breakage, leakage, etc. This ensures protection, safety and convenient handing. For example- soft drinks are packed in crates, food items are packed in plastic bags, fruits are packed in card boxes, etc.
Packing has the following advantages:
(i) It protects the goods from damage and deterioration, while handing, transporting and storing.
(ii) The maximum retail price, features of the product, date of manufacture, etc., can be printed on the packet, and
(iii) Some packages will fetch the attention of the consumer, because they will be attractive and easily noticeable.
Salesmanship is the process of ascertaining the needs and wants of the buyer, by personally approaching him, and satisfying his needs and wants. Direct selling or door to door selling is quite common these days. Here, the salesman goes from house to house explaining the features of the product and if the buyer is satisfied, the sale takes place. Eureka Forbes is using direct selling to sell its vacuum cleaners.
Advertising is a form of mass communication. The seller who wants to communicate his product or service to his customer, advertises his products or services. It is paid communication, because the advertiser has to pay for the space or time in which his advertisement appears. It can be defined as “mass paid communication (presentation and promotion) of goods, services, or ideas by an identified sponsor”. Advertising appears on the internet, newspapers, magazines, television, radio, cinema theatre, posters, etc.
It covers those marketing activities, other than advertising, publicity, and personal selling that stimulate consumers purchasing desires and dealer effectiveness. This includes displays, shows, exhibitions, demonstrations and many other non-routine selling efforts at the point of purchase. For example- in a saree shop, if the customer is in dilemma to select one of three or four sarees, mannequins are used, which wear the saree, to demonstrate so that the customer can select one.
Manufactured goods are to protected from loss, and all possible unavoidable future events. It can be due to a fall in prices, loss due to obsolescence, spoilage, depreciation, fire, theft, floods or any other natural calamities. The General Insurance Company and Oriental Insurance Company are providing protection by covering the financial risk.
This refers to the systematic gathering, recording, and analysis of data about marketing problems, in order to provide useful information for taking decisions related to marketing.
Each organisation now has a separate marketing research section, to analyse the best possible information so that the firm can take timely action whenever and wherever needed.
This is helpful to business firms:
1. To identify and understand the target market
2. To forecast sales
3. To test new products
4. To ascertain the relative position of the firm in the market.
5. To evaluate the effectiveness of marketing policies and programmes used by the firm, and
6. To monitor the environment of marketing.
This means the spreading of market information among buyers and sellers. Producers and buyers are interested in getting the latest update, especially about the ruling prices in the market. For example- share prices quoted in major stock exchanges of the country, silver, gold, bullion and agricultural products with the highest and lowest quoted values in the markets etc., which are announced in newspapers, television, radio, etc.
Finance is referred to as the life blood of business. Insufficient funds may affect the proper functioning of marketing. Sales can be either cash sales or credit sales. Credit sales are needed for sales promotion. But the functions of marketing should not be affected due to the paucity of funds.
Functions of Marketing – 3 Important Functions: Merchandising, Physical Distribution and Facilitating Functions
A marketing function is an act or service by which a finished product and the final consumer are linked together. Sometimes it is not possible to divide the marketing process into a few functions.
However various functions of marketing can be lumped into the following three major heads:
1. Merchandising Functions:
Buying is the first step in the process of marketing. A manufacturer has to buy raw materials for production. A wholesaler has to buy goods to sell them to the retailer. A retailer has to buy goods to be sold to the consumer. Buying involves transfer of ownership of goods.
Assembling means creation and maintenance of the stock of goods purchased from different sources. Sometimes components are collected and assembled into the finished product at one place by middlemen. As two distinct processes, both buying and assembling involve related elements such as quantity, quality, and price date of delivery and other terms and conditions. All these require specialised knowledge on the part of the buyers.
Selling is important from the point of view of the seller as well as the consumer. Only through the sale of goods, the profit-making object of a business concern is achieved. After Industrial Revolution and increasing use of machinery, mass-production has become possible which in turn requires mass selling complicated by the presence of legal restraints. It involves creation of demand, market research, selection of channel for distribution, etc.
2. Physical Distribution Functions:
These relate to the process of transporting the goods from the place of seller to the place of buyer.
These include two main functions:
A good system of transportation increases the value of goods by the creation of place utility. The quick development of transportation and communication and the opening of new avenues have resulted in extension of markets, regular supply, lower price and improved services to the consumers.
(ii) Storage and Warehousing:
Storage becomes necessary, when production is seasonal but consumption is perennial or when production is continuous but consumption is seasonal. Storage involves holding and preserving goods between the time of their production and the time of their consumption.
Storage tends to adjust the supply to demand of the product and holds the price line. It is a function of equalisation. It creates time and place utilities.
3. Facilitating Functions:
These make the marketing process easy. These include financing, risk-bearing, standardisation, pricing, advertising and sales promotion and market information, etc.
Without the availability of adequate and cheap finance, it is very difficult to carry on marketing activities smoothly. Commercial banks, cooperative credit societies and government agencies arrange for short-term finance, medium term finance and long-term finances. Trade credit is also one of the important sources of finance.
A standard is a measure generally recognized as a model for comparison. Standards are determined on the basis of colour, weight, quality and other factors of a product. Standardisation facilitates production and sale of goods.
(iii) Market Information:
Decisions on marketing are based on information regarding market conditions. Marketing research has now become an independent branch of marketing.
Marketing of goods involves innumerable risks due to theft, deterioration, accidents, etc. The most important factor responsible for the risk is fluctuation in prices. The other factors may be change in fashion, increased competition, change in habits of the consumers, natural calamities, etc.
Businessmen have to foresee the business risks and take concrete steps to avoid them by insurance and hedging. Still unavoidable risks have to be borne by the businessmen.
Pricing is an important function closely related to selling. Pricing policy of the concern directly affects the profit element and its successful functioning. Several factors are to be borne in mind in determining the price policy such as cost of the product, competitors’ prices, marketing policies, government policy or customary or convenient prices, etc.