MARKETING

EFFICIENCY
Presented By: Brijesh Patel

Definition
Marketing efficiency as the ratio of market output or satisfaction to marketing
input or cost of resources. An increase in this ratio represents increased efficiency
and a decrease denotes low efficiency.
According to Jasdanwalla
The term marketing efficiency may be broadly defined as the effectiveness or
competence with which a market structure performs its designated function.
Two distinct approaches have been adopted:(1) Analysis of marketing margin at various stages of movement of a farm product
from producers to the final consumers,
(2) Analysis of the functioning of the market using structure conduct
performance framework.

Introduction
Marketing efficiency is essentially degree of market performance. In this sense
the concept is broad and dynamic.
Efficiency of a market structure through the following.
Farmers expect quick market clearance and higher prices for their produce.
Consumers expect ready availability of products in the form and quality
desired by them at lower prices
Traders and other functionaries expect steady and increasing incomes; and
Government expect the system to safeguard the interest of all the three
sections and in a proportion which is considered to be fair so that overall
long-run welfare of the society is maximized.

Components of marketing efficiency

Effectiveness with which a marketing service is performed.
The cost at which the service is provided.
The effect of this cost and the method of performing the service as 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.
But a change that reduces costs but also reduces consumer satisfaction need not
indicate increase in marketing efficiency. A higher level of consumer satisfaction
even at a higher marketing cost may mean increased marketing efficiency
An efficient marketing system for farm products ensures that
Increase in the farm production is translated increase in the level of income in
the economy
Consumers derive the greatest possible satisfaction at the least possible cost.

Assessment of marketing efficiency

Technical or Physical or Operational efficiency: It pertains to the cost of
performing a function; Efficiency is increased when the cost of performing a
function per unit of out put is reduced. Eg: - Storage processing, handling etc.
Pricing / A locative efficiency: Pricing efficiency refers to the structural
characteristics of the marketing system, when the sellers are able to get the true
value of their produce and the consumers receive true worth of their money.

Empirical Assessment of Marketing Efficiency

Marketing
is said to be efficient, if the total marketing margin is reduced for a given

marketing cost.
Ratio of Output to Input

A reduction in the cost for the same level of satisfaction or an increase in the
satisfaction at a given cost results in the improvement in efficiency.

E = level of efficiency
O = value added to the marketing system.
I = real cost of marketing

 The
marketing efficiency of the two channels is measured by Shepherds Method,
Acharya and Agarwals Method.
Marketing Efficiency by Shepherds Method
The marketing efficiency is measured with the help of the following formula
given by Shepherd:
Where,
ME = Index of Marketing Efficiency,
V = Value of goods sold or consumer price and
I = Total marketing cost or marketing cost per unit.

Acharya and Agarwals Method

The
marketing efficiency is measured by using the following formula given by
Acharya and Agarwal:

Where,
E = Marketing Efficiency,
O = Output of the marketing system (value added, that is, difference between
consumers price and producers price) and
I = Inputs used in the marketing process (marketing cost).

Composite Index Method

The marketing efficiency was also analysed by using composite index method.
The percentages of producers price, marketing cost and marketing margin to
consumers price per quintal were calculated and these were assigned ranks. Total
scores were found by adding the respective ranks in each Channel. The mean
scores were calculated for each channel. Where the mean score is less, it showed
the real marketing efficiency of the Channel.

Case Study: