Top 9 Marketing Functions of a Business | Functions | Marketing Management

The following points highlight the top nine marketing functions of a business. The functions are:- 1. Buying 2. Selling 3. Transportation 4. Storing 5. Standardisation, Grading and Branding 6. Market Financing 7. Pricing 8. Risk Assuming 9. Advertising.

Function # 1. Buying:

It is an important function in all business con­cerns. The manufacturing firms are required to purchase huge quantities of raw materials and other requisites. The trading firms buy goods for the purpose of selling than to others. Buying activity is interlinked with the selling activity.

Economy and efficiency in a buying function on the part of the manufacturers or traders will enable than to earn more profits. Properly speaking, buying involves taking a few important decisions as to the quantity, quality, and variety required to be purchased and calls for determining the time of purchase, source of supply, and the terms of purchase.

There are three main modes of buying, such as:

(i) Buying by inspection,

(ii) Buying by sample or pattern, and

(iii) Buying by description or brand.

In an inspection method of buying the buyer visits the seller’s premi­ses and inspects the whole lot of goods proposed to be bought and finally approves for effecting the buying transaction. This method is suitable for both the buyers and sellers when they live in the same area or locality.

This method is mostly followed by the individual consumers. Industrial consumers even when located at far-off places follow this method for special and quality products. The Central and State Governments follow this method of buying for their requirements after observance of certain formalities with the sellers.

‘Buying by sample or pattern’ method is very common and convenient. The buyer considers the sample or pattern as the representative of the bulk or lot, and examines the attributes or specifications of the sample to see its conformity with the requirements.

In a buying-selling transaction based on this method, it is the usual practice for the buyer to obtain an undertaking from the seller that the goods in bulk or bigger lots will contain the same quality as the sample or pattern shown to him.

In the method of ‘buying by description or brand’, an intending buyer chooses a particular brand in the catalogues or price lists circulated by the seller and effects the buying transaction.

Function # 2. Selling:

The primary objective of a business enterprise is realised through the activity of selling by way of supplying goods and services to the consumers. “Selling is the process whereby goods and servi­ces finally flew to the consumers who need then and the firm performs its function of distributing its products among consumers.”

A selling function, in the present day economy, involves three major steps as under:

(i) Informing the consumers or customers about the availability of the products in the market;

(ii) Ascertaining the consumer behaviour and demand for the products and competitive position in relation to the rivals; and

(iii) Making efforts to create demand for new products which are introduced in the market which include consumer needs asse­ssment, location of new consumers or users, etc.

The most common methods adopted for demand creation are:

(i) Personal selling i.e. the engagement of salesmen to convince the consumers about the usefulness of the products.

(ii) Advertising i.e. appealing to sate basic needs car instincts of the consumers and inspiring than to accept or buy the pro­ducts.

(iii) Giving the consumers an opportunity to use the products and getting the information feedback about consumer satisfaction.

Furthermore, since profit is the surplus of selling price over the cost of doing business, sales provide the continued existence of business.

In the modern set-up of the economy, demand creation has been the core of selling.

Function # 3. Transportation:

In marketing, transport discharges an important function since the entire activities of assembling and dispersal of goods are done with the help of sane forms of transport. Transport imparts place utility to goods by moving than from different centres of production to the places of consumption.

There are several means of transport which may be grouped under three heads:

(a) Land transport,

(b) Water transport, and

(c) Air transport.

Motor; trucks and railways are the two principal forms of land transport. Water transport comprises inland and foreign shipping. Air transport was confined to the carrying of passengers so long, but gradually it is making headway as a carrier of goods. The comparative efficiency of the different forms of transport is judged with reference to the transport service and its cost.

In specific terms the widening of markets, the stabilisation of commo­dity prices, the increase in the scale of production and the specialisation in industry are the outcome of the improvements in transportation and tra­ffic services.

Function # 4. Storing:

It is an important function of marketing. It adds both ‘time utility’ and ‘place utility’ to the goods. By preserving the goods from the time of production to the time of consumption, storage aids in the steady flow of goods to the market. Further, by holding the goods in different warehouses situated at different places, it ensures a prompt supply of goods to those market areas where they are wanted.

If transporting and advertising are designed to widen the market, then storage is an essen­tial function fear deepening the market. As production is made nowadays in anticipation of demand, the storage becomes indispensable at some point of time or other in the total marketing process.

Function # 5. Standardisation, Grading and Branding:

A standard is an established measure or concept of quality which provides a model for comparison between the products of the same kind. Standards describe the nature and characteristics of the products with reference to shape, size, colour, performance and like requisites.

Standardisation conveys the idea of uniformity and identity in respect of quality or some other matters. In manufacturing operations, standards play an important part in securing efficiency and economy. Not only finished products are standardised, but also the materials, processes and performances are standardised.

As manufac­tured goods are standardised in the productive process, they do not require any standardisation in the sphere of marketing. But farm products and mining products are supplied in the market in different qualities and with varying features.

There is a lack of uniformity or standardisation in the variety of natural products available from the soil. Standardisation becomes an important marketing function in such cases in order to facilitate sale and purchase of goods.

In general meaning of the term, standardisation includes the establish­ment of standards, the sorting and grading of tie products to coif arm to these standards, re-packaging, breaking up large quantities into smaller units of desirable size, and product inspection. Thus grading, branding and packaging are important aspects of standardisation.

These are discussed below in brief:

Grading:

In contrast to the manufactured products, natural products can never be standardised perfectly, and there must be some variations between two or mare products. Nevertheless, such products are capable of being divided, associated, or classified into certain common lots. This is what is done through grading.

Grading involves the division of products with reference to some predetermined standards or measures of quality. According to F.E. Clark (Principles of Marketing), grading is the division of products into classes made up of units possessing similar characteristics of size and quality.

As the manufactured products are turned out by machines with a high degree of accuracy, the question of grading becomes completely irrelevant in such situation.

Grading may be of two classifications – fixed and variable. Fixed grading of products is done according to the fixed standards of quality.

The grading of wheat, cotton, etc. is made in this manner. Variable grading of products is done with the use of varying standards or norms. In India, the Agricultural Produce (Grading and Marketing) Act 1937 provides for cer­tain parameters of grading. Graded products, which satisfy and conform to certain standards of quality and specifications laid down by the Central and State Governments, are marked AGMARK.

Branding:

It has become an inseparable part of modern mass-selling process. Standardised machine products are marked under a particular brand name with a view to identifying their sources of production and establishing the individuality of products. The manufactured goods do not require any grading, but they involve branding.

Farm products and mining products are subject to grading; and as a step further, they may be branded in some cases. The primary object of branding is to introduce product differentia­tion in the market and to single out a product from its rivals. The manufac­turer protects the brand name or trade mark by registration and maintains it by guaranteeing the quality of products.

There are three bases adopted for branding the firm’s products:

(i) Symbols and marks:

These are used as brand names such as Lion brand Cocoanut oil, Four Square brand Cigarettes, etc.

(ii) Special names:

These are given for branding products such as Rexona Soap, Gold Flakes Cigarettes, etc.

(iii) Manufacturer’s name:

These are embossed, engraved or printed on the products such as Bata Shoes, Godrej steel furniture, etc.

Function # 6. Market Financing:

It is an important function of both marketing and production. Like a manufacturing concern, a marketing enter­prise requires fixed capital as well as working capital.

However, this requirement of fixed capital is comparatively much lower than that of work­ing capital. Working capital is needed in marketing to carry stocks of goods, to extend trade credit, and to meet operating expenses like salesmen’s wages, advertising, transporting and office expenses.

The same considera­tions as are required in the case of physical production go to determine the amount of working capital, namely:

(i) The volume of business transac­ted,

(ii) The rapidity of stock turnover,

(iii) The nature of the business and value of goods,

(iv) The terms of purchase and sale, and

(v) Liquidity facility of assets.

There are three important sources of capital to a marketing enter­prise:

i. Owner’s investment,

ii. Bank credit and

iii.Trade credit.

It is needless to point out that the greater the amount of owner’s investment, the better will be the standing of an enterprise in the market.

The entire amount of fixed capital and at least 50 per cent of the working capital should be covered by the owner’s investment; and this amount is regarded as the irreducible minimum.

Short-term borrowings from commercial banks and other agencies are made by almost all concerns. These borrowings are necessary during periods of seasonal peaks when an extra amount must be found out. But when borrowings are made during the normal period, they do not indicate a healthy sign, the reason being their permanent employment in the business.

The manufacturer extends trade credit to wholesalers who, in turn, allow such facility to retailers. Trade credit enables the manufacturer and whole­salers to increase sales, to enhance reputation and to strengthen their positions in the market.

In our country, internal trade is financed by various indigenous bank­ers, commercial banks and foreign exchange banks, while foreign trade is supported mostly by the exchange banks and the State Bank of India. The banks give advances by way of loans, overdrafts and cash credits as well as by discounting hundis and bills.

In the marketing of farm products, indigenous bankers supply funds in the primary market, commercial banks in the secondary market, and the foreign exchange banks in the terminal market for foreign shipment.

Function # 7. Pricing:

Price is the governor of marketing activity, as sales are mainly circumscribed by the pricing of products. Price is deter­mined by the top executives in such a way that it may bring the largest volume of sales with a sufficient profit margin. A number of considerations are involved in the pricing of products.

First, the price must be high enough to cover all costs of production, but at the same time, low enough to attract customers.

Secondly, the extent of competition that a particular line of product has to face in the market often influences the pricing of products. For the sake of competition, varying margins of profits may be required to be fixed for different products of an enterprise.

Thirdly, methods of marketing require the determination of several prices for different parties, viz., wholesale price, retail price and consu­mer price. These price differentials must be satisfactory to all parties; otherwise, traders may not push the goods in the market, and consumers may be driven to products of other concerns.

Resale Price Maintenance:

In the case of domestic consumers’ goods, resale price maintenance has become the accustomed practice of all manufacturers. The manufacturers set the price at which the wholesaler is to sell the product to retailers, and also the price at-which the retailer should sell the goods to consumers. This determination of wholesale, retail and,’ consumer prices is known as resale price maintenance.

The principal advantage lies in the price stability that it brings to the benefit of all parties. The consumer is required to pay a fixed price wherever he may purchase goods. The dealers are assured of a steady margin of return in the handling of these products.

The manufacturer can count upon a steady rate of return in respect of his future production. This price maintenance protects the weak and inefficient retailers from the goods being undersold by other retailers. But the consumer is deprived of the benefit of a possi­ble price reduction.

The proponents of resale price maintenance argue that the system of price-cutting casts a demoralizing influence on the market. Price-cutting undermines public confidence, and consumers become skeptical about the fairness of prevailing prices. The profit margin of both dealers and manu­facturers may be affected to such an extent that products are ultimately displaced from the market.

The use of price lines has become important nowadays in the field of retailing. A series of predetermined prices is adopted in the marketing of products dealt in, whether trading is confined to a few products or to a number of products. Price line assists the retailers in buying’, pric­ing, record keeping as well as in pushing sales among consumers of different income groups.

The consumers can select the goods easily, compare their values and make necessary bargains. However, to offer goods at certain fixed prices within the price line, the retailer is required to select the product items in such a way that their prices can fit in with the patt­ern of price lines.

Normal selling prices are to be marked up or marked down in some cases to put the items in some recognised price lines. leaving aside profit margins on individual items, overall trading margin is stressed under this system of price marketing.

Function # 8. Risk Assuming:

In marketing, there are innumerable risks which are to be assumed either by the seller or by somebody else. Goods may be destroyed by fire, shipwreck, train car motor accident, flood, storm and a variety of other causes. They may be stolen, burgled or decayed. There are also risks of falling prices, bad debts or changing demands.

All these risks make the cost of marketing too high. With a view to reducing the risks, businessmen try to shift sate risks on the shoulders of others, and to eliminate other risks through the adoption of safety measures. For the businessmen and consumers, the majority of business risks can be shifted to the insurance company against the payment of a money consideration known as premium.

Elimination of risks:

Risks of fire, theft and physical injury can be lessened or eliminated by the construction of fire proof building and introduction of automatic sprinkler services, by the setting up of vaults and employment of constant watchmen, and by careful handling of products and equipment’s through trained personnel. Risk of price or demand changes can be guarded against by trend analysis, study and forecasting.

Bearing of risks:

There are yet many risks which are left far the businessmen. These are the irreducible risks present in marketing; and the burden of such risks, in their ultimate analysis, is transferred to the consumer in the shape of increased prices of products.

Function # 9. Advertising:

For creating the demand for new products intro­duced in the market or for bolstering the demand for listing products, advertising is carried out in many cases in the form of campaigns.

Adverti­sing campaign refers to the systematic and organized efforts directed over a period towards influencing consumers’ choice if products in the market. To aid such campaign, factual information relating to market situations and possibilities is supplied by the activities of marketing research.