Define marketingExplain the relevance of marketing in a developing economy?

Answer 1

Q1. Markets are the context, both physical and conceptual, where exchange takes place. Marketing includes all activities from the producer to the final including processing and distribution systems. The term producer includes farmers or pastoralists and the manufacturers of production inputs when they produce the commodity being marketed. The term consumer is used for anyone who is the final consumer of a product or the final user of a production input (e.g. pastoralists may consume butter and veterinary inputs). The retailer is the final link in the chain from producer to consumer. Hence, an urban butcher is a retailer and so is a vaccinator in the government veterinary services who delivers a vaccination. The wholesaler delivers the product to the retailer. The term farm gate is the location of a sale where a farmer keeps his or her animals or produces his or her crop (i.e. on a farm in the case of settled cultivators or at an encampment in the case of pastoralists). The terms market actors and market agents are used interchangeably to represent any persons participating at any level of the market.

The objectives of marketing vary. For the individual producer or consumer, the objectives may be to maximise benefits from the resources available and to expand marketing operations in order to increase wealth. From a societal viewpoint, the objectives may be to encourage efficient allocation of resources, to create wealth and promote economic growth in order to improve the general welfare of society. Important considerations may also be to improve distribution of income between sectors of the economy and to maintain some stability of supply and demand for marketed goods. The concurrence of marketing objectives with national policy objectives identified in module 2 will be discussed later in this module.

Marketing and trade play vital roles in the economic growth and overall development of a nation. The major roles of marketing and trade in the national economy can be thought of in terms of:

· specialisation in activities of comparative advantage

· enhanced resource-use efficiency and trade

· advances in marketing with economic growth.

Specialisation in activities of comparative advantage

Without market facilities, areas must maintain diversified activities to produce their own food, shelter, tools and other needed goods. In the presence of a market, however, an individual can specialise in one activity and sell the surplus in order to purchase other needed goods. The individual is likely to specialise on the basis of a comparative advantage in that activity for which he or she has some special resource or ability. A comparative advantage exists when an individual or region can produce a good, relative to the price of other goods, more cheaply than another individual or region. In livestock production, comparative advantage is often the result of agro-ecological conditions particular to a region making it suited to certain specialised activities. The agro-ecological basis for production results in regional comparative advantage, whereby all of an area with that common agro-ecological base shares the ability to produce the good relatively more cheaply than another area.

Enhanced resource use efficiency and trade

Through specialisation and trade, a community is better able to utilise its limited resources. Specialisation and the resulting efficiency of resource-use is the basis for economic growth and development. As markets and economies develop, surpluses occur more frequently in profitable activities, creating new wealth, while products are moved greater distances than before. Thus, trade is a necessary ingredient for economic growth. Marketing is simply the means by which trade occurs.

Advances in marketing with economic growth

As economic growth proceeds, several changes in marketing take place. With economic development, the activities and tasks of marketing increase. Activities such as storage and processing, packaging and retail distribution become more important. Greater activity moves away from the site of production and towards marketing. This, in turn, creates employment opportunities and further specialisation (diversification of the community). Since livestock products typically have positive income elasticities of demand, economic growth can lead directly to new opportunities for production. Thus, the livestock subsector increases in importance. With development, more economic agents may enter trade, helping to improve marketing services and, in some cases, allowing the market to capture external economies of scale. This refers to a situation where the presence of many agents allows each one to operate at a lower cost. An example is the case where increased trade in some commodity (e.g. livestock allows for the establishment of large storage facilities (e.g. pre-slaughter holding areas), which lowers per unit storage costs. The physical infrastructure can also be affected in a positive way by large markets, in the form of better roads and communication, offering the potential for external economies of scale.