Chapter 2: Market Integration Flashcards
_____ shows the relationship of the firm in the market.
Integration
The extent of integration influences the conduct of the firms and consequently the marketing efficiency. The behavior of a highly integrated market is different from that of a disintegrated market. Markets differ in the extent of integration and therefore, there is a variation in their degree of efficiency.
MARKET INTEGRATION
________ have defined market integration as a process which refers to the expansion of firms by consolidating additional marketing functions and activities under a single management.
Kohls and Uhl
There are Basic Types Market Integration
- Horizontal Integration,
- Vertical Integration,
- Conglomeration
this occurs when a firm or agency gains control of other firm or agencies performing similar marketing functions at the same level in the marketing sequence.
Horizontal Integration
In this type of integration some marketing agencies combined to form a union with a view to reducing their effective number and the extent of actual competition in the market. It is an advantage for members who join the group.
Horizontal Integration
this occurs when a firm performs more than one activity in the sequence of the marketing process. It is linking together of two or more functions in the marketing process with a single firm or under a single ownership.
Vertical Integration
This type of integration makes it possible to exercise control over both quality and quantity of the product from the beginning of the production process until the product is ready for the consumer. It reduces the number of middle men in the marketing channel.
Vertical Integration
a combination of agencies and activities not directly related to each other may, when it operates under a unified management, be term a conglomeration.
Conglomeration
Degree of Integration
- Ownership Integration
- Contract integration
This occurs when all the decisions and assets of firms is completely assumed by another firm.
Example: A processing firm which buys a wholesale firm.
Ownership Integration
This involve an agreement between two firms on certain decisions, which each firm retains it separate identity.
Example: tie up of a dhal mill with pulse traders for supply of purse grains.
Contract integration
The measurement or assessment of marketing integration may be attempted at two levels.
- Integration among firms of a market.
- Integration among specially separated markets.
-the degree of correlation between two prices is taken as an index of the extent to which the two markets are integrated.
Price Correlation
-A higher degree of correlation coefficient indicates a _____ at least in terms of pricing the product between market centers and vice versa
greater degree of integration
