Explain the Exchange functions


Explain the Exchange functions.


These functions are what is commonly thought of as marketing. They involve finding a buyer or seller, negotiating price and transferring ownership (but not necessarily physical transfer
These functions take place at the 'market' – that is, the physical meeting point for buyers and sellers at the point of production or via some other means of communication. At this point, formal or informal property rights are important to ensure the reliable transfer of ownership and to guarantee legality (e.g. that animals on sale were not stolen and will not be reclaimed).

a) Buying inputs:

This is procuring inputs required to produce goods and services. The marketing concept holds that the needs of the customer are of paramount importance. A producer can be said to have adopted a market orientation when production is purposely planned to meet specific demands or market opportunities. Thus a contract farmer who wishes to meet the needs of a food processor manufacturing sorghum-based malted drinks will only purchase improved sorghum seed. He/she will avoid any inputs likely to adversely affect the storage and/or processing properties of the sorghum and will continually seek new and better inputs which will add further value to his/her product in the eyes of the customer. In making his/her buying decisions his underlying consideration will be the effect upon the attractiveness of his/her output to the markets he/she is seeking to serve.
The buyer's motive is the opportunity to maintain or even increase profits and not necessarily to provide, for example, the best quality. Improving quality inevitably increases the associated costs. In some cases the market is insensitive to improvements in quality, beyond some threshold level, does not earn a premium price. Under such circumstances, the grower who perseveres and produces a ‘better product’, is not market oriented since he/she is ignoring the real needs of the consumer. The most successful agribusiness is the one which yields the largest difference between prices obtained and costs incurred.

b) Selling products:

Of the nine functions listed, this is probably the one which people find least difficulty in associating with marketing.
-Indeed to many the terms marketing and selling are synonymous. Most firms practice the selling concept when they have over capacity. Their immediate aim is to sell what they can make rather than to make what they can sell.
There is no denying that ‘high pressure selling’ is practiced, where the interests of the consumer are far from foremost in the mind of the seller. This is not marketing. Enterprises adopt the marketing philosophy as a result of becoming aware that their own long term objectives can only be realized by consistently providing customer satisfaction. Whereas selling might create a consumer, marketing is about creating a customer. The difference is that marketing is about establishing and maintaining long term relationships with customers.
-Selling is part of marketing in the same way that promotion, advertising and merchandising are components, or sub-components of the marketing mix. These all directed towards persuasion and are collectively known as marketing communications; one of the four elements of the marketing mix.
janetraph answered the question on March 14, 2019 at 06:26

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