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    Market Integration 2

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    Pat Jimenez
    This document discusses types and effects of market integration. There are three main types: horizontal, vertical, and conglomeration. Horizontal integration occurs when firms in the same marketing level combine, like retailers merging. Vertical integration links different marketing levels under one ownership, like a manufacturer acquiring retailers. Conglomeration combines unrelated businesses. Market integration can increase market power and profits but also reduce flexibility and competition. The reasons for integration include reducing costs, risk, and improving coordination across the marketing process.

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    Market Integration 2

    Uploaded by

    Pat Jimenez
    21 views21 pages
    This document discusses types and effects of market integration. There are three main types: horizontal, vertical, and conglomeration. Horizontal integration occurs when firms in the same marketing level combine, like retailers merging. Vertical integration links different marketing levels under one ownership, like a manufacturer acquiring retailers. Conglomeration combines unrelated businesses. Market integration can increase market power and profits but also reduce flexibility and competition. The reasons for integration include reducing costs, risk, and improving coordination across the marketing process.

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    This document discusses types and effects of market integration. There are three main types: horizontal, vertical, and conglomeration. Horizontal integration occurs when firms in the same marketing level combine, like retailers merging. Vertical integration links different marketing levels under one ownership, like a manufacturer acquiring retailers. Conglomeration combines unrelated businesses. Market integration can increase market power and profits but also reduce flexibility and competition. The reasons for integration include reducing costs, risk, and improving coordination across the marketing process.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    21 views21 pages

    Market Integration 2

    Uploaded by

    Pat Jimenez
    This document discusses types and effects of market integration. There are three main types: horizontal, vertical, and conglomeration. Horizontal integration occurs when firms in the same marketing level combine, like retailers merging. Vertical integration links different marketing levels under one ownership, like a manufacturer acquiring retailers. Conglomeration combines unrelated businesses. Market integration can increase market power and profits but also reduce flexibility and competition. The reasons for integration include reducing costs, risk, and improving coordination across the marketing process.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 21

    MARKET INTEGRATION

    CONTENT
    • Introduction
    • Types of market integration
    • Effects of market integration types
    • Advantages and disadvantages of market integration
    • Reasons for market integration
    Market integration
    • Integration shows the relationship of the firm in a market. The extent of
    integration influences the a conduct of the firms and consequently their b
    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.
    • Kohls and Uhl have defined market integration as a process which refers
    to the expansion of firms by consolidating additional marketing function
    and activities under a single management.
    • retailers and the setting up of another plant by a milk processor. Example
    of market integration are the establishment of whole selling facilities by
    food
    • In each case, there is a concentration of decision making in the hands of a
    single management.
    Types of Market Integration
    There are three basic kinds of market integration
    1. Horizontal integration
    2. Vertical integration
    3. Conglomeration
    Horizontal integration
    • This occurs when a firm or agency gains control of other firms or agencies
    performing similar marketing functions at the same level in the marketing
    sequence.
    • In this type of integration, some marketing agencies combine to form
    union with a view to reducing their effective number and the extent actual
    competition in the market
    • It is advantageous for the member who join the group.
    • In most markets, there is a large number of agencies which do not
    effectively compete with each other.
    • This is indicative of some element of horizontal integration.
    • It leads to reduced cost of marketing.
    • In this reduced competition possible.
    Effects of Horizontal integration
    • Buying out a competition a time bound way to reduce competition.
    • Gaining larger share of the market and higher profits.
    • Attaining economies of scale a proportionate saving in costs gained by an
    increased level of product specializing in the trade.
    Advantaged of Horizontal integration
    1.Costs.
    2.Higher efficiency
    3.Increased product differentiation.
    4.Increased market power.
    5.Reduced competition.
    6.Access to new market.
    7.Economics of scale.
    8.Economics of scale.[a proportionate saving gained by producing two or more distinct goods, when the cost
    of doing so is less than that of producing each separately.]
    9.International trade.
    Disadvantages of Horizontal integration
    1.Destroyed value.
    2.Legal repercussions.
    3.An unintended consequences of an event or action
    4.Reduced flexibility
    Vertical 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
    within a single firm or under a single ownership.
    • This type of integration makes it possible to exercise control over both
    quality of the production process until the product is ready for the
    consumer.
    • It reduced the number of middle men in the marketing channel.
    Forward Integration
    If a firm assumes another function of marketing which is closer to the
    consumption function, it a case of forward integration.
    Example: wholesaler assuming the function of retailing.
    Backward Integration
    This involves ownership or a combination of sources of supply.
    Example: firm assumes the function of assembling/purchasing the produced
    from the vilages.
    Balanced Vertical
    The third type of vertical integration is a combination of the backward and
    the forward vertical integration.
    Advantages of Vertical Integration
    It allows to invest in assets that are highly specialized
    It gives more control over business.
    It allows positive differentiation.
    It requires a high level of certainly when it comes to quality.
    It provides more competitive advantages.
    Disadvantages of Vertical Integration
    Capacity-balancing problems.
    Bring about more difficulties.
    Results in decreased flexibility.
    Create some barriers to market entry.
    Cause confusion within the business.
    Requires a huge amount of money
    Effects of Vertical Integration
    • More profits by taking up additional functions
    • Risk reduction through improved market coordination
    • Improvement in bargaining power and the prospects of influencing prices
    • Lowering costs through achieving operational effeciency
    Conglomeration

    A combination of agencies or activities not directly


    related each other may, when it operates under a unified
    management, be termed a conglomeration.
    Effects of Conglomeration
    • Risk reduction through diversification
    • Acquisition of financial leverage
    • Empire- building urge.
    Reason for market integration
    • To remove transaction costs foster competition
    • Provide better signals for optical generation and consumption decisions
    • Improve security of supply.

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