Marketing function refers to the act, operation, or service by which the original producer and the final consumer are linked together. As the marketing system becomes more complex, there arises a need for new functions.

It includes all the functions and processes involved in moving the produce from farmers to consumers. Many functions are involved in the marketing of farm products, and neither the producers nor the consumers of farm products are located in one place. They are spread across the country.

Classification of Marketing Functions

Marketing functions can be classified in various ways. Thompson has classified the marketing functions into three broad groups:

1. Primary Functions

i. Assembling or Procurement: In agriculture, goods are mostly produced by small farmers scattered over a wide area. Collection of small quantities from them before further marketing processes is necessary. Assembling means bringing together, collecting, and concentrating goods of the same type from various sources of supply at centrally located places.

ii. Advantages include economy in transportation, availability of goods in large quantities, widening markets, enabling grading, and making processing more economical.

iii. Processing (Preparation for Consumption): Very few agricultural products are ready for final consumption at the farm level. In most cases, the marketing system must convert them into suitable forms before they can be delivered to consumers.

Processing also helps in addressing surplus production by converting excess farm produce into durable items, creating new demand. Processing is defined as the act or series of acts by which a product is converted into a more usable form.

iv. Dispersion or Distribution: Dispersion is the process opposite to assembling. After collecting and processing the products from many farmers, the dispersion process begins.

Dispersion involves finding where potential buyers are located, determining their preferences, and agreeing on prices. It also includes the sale of goods, their physical movement, and the transfer of funds back to the central and assembling markets. Dispersion typically starts from major wholesale markets and proceeds through various marketing channels.

2. Secondary Functions

Secondary functions facilitate the smooth operation of primary functions, including assembling, processing, and dispersion.

i. Packing or Packaging: Packing is the first function performed in the marketing of agricultural commodities. Nearly all farm products require packing at every stage of the marketing process.

The type of container used depends on the commodity and the marketing stage. Packing ensures easier handling, reduced freight costs, lower storage and handling expenses, prevention of damage and deterioration, and prolonged storage life.

ii. Transportation: Transportation is one of the most important functions of the agricultural marketing system due to the bulky and perishable nature of agricultural products. It involves moving the produce from the farm to assembling centers, urban markets, and consumer centers.

Rail, air, and water transport are commonly used, with efficiency depending on the speed of delivery and care taken during transit. Transportation creates place utility.
Advantages include widening markets, narrowing price differences over space, creating employment, facilitating specialized farming, transforming the economy, enabling mobility of production factors, and helping in market development.

iii. Grading and Standardization: Agricultural produce differs in size, color, quality, and nutritive value. Standardization is used to determine the grades or classes of products, while grading sorts individual specimens into these grades. Grading ensures uniformity, making it easier to obtain better prices and enhancing marketability.

3. Tertiary Functions

Tertiary functions support the overall marketing process.

i. Banking: Banking services are essential for financing marketing activities, ensuring liquidity for farmers and traders.

ii. Insurance: Insurance provides a safeguard against potential losses due to risks such as crop failure, spoilage, and accidents during transport.

iii. Communication (Post and Telegraph): Effective communication systems are crucial for coordinating activities in the agricultural marketing system.

iv. Supply of Energy (Electricity): Energy supply, particularly electricity, is critical for processing, storage, and transportation, making it a key element in agricultural marketing.

Storage and Warehousing

Agricultural produce is of seasonal nature, it is produced at a particular point of time. However, demand for agricultural produce is constant throughout the years. This characteristic increases the importance of storing.

Storage is an exercise of human foresight by means of which commodities are protected from deterioration and surplus products are stored for release in future scarcity to get better prices.

1. Warehousing: Warehouses are scientific storage structures especially constructed for the protection of the quantity and quality of stored products. Warehousing may be defined as the assumption of responsibility for the storage of goods.

It may be called the protector of national wealth. The warehousing scheme in India is an integrated scheme of scientific storage, rural credit, price stabilisation, and market intelligence and is intended to supplement the offers of co-operating institutions.

The important functions of warehousing are: (1) scientific storage (2) financing (3) price stabilisation (4) market intelligence, etc.

Price Determination and Price Discovery

Under the marketing system, there is the responsibility of realising the value of the goods delivered to the final consumers and distributing it to various marketing products at each stage as they move through the marketing channels.

Prices are determined by the aggregate forces of demand and supply in a market, while prices are discovered at each stage in the marketing channel.

Price is discovered in an individual market by retailers and consumers, whereas price determination takes place in the total market by the forces of demand and supply.

Risk Taking and Risk Bearing

There is always a time lag between harvesting and final consumption. Risk is imminent under such a situation and this is borne by the producers, traders, and others involved in the marketing process.

Hardy has defined risk as uncertainty about cost, loss, or damage. Risk-bearing ability means the ability to withstand losses or adverse conditions faced while carrying out various marketing functions. There is risk of losses due to fire, flood, famine, rodents, quality deterioration, price fall, change in taste, habit, or fashion, etc. There are three types of risks:

1. Physical risk: This is caused during weighing, bagging, transportation, storage, etc. It consists of loss of quantity.

2. Price risk: Because of the special characteristics of agricultural products, price risk is a common phenomenon. Price fluctuations occur during the same day, week, month, or year.

3. Institutional risk: Government policies like movement restrictions on food grains and the imposition of levies bring losses to the markets. Risk can be reduced by improving storage structures, insurance, and market information.

Financing

Money or credit is an important means to carry out various marketing functions. The financing function of marketing involves the use of capital to meet the financial requirements of agencies engaged in various marketing activities.

A farm product takes time for goods to reach into the hands of the ultimate consumers. Therefore, it needs the service of providing the credit and money to meet the cost of selling merchandise into the hands of the final users. This is commonly referred to as the finance function in the market.

Buying and Selling

Buying and selling are the most important activities in the marketing process. Buying involves the purchase of the right goods at the right place, at the right time, at the right price, and in the right quantity. Selling is one of the dispersing functions. Selling in business would mean the transfer of ownership of goods or services to a buyer in exchange for money.

Selling consists of sub-functions viz: product planning and development, contractual function, demand creation, and negotiation. Selling occurs at various stages. Initially, farmers sell to village merchants or to a merchant in a regulated market, again wholesale merchants sell produce to retailers, and retailers sell to consumers.

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