In the previous articles, the characteristics and types of market structures that lead to market conduct were discussed. The ultimate goal is to show how the structure and the conduct lead to the performance of the market.
1. Market Conduct in Agricultural Markets
Market conduct relates to the behavior of firms or the decisions that firms make concerning pricing, output policy, and other competitive tactics. Market conduct is tied to market structure.
In other words, market conduct refers to the actions firms take in adopting or adjusting to the market in which they buy and sell. It includes methods employed by groups of firms in determining price and output, sales promotion policies, policies directed at altering the nature of the product sold, and various selling tactics used to achieve specific market results.
The most important factors used in assessing market conduct are:
i. Methods of determining price and output;
ii. Sales promotion policy;
iii. Product policy;
iv. The presence or absence of exclusionary tactics directed against established rivals or potential entrants;
v. Research and development.
Since market conduct refers to certain behavioral characteristics of firms in the market, it specifically refers to:
i. Pricing practices that encourage grading and standardization of agricultural commodities;
ii. Uniformity of market charges;
iii. Pricing practices free of collusion and unfair tactics, as well as black marketing;
iv. Pricing policies that encourage product quality improvement and greater consumer satisfaction.
Market conduct is heavily influenced by the market structure. It is the link between market structure and performance. Since the behavior of sellers in a market could adversely affect the efficiency of the entire system, governments worldwide closely monitor market conduct to take remedial actions when such conduct is viewed as harmful to efficient marketing.
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2. Market Performance in Agricultural Marketing
Market performance is a concept that is related to structure and conduct. It is defined as the strategic end result of market adjustments made by buyers and sellers. In other words, market performance is the appraisal of the extent to which the interactions of buyers and sellers in a market stimulate results consistent with social purposes.
The main features used in assessing market performance are:
i. The level of profit;
ii. Scale and utilization of plants and firms;
iii. Sales and promotion costs;
iv. The character of the product and progressiveness.
Market performance, in other words, is the assessment of how well the process of marketing is carried out and how successfully its aims are accomplished. Specifically, market performance is connected with:
i. Technological progressiveness;
ii. Growth orientation of agricultural firms;
iii. Efficiency of resource use; and
iv. Product improvement and maximum market services at the least possible cost.
It is difficult to measure market performance because of the subjective nature of performance measures. However, performance measures can be modified to suit the nature of the particular problem.
The term “performance” has come into increasing use in place of “efficiency” even though it is less precise but probably more generally applicable. Performance is believed to be more generally applicable because it embraces a wider dimension than efficiency, thereby giving a better picture of the marketing system.
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3. Possible Achievements of Market Structure, Conduct, and Performance in Agricultural Marketing
If market structure, conduct, and performance are well applied, they can help shape the marketing system in the country and achieve these specific aims:
i. Efficient use of resources committed to marketing;
ii. Increased employment since there will be increased production and hence increased marketing services;
iii. Better or lower consumer prices, with reasonable returns to producers, enough to encourage them to increase their production;
iv. Reduced pre-harvest losses, as there will be available storage facilities in the marketing channels;
v. Increased consumer awareness through education and advertisement of price movements and product quality;
vi. Complete information for farmers, middlemen, and consumers, aiding them in planning, estimating production, and monitoring price movements.
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