Question

Question 1:

What do you understand by the term ‘Marketing Margins’?

Answer 1

• Margin - the difference between two values or sums of money.

• Marketing - involves a company's attempt to inform potential buyers of its product or service, drawing attention to it in such a way that an audience will be willing to purchase it.

• A marketing margin applies to a company that buys a product with the intent to resell it.

• Marketing margins are costs of equipment, transport, labor, capital, risk, and management

• In the long run, marketing margins for competitive markets should be equivalent to the cost of marketing

• When companies buy a product to act as a distributor or retailer, it must sell the product at a higher price than that at which they purchased it.

• In such situations, the marketing margin of a product is the difference between what a company pays for the product and what it charges for the product.

• Example : price paid by customers for a finished product (cheese) with the payment received by farmers for equivalent quantities of the raw material of product(milk).