2. The cost at which the service is provided.
3. The effect of this cost and the method of performing the
service as production and
consumption. i.e. effect of (1) & (2), last two are more important.
Assessment of marketing efficiency :
1. Technical or Physical or Operational efficiency: It pertains to the cost of
performing
a function; Efficiency is increased when the cost of performing a
function per unit of out put is reduced.
Eg: - Storage
processing, handling etc.
2. Pricing / Allocative efficiency : System is able to allocate farm products either
over time, across
the space or among the traders, processors and consumers at a point
of time in such as way that no other allocation would make
producers and consumers
better off. This is achieved via pricing the product at different stages, places,
times
among different users. Pricing efficiency refers to the structural characteristics of the
marketing system, when the sellers are able to get the true
value of their produce and
the consumers receive true worth of their money.
The above two types are mutually reinforcing in the long run.
Emperical Assessment of Marketing Efficiency :
A reduction in the cost for the same level of satisfaction or an increase in the
satisfaction at a given cost results in the improvement in efficiency. (Khols and Uhl.)
O
E = ---- 100
I
E =
level of efficiency
O = value added to the marketing system.
I = real cost of marketing
Shepherd ‘s formula of marketing efficiency :
V
ME = --- - 1 100
I
ME
= Index
of marketing efficiency
V
= Value of the goods sold or price paid by the consumer (Retail price)