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Market Integration

Market integration refers to the process where firms consolidate marketing functions and activities under single management. There are three main types: [1] Horizontal integration is when firms in the same industry combine to reduce competition; [2] Vertical integration is when a firm controls more than one stage of production/distribution; [3] Conglomeration involves combining unrelated businesses under single ownership. Examples include Facebook acquiring Instagram for horizontal integration, and Amazon becoming both bookseller and publisher through backward vertical integration. Market integration influences firm conduct and efficiency.

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Regie Castor
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43 views

Market Integration

Market integration refers to the process where firms consolidate marketing functions and activities under single management. There are three main types: [1] Horizontal integration is when firms in the same industry combine to reduce competition; [2] Vertical integration is when a firm controls more than one stage of production/distribution; [3] Conglomeration involves combining unrelated businesses under single ownership. Examples include Facebook acquiring Instagram for horizontal integration, and Amazon becoming both bookseller and publisher through backward vertical integration. Market integration influences firm conduct and efficiency.

Uploaded by

Regie Castor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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THE CONTEMPORARY

WORLD

CASTOR REGIE L
BS-CRIMINOLOGY 1-D
MARKET INTEGRATION

 Integration shows the relationship of firms in a market. The extent of integration influences the
market conduct of the firms and consequently their marketing efficiency.
 Markets differ in the extent of integration and, therefore, there is a variation in their degree of
efficiency.
 Market integration is a process which refers to the expansion of firms by consolidating additional
marketing functions and activities under a single management.
TYPES OF MARKET INTEGRATION

• There are three basic kind of market Integration:


 Horizontal Integration
 Vertical Integration
 Conglomeration
HORIZONTAL INTEGRATION

• In this type of integration, some marketing agencies combine to form a union to reduce their
effective number and the extent of actual competition in the market.
• e.g. Primary milk producers , Facebook with instagram
EXAMPLE FOR HORIZONTAL INTEGRATION

 One of the clearest examples of horizontal integration is Facebook’s acquisition of Instagram in


2012 for a reported $1 billion.
 Both Facebook and Instagram operated in the same industry and were in similar production
stages in regard to their photo-sharing services.
 Facebook looking to strengthen its position in the social media and social sharing space, saw the
acquisition of Instagram as an opportunity to grow its market share, increase its product line,
reduce competition and access potential new markets.  All of these things came to pass ,
resulting in a high level of synergy
VERTICAL INTEGRATION

 Vertical integration 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 with in a single firm or under a single
ownership.
 For e.g. if a firm assumes wholesale as well as retailing, it is a vertical integration or rice processor under taking
retailing.
1. Forward Integration : takes activities close to the consumption function Eg. wholesaler assuming the function
of retailing
2. Backward Integration : combination of sources of supply. Eg. processing firm assumes the function of
assembling/purchasing
EXAMPLE FOR FORWARD VERTICAL
INTEGRATION COMPANY
 Canadian communications giant Rogers is an example of forward integration.
 The company established Rogers TV, a subsidiary company that operates local television
channels.
 The Rogers TV channels show programs such as cooking and talk shows, which are produced
by Rogers-managed television studios.
 These provide Rogers with an opportunity to advertise and sell its digital products using an
electronic version of a retail store.
EXAMPLE FOR BACKWARD VERTICAL
INTEGRATION COMPANY
 Amazon.com backward vertically integrated when it became not only a bookseller but a book
publisher.
 As a bookseller, Amazon.com buys books from various suppliers, such as publishing companies.
 By becoming a publisher itself, it has integrated into its business the role of supplier and can sell
books that its own publishing company publishes.
CONGLOMERATION

 A combination of agencies or activities not directly related to each other may operate under a unified
management.
 Eg : conglomeration are Hindustan Unilever Ltd. (processed vegetables and soaps), Delhi Cloth and General
Mills (Cloth and Vanaspati).
 What : involved in a number of different and frequently unrelated activities  How : Most of the business firms
have some degree of vertical integration, horizontal integration and conglomerate character
 Whom : firm which buys and sells the grains is also engaged in selling of fertilizers, insecticides and pesticides,
feed
 Why : meeting the multiple needs of their customers, most of whom are farmers spreading the risk and helps in
expanding the activities to additional markets

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