MARKET

INTEGRATION
Presented by: Castillo Ken and
Dologan, Ma. Lourdes Coleen
MARKET INTEGRATION
→ Market Integration is a process which refers to the expansion of firms by
consolidating additional marketing functions and activities under a single
management. — Kohls and Uhl.

Example:
A. The establishment of wholesaling facilities.
B. Food retailers.
C. Setting up of another plant by a milk processor
THREE TYPES OF MARKET
INTEGRATION
1.Horizontal Integration
→ This occurs when a firm/agency gains control of other firms/agencies
performing similar marketing functions at the same level in the marketing
sequence.
→ It leads to reduce cost of marketing and reduced competition possible.

Effects of Horizontal Integration:

A. Buying out a competitor in a time boundway to reduce competition.
B. Gaining larger shares of the market and higher profits.
C. Attaining economies of scale. Specializing in the trade.
ADVANTAGES OF HI. DISADVANTAGES OF HI.

1. Lower cost. 1. Destroyed value.

2. Higher efficiency. 2. Legal repercussions.
3. Increased product differentiation. 3. Reduced flexibility.
4. Increased market power.
5. Reduced competition.
6. Access to new markets.
7. Economics of scale.
8. Economics of scope.
9. International trade.
THREE TYPES OF MARKET
INTEGRATION
2. Vertical Integration
→ This occurs when a firm performs more than one activity in the sequence of the
marketing process.
→ It is a linking together of two or more functions in the market process within a
single firm or under a single ownership.

Three Types of Vertical Integration

A. Forward Integration
B. Backward Integration
C. Balanced Vertical Integration
 DISADVANTAGES OF VI.
ADVANTAGES OF VI .
1. It allows to invest in assets that 1. Capacity-balancing problems
are highly specialized.
2. Bring about more difficulties
2. It gives more control over
business 3. Results in decreased flexibility

3. It allows positive differentiation 4. Create some barriers to market

entry
4. It requires lower costs of
transaction 5. Cause confusion within the
business
5. It offers more cost control
6. Requires a huge amount of money
6. It ensures a high level of certainty
when it comes to quality
7. It provides more competitive
advantages
Effects of Vertical Integration
A. More profits by taking up additional functions.
B. Risk reduction through improved market coordination.
C. Improvement in bargaining power and the prospects of influencing prices.
D. Lowering costs through achieving operational efficiency.

3. Conglomeration
→ It is the third type of market integration, and refers to a combination of agencies or activities
not directly related to each other, when it operates under a unified management.

Effects of Conglomeration:
A. Risk reduction through diversification.
B. Acquisition of financial leverage
C. Empire – building urge
References:

https://youtu.be/pJfr4Zot1PY
https://en.m.wikipedia.org/wiki/Vertical_integration