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Market Integration

Market integration refers to consolidating marketing functions under single management. It influences firm conduct and marketing efficiency. Highly integrated markets behave differently than disintegrated markets. Market integration occurs when prices across locations or related goods follow similar patterns over time, indicating how related markets are. It can be intentional through government strategies or due to supply and demand shifts between markets. Monitoring market integration provides insight into economic trends.

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270 views2 pages

Market Integration

Market integration refers to consolidating marketing functions under single management. It influences firm conduct and marketing efficiency. Highly integrated markets behave differently than disintegrated markets. Market integration occurs when prices across locations or related goods follow similar patterns over time, indicating how related markets are. It can be intentional through government strategies or due to supply and demand shifts between markets. Monitoring market integration provides insight into economic trends.

Uploaded by

Diana Camacho
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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According to Kohls and Uhl, they have defined market integration as a process

which refers to the expansion of firms by consolidating additional marketing functions


and activities under a single management. Examples of market integration are the
establishment of wholesaling facilities by food retailers and the setting up of another
plant by a milk processor. In each case, there is a concentration of decision making in
the hands of a single management.
Market Integration shows the relationship of the firm in a market. The extent of
integration influences the conduct of the firms and consequently their marketing
efficiency. The behavior of a highly integrated market is different from that of a
disintegrated market. Markets differ in the extent of integration and therefore, there is a
variation in their degree of efficiency.
Market integration occurs when prices among different locations or related goods
follow similar patterns over a long period of time. Group of prices time and again move
proportionally to each other and when this relation is very clear among different markets
these markets are said to be integrated. Thus market integration is an indicator that
explains how much different markets are related to each other. At times, market
integration may be intentional, with a government implementing certain strategies as a
way to control the direction of the economy. At other times, the integration of the
markets may be due to factor such as shifts in supply and demand that have a spillover
effect on several markets. When market integration exists, the events occurring within
two or more markets are exerting effects that also prompt similar changes or shifts in
other markets that focus on related goods. For example, if the demand for wheat within
a given geographical market is suddenly reduced, there is a good chance that the
demand for rice or other staple food would increase in proportion within that same
geographical market. If the wheat requirement increase, this would usually mean that
the market for other staple food may decrease. Both markets would have the chance to
adjust pricing in order to deal with the new circumstances surrounding the demand, as
well as adjust other factors, such as production.
Market integration can often be a very positive situation, especially if the emerging
pattern regarding pricing is indicative of an increasingly prosperous economy. At the
same time, assessing integration between markets can also be a useful tool in
identifying trends that are less than desirable, and having the chance to begin reversing
those trends while there is still time. For this reason, financial analysts as well as
economists often monitor activities in related markets, identify any signs of integration.

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