Functions of Marketing Questions and Answers [With PDF]
Between the factory and the customer there is a long chain of work: someone buys the materials, someone transports and stores the goods, someone grades, packs and advertises them, and someone sells them. These jobs are the functions of marketing. This chapter explains each of them: buying, selling, transportation, warehousing, standardization and grading, packaging, advertising, market information and risk bearing. Here are 35 important questions with clear answers and tables, ready for exams, vivas and interviews.
This is Chapter 3 of our Marketing course. It follows Marketing Environment and comes before Market Segmentation.
Meaning and Types of Marketing Functions
Q1. What are marketing functions?
Marketing functions are the activities, operations or services performed to move goods and services from producers to consumers and to satisfy customers. They include buying, selling, transportation, warehousing, standardization and grading, packaging, advertising, financing, collecting market information and bearing risk.
Q2. What are the types of marketing functions?
| Group | Functions |
|---|---|
| Exchange functions | Buying and selling |
| Physical distribution functions | Transportation, warehousing and packaging |
| Facilitating functions | Financing, risk-taking, standardization and grading, market information and after-sales service |
Some books place packaging among the physical functions, as here, and others among facilitating functions. Financing provides the funds for production, stock and credit sales. After-sales service (installation, repairs and complaint handling) keeps customers satisfied after purchase.
Q3. What is the importance of marketing functions?
- They satisfy social needs.
- They encourage higher production.
- They distribute goods properly.
- They help keep the price level stable.
- They reduce business risks.
- They create jobs.
- They help develop industry and skills.
- They build relationships between producers and consumers.
- They help use natural resources properly.
- They raise the standard of living and promote economic and social development.
Buying (Purchase)
Q4. What is purchase?
Purchase (buying) is the process of estimating needs, finding sources of supply, building business relationships, negotiating prices and terms, and finally getting ownership of goods or services from the seller in exchange for money.
Q5. What are the features of purchase?
- It is an exchange of goods or services for money.
- Ownership of the product is transferred from seller to buyer.
- It meets the needs of consumers.
- Industrial buyers purchase materials for production.
- Middlemen buy for resale.
Q6. What is the importance of buying in marketing?
- It ensures that quality materials and goods are obtained.
- It ensures supply on time.
- It secures goods at a reasonable price.
- It helps meet seasonal demand.
- It helps keep prices stable.
- It helps achieve consumer satisfaction.
Q7. How is buying classified?
- Buying by manufacturers (for production)
- Buying by middlemen (for resale)
- Buying by consumers (for personal use)
Q8. What are the problems of buying?
- Finding out what customers want.
- Deciding what quantity to buy.
- Judging a product’s quality before buying it.
- Choosing the best time to buy.
- Finding the right source of supply.
- Deciding the purchase price.
- Making transport arrangements.
Q9. What are the methods of buying?
| Method | How it works |
|---|---|
| By inspection | The buyer examines the actual goods before buying |
| By sample | The buyer judges a small sample and buys the whole lot of the same quality |
| By description | The buyer relies on the seller’s description, brand or specification |
| By grading | The buyer buys goods of a recognized grade, without inspecting each item |
Q10. What are the functions of buying?
- Planning for the purchase of goods
- Contracting with suppliers
- Assembling the goods
- Negotiating price and terms
Selling
Q11. What is a sale?
Selling is the process of finding out customers’ needs, creating demand, finding buyers, advising them about the product and transferring ownership through negotiation. Together with buying, it is one of the two exchange functions.
Q12. What are the features of selling?
- It is a combination of several activities.
- Ownership of the product passes to the buyer.
- It involves exchange.
- It includes advertising, personal selling and sales promotion.
- It matches products and services with the buyer’s needs.
Q13. What is the importance of selling in marketing?
- It ensures customer satisfaction.
- It helps the organization achieve its goals.
- It builds genuine customer relationships.
- It balances demand and supply, including seasonal demand.
- It motivates marketing staff.
- It brings buyers and sellers together.
Q14. What are the functions of selling?
- Planning the product
- Communicating with consumers
- Creating demand
- Negotiating
- Carrying out the contract
Transportation
Q15. What is transportation?
Transportation is moving goods from where they are produced to where they are needed. It creates place utility, because the goods become available at the place where buyers want them.
Q16. What are the features of transportation?
- It is a physical distribution function.
- It creates place utility.
- It links producers with users.
- It helps balance supply and demand across regions.
Q17. What is the importance of transportation?
- Creates place utility.
- Supplies products at the right time.
- Helps satisfy consumers.
- Links producers and consumers.
- Keeps production flowing.
- Balances demand and supply.
- Helps keep prices stable.
- Helps expand the market.
Q18. What are the types of transportation?
| Type | How goods move | Example |
|---|---|---|
| Land | By road or rail | Trucks, trains |
| Water | By river or sea | Cargo ships, river barges |
| Air | By aeroplane | Urgent or high-value goods |
| Pipeline | Liquids and gases through underground pipes | Oil and natural gas |
Warehousing
Q19. What is warehousing?
Warehousing is the storage of manufactured, collected or imported goods until they are needed for sale or use. It allows goods produced at one time to be supplied at another, so it creates time utility.
Q20. What are the features of warehousing?
- It is a physical distribution function.
- It creates time utility.
- It links the time of production with the time of use.
- It involves planning, building and running storage facilities.
- It is done by producers themselves or by intermediaries.
Q21. What is the importance of warehousing?
- Creates time utility.
- Balances demand and supply.
- Keeps supply steady.
- Helps keep prices stable.
- Allows continuous production.
- Protects the quality of goods.
- Reduces risk.
- Helps satisfy consumers.
Q22. What are the types of warehouses?
| Type | Meaning |
|---|---|
| Private warehouse | Owned and used by one firm for its own goods |
| Public warehouse | Owned by an agency and rented to any businessman for a fee |
| Bonded warehouse | Used for imported goods until customs duty is paid |
| Other special warehouses | Cold storage, grain silos and institutional warehouses such as railway or bank warehouses |
Standardization and Grading
Q23. What is standardization?
Standardization is setting fixed standards or specifications for a product, such as quality, size, weight and purity, in line with what buyers need.
Q24. What are the features of standardization?
- It fixes the limits of product quality.
- Products are classified according to those standards.
- It is based on quality, size, volume, and so on.
- It is a planning and decision-making activity.
- It follows buyers’ expectations.
Q25. What is the importance of standardization?
- It specifies the quality of products.
- It is the basis for grading.
- It helps decide the price.
- It makes packaging easier.
- It makes selling simpler.
Q26. What is grading?
Grading is sorting goods into classes (grades) according to the established standards of size, quality or ripeness. Example: apples sorted into Grade A, B and C.
Q27. What is the importance of grading?
- It makes selling easier.
- It helps the market grow.
- It tells buyers what they are getting.
- It helps fix the price of each grade.
- It helps satisfy customers.
- It meets the preferences of a particular area.
Q28. What is the difference between standardization and grading?
| Point | Standardization | Grading |
|---|---|---|
| Meaning | Setting the standards for a product | Sorting goods into classes by those standards |
| Nature | Planning and decision-making | Putting the standards into practice |
| Order | Comes first | Comes after standardization |
Packaging and Advertising
Q29. What is packaging?
Packaging is designing and producing the container or wrapper of a product, to protect it from damage, to carry information about it and to make it attractive.
Q30. What is the importance of packaging?
- It protects the quality of goods.
- It makes storage and handling convenient.
- It keeps goods safe.
- It makes transfer easier.
- It attracts buyers.
- It makes the product easy to recognize.
- It helps boost sales.
Q31. What is advertising?
Advertising is a paid, non-personal form of communication by an identified sponsor, through media such as TV, radio, newspapers and the internet, to inform and persuade people to buy a product, service or idea.
Q32. What is the importance of advertising?
| Economic importance | Social importance |
|---|---|
| Generates demand for the product | Raises the standard of living |
| Balances demand and supply | Widens choice and variety of tastes |
| Can lower unit costs through larger sales | Reduces the need for middlemen’s selling effort |
| Helps launch new products | Creates employment opportunities |
| Builds brand loyalty | Spreads awareness of social issues |
| Links producers and consumers |
Market Information and Risk
Q33. What is market information?
Market information is the data about current and potential buyers’ tastes, preferences, behaviour, needs, and about product demand, supply, prices and competitors. Firms collect it through market research and use it to make better marketing decisions.
Q34. What are the types of marketing risks?
- Physical risk: loss or damage from fire, theft, spoilage or accidents.
- Market (price) risk: loss from a change in prices or demand.
- Financial risk: loss from bad debts, interest or exchange rates.
- Political and legal risk: loss from changes in laws or government policy.
- Environmental risk: loss from natural disasters or changes in the environment.
- Production and business risk: loss from failed products or disrupted supply.
Q35. How can marketing risk be reduced?
- Insurance: transfers physical risks to an insurer.
- Hedging: locks in a price to protect against price changes.
- Market research and forecasting: improves decisions.
- Diversification: spreading across products and markets.
- Alliances and joint ventures: sharing the risk with partners.
- Good storage and handling: reduces physical loss.
Quick Revision Points
- Exchange functions: buying and selling. Physical functions: transportation, warehousing, packaging. Facilitating functions: financing, risk-taking, standardization and grading, market information.
- Transportation creates place utility. Warehousing creates time utility.
- Standardization sets the standards. Grading sorts goods by them.
- Methods of buying: inspection, sample, description, grading.
- Risk can be reduced by insurance, hedging, research and diversification.
Test yourself with the chapter quiz below, then continue to Market Segmentation.
