– Marketing efficiency is the degree of market performance.

– It is the ratio of market output (satisfaction) to the marketing input (cost of resources).

–  An increase in efficiency indicates improved efficiency and vice versa.

There are three criteria to judge the efficiency:

i) operational efficiency criterion

ii) price efficiency criterion

iii) distributive justice criterion

I) Operational efficiency/ technical efficiency or physical efficiency:

– It pertains to the cost of performing a function; efficiency is increased when the cost of performing a function per unit output is reduced. Ex: storage, processing, handling etc.

II) Pricing efficiency/ allocative efficiency:

– Pricing efficiency refers to the structural characteristics of the marketing system, when sellers are able to get the true value of their produce and the consumers receive the true worth of their money.

– It is achieved only if the prices of products in various markets at a given point of time do not differ by more than the cost of transporting the products.

– The price of a product prevailing at two points of time does not differ by more than the cost of its storage including risk premium.

III)  Distributive justice criterion:

– Marketing should ensure equality of services to the producers and consumers so that it does not work against distributive justice.

– This criterion obviously involves a comparative study of the services offered to various section of producers and consumers as well as- the extent up to which these are actually availed of by these groups.

 Consequences of inefficient Marketing:

If the marketing system is inefficient, then following could be the evil consequences:

i) loss of product (higher post-harvest loss),

ii) loss in processing,

iii) less consumers’ satisfaction,

iv) low level of production (discourage producer eg. in rural hills)