Buying and selling is the most critical activity among all other marketing activities. In this process, goods/commodities are transferred from seller to buyer; hence, this process adds possession utility to the goods/commodities. The number of times selling and buying is to be performed directly related to the marketing channel’s length. Buying involves what to buy, where to buy, from whom to buy, how to buy, and how to settle the prices and the terms of purchase. In short, buying is to make the purchase of the right thing (good), at the right time, in the right volume, and at the right place. On the other hand, selling is to dispose of the goods at an acceptable price. The selling function involves problem of when to sell, where to sell, through whom to sell, and whether to sell in one lot or parts.
Methods of Buying and Selling
Some well-known methods of buying and selling which are prevalent in Indian markets are discussed below (Acharya & Agarwal, 2010).
- a. Hatha System (Under cover of a cloth) – In this method, the prices of the commodities are settled by the buyers and the commission agents of the seller. In this method, buyers and commission agents of the sellers twist each other‘s finger under a piece of cloth; twisting of fingers are associated with some code symbol these people are familiar with negotiation in this form continues until a final price is agreed upon by the buyer and the commission agent. It is like bidding when all the buyers have given their offers, the name and the offer price of the highest bidder is announced to the seller by the commission agent. The government banned this method because of the high chances of cheating.
- b. Private Negotiations- In this method, generally, individual buyers come to the shops of the commission agents and offer a price after inspecting the sample buyer. If the price is accepted, the commission agent informs the seller about the decision, and the buyer has given the product after it has been weighed. In this method, direct/private transactions take place without the involvement of the commission agent. In direct transactions seller take the sample to the buyer and asks him to offer a price. If the price is accepted, then the contract will be negotiated. This method is prevalent in the village or unregulated markets.
- c. Quotations on samples taken by Commission Agent- In this method, commission agent of the seller take the sample to the buyer, and the price is offered based on them. The commission agent makes several rounds of prospective buyers until none is ready to quote a higher price than offered by a particular buyer. The deal is settled with the highest bidder.
- d. Dara Sale Method- Commodity in different lots is mixed and then sold as one lot under this method. The main merit of this method is that within a short period, large numbers of lots are sold off, and the main demerit of this method is that it does not allow different prices for different quality items as both the commodities, whether it be of good quality or it is of bad quality, are sold under the same lot at same prices.
- e. Moghum Sale method- This is based on verbal understanding between buyers and sellers. Under this method, price is not pre-determined; instead, it is understood that the buyer will pay the seller as per the prevailing rate in the market for that day or based on the rate at which other sellers of the village sell their produce. This method is common in small villages.
- f. Open Auction Method – It is considered one of the fairest methods. Under this method, buyers gather at the shop of commission agents, and then the buyers, after inspecting the available produce/sample of the produce, loudly offer their bids. The produce is given to the highest bidder after taking the consent of the seller farmer. This method ensures fair dealing to all the parties involved in the transaction, and hence it is being used in most regulated markets.
- g. Close Tender System- This method is same as the open auction method, but the main difference is that bids are invited only in close tender rather than open announcement. Under this method, different produce displayed in the shop of commission agents is allotted different lot numbers. After inspecting the produce (lot), buyers visit the shops and offer the price for the lot on a slip of paper that is being deposited in a sealed box at the commission agent‘s shop. The commission agent does not have any idea about the bid amount. The commission agent opens the box when auction time is over. After that, the highest bid is accepted and the bidder is informed. Some regulated markets have adopted this method.
For citing this article, use:
- Abad, A. (2022). An appraisal of marketing channel efficiency of agricultural marketing cooperative societies a select study of delhi state.
