Chapter-10

CHAPTER 10

INTERNAL TRADE

Trade is the nucleus of commerce. Trade means buying and selling of goods and services for
a profit. Trade is of two types – Internal trade and external trade. This chapter discusses the meaning
and nature of internal trade and explain its different types.

Internal Trade

Trade which takes place within a country is called internal trade. It is also called home trade
or domestic trade. In such type of trade both buyer and seller belongs to the same country. The
payment is made in their own national currency. In internal trade, trader can use any mode of
transport for carrying the goods.Internal trade is of two types:-

I) Wholesale Trade
II) Retail Trade
I. Whole Sale Trade

Wholesale trade means buying of goods in large quantities from producers and selling them
in smaller quantities to the retailers. Wholesaler acts as a connecting links between the producer and
the retailer. A wholesaler generally specializes in the purchase and sale of a particular line of goods.
The main role of a wholesaler is breaking the bulk, ie, buying goods in large quantities and selling
them in small quantities.

Producer → Wholesaler → Retailer

Functions of Wholesaler

1) Buying and Assembling

The wholesaler buys and assembles goods from different producers and kept them in stock
for sale to retailers.

2) Breaking the bulk

They purchase goods in large quantity and repack them in small packet for easy delivery to
retailers. It is more convenient to retailers.

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3) Transporting

Wholesalers firstly moves the goods from the producer to his godown and secondly from
there to the retail shop. He saves transportation cost through bulk transportation of goods.

4) Risk Bearing

Wholesalers assume the risk arising out of change in demand, spoilage, destruction of goods
by fire, theft etc in the course of transportation or storage.

5) Financing

Wholesalers provide finance to both manufactures and retailers. Wholesalers purchase goods
on cash basis from the manufactures and sell them to the retailers on credit basis.

6) Market Information

They collect information about market conditions from retailers and pass it to the producers.
They also give information about the new products to the retailers.

7) Pricing

The wholesaler fixes the prices of the goods he deal in, and based on this, the retailer
determines the consumer price.

8) Grading

Wholesalers sort out goods on the basis of quality, size, content, design etc. This is called
grading.

Services of Wholesalers

The wholesalers render valuable services to the producers and retailers.

A. Services to manufactures (Producers)

1. Provide Ready Market

They provide ready market to the goods of manufactures by placing bulk orders.

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2. Concentration of production

A wholesaler relieves the producer from the botheration of finding buyers for his goods. In
the absence of the wholesaler, the producer has to deal with numerous retailers. This is more
complex and time consuming process.

3. Provide storage facility

Producers do not have to make arrangements for warehousing because goods are lifted by
wholesalers immediately after they are produced. They take full responsibility for storing the goods.

4. Provide finance

Wholesalers make ready payment and sometimes even advance payment to the manufacturer.
It enables the manufacture to continue the production without interruption.

5. Economics of scale

A wholesaler buys goods in bulk and thereby enables the manufacturer to carry on large scale
production. Large scale production results in lower cost of production per unit.

6. Market Information
Wholesaler collects information regarding tastes and fashion of consumers from the retailers
and passes it on to the producers. Such information enables the manufactures to regulate production
in accordance with the changing requirements of the market.
B. Services to Retailers

The wholesalers render the following services to retailers.:-

1) Provide credit facility

Wholesalers grant liberal credit facilities to retailers. As a result, retailers can carry on a large
volume of business even with a small amount of working capital.

2) Warehousing

The wholesalers stock the goods and supply them to the retailers as and when they are
required. Hence there is no need for the retailers to keep goods in their own warehouse.

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3) Risk bearing

The wholesalers assume most of the risk connected with marketing such as fluctuation in
prices, loss of goods during transits and storage. This reduces the risk of retailers.

4) Expert advice

A wholesaler is an expert and specialist in his line of business and he is in a position to give
advice to retailers about various matters of his product.

5) Sources of ready supply

A wholesaler is always well stocked with different types of goods. Therefore, the retailers are
assured of quick and regular supply of their required goods from time to time.
6) Information about new product
A wholesaler is in constant touch with producers. Therefore, he has up to date information
about new products and new verities of existing products. He passes on such information to retailers.

II. Retail Trade

Retail trade is the final stage in the distribution of goods. It means sale of goods in small lots to the
final consumer. A retailer buys goods from wholesalers and sells them in small quantities to the ultimate
consumers. He serves as a link between the wholesalers and ultimate consumers. Retailer stocks a wide
variety of goods to meet the requirements of his customers. Retailer being directly and intimately in touch
with the consumers he is the last link in the chain of distribution. The functions of retailer begin where the
functions of wholesaler end.

Functions of Retailers

A retailer performs a number of important marketing functions. They are :-

1) Assembling goods

A retailer purchases a wide variety of goods from different producers and stocks them to
meet the requirements of his customers.

2) Convenient Location
Retailers locate their business in convenient places, generally nearest to the residential areas.
Hence, consumers find it easy to make their purchase from retail shops without travelling
long distances.

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3) Personal Selling

Sales promotion is most effective through retailers. As he has direct contact with the
customers, he can advice and guide them in selection of goods and can easily persuade t hem to buy
the goods.

4) Provide market information

Retailers are in direct personal touch with consumers, they are in a position to give correct
market information to wholesalers and manufactures.
5) Financing
Retailers generally extend credit facilities to their regular customers.

6) Risk bearing

Even though the retailer supplies goods in small quantities, he has to bear the risk of loss due
to change in fashion, price, theft, fire etc of goods.

7) Personal and after sales service

Sometimes retailers provide free home delivery to attract consumers. In case of certain products,
supply of spare parts, repairs etc shall also be offered by retailers.

Services of Retailers

The services of retailers can be classified under two heads.

A. Services to manufacturers / wholesalers

B. Services to Consumers
A. Service to Manufactures/ Wholesalers
1) Ready market

Retailers provide a ready market for goods at wholesalers and manufactures. They provide a
sales outlet for different types of products.

2) Popularise new products

They popularize new products through wind display, personal selling, exhibition etc.

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3) Providing market Information

The retailers, being in close touch with the ultimate consumer, is in a position to give reliable
market information to the manufacturer.

4) Sales promotion

Sales promotion measures like free gifts coupons etc can be effectively implemental with the
help of retailers. Retailers can easily influence the buyer to purchase a particular product.

B. Services to Consumers
1) Ready stock

Retailers keep ready stock of a wide variety of goods, in his absent the consumer want to
store them.

2) Selection of goods

The retailer has a large variety of goods according to the taste and fashion of consumers.

3) New product information

The retailer brings new products and new verities to the notice of the customers by proper
display and personal selling.

4) Freedom to buy small quantities

The retailers facilitate the customers to buy goods small quantities according to their
requirements and ability.

5) Credit facilities

Retailers often supply goods on credit to their regular customers.

6) Provide choice

Retailers keep different verities of goods of different producers. This enable the consumers to
select goods according to their choice.

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Difference between Wholesalers and Retailers

Basis of Difference Wholesaler Retailer

1. Scale of business Organised on a large scale Organised on a small scale
2. Amount of capital High capital is required Comparatively less capital is
required
3. Direct contact Direct contact with Direct contact with consumers
manufactures
4. Source of supply Manufacturer Wholesaler
5. Link Link between Manufacturer Link between wholesaler and
and Retailer consumer
6. Specialisation Specialisation in one or two No such specialization. He deals
lines of goods verities of goods in small quantities
7. Location Location of business is not Location of business is important,
important usually in residential areas.
8. Dealing in goods Deals in large quantities Goods are purchased and sold in
small quantities.
9. Area covered Large area covered Relatively small area-local market
Types of retailers

Itinerant Traders (retailers Fixed shop trades

with out shops)
Hawkers & Cheap Market Street
pedlars jacks traders Traders

Small scale Large scale

retailers retailers

General Single Specialty Street Second Second

stores line shops shops hand shops
stores goods
shop

Departm Multiple Mail Consumer co- Super Franchise

ental shop order operative stores Bazaar
stores business

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Classification of Retailers

Retailers can be broadly classified into two.

1. Itinerant Traders
2. Fixed shop Retailers
1. Itinerant Traders
These traders are retailers without shops. They do not have fixed shops. They deal in low
priced commodities and move from one place to another place. Their special feature is simple and
easy formation, low investment and personal touch with business. Itinerants include hawkers,
peddlers, cheap jacks, and street and market traders.

(a) Hawkers and peddlers

Hawkers and peddlers are the oldest form of retailers. They are petty traders who carry the
products on bicycle, a hand cart, a cycle rickshaw or on their heads. Hawkers carry goods on vehicles
while peddlers on their backs or heads moving from place to place to sell their merchandise/products
at the door steps of the consumers.

They generally deal in cheap, non standard commodities such as fruits, vegetables, toys, pen,
ice creams, utensils etc. As these traders reach the consumers themselves, so it is very convenient for
housewives and general public to purchase goods from them. Prices charged by them is
comparatively lower than the prices of commodity in the market, because they need not establish and
maintain costly shop.

(b) Market traders

They are small retailers who open their shops at different places on fixed dates, such as every
Saturday or Sunday. These retailers move from one market to other market. These traders may be
dealing in one particular line of merchandise, say readymade garments, toys, crockery etc. They are

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mainly catering to lower income group of customers and deal in low priced consumer items of daily
use.

(c) Street traders

Street traders are small retailers who are commonly found at places where huge floating
population gathers. They sell consumer goods of daily use near bus stand, railway station, parks etc..
They sell goods like books, pens, readymade garments, magazines etc. For consumers it is very
convenient buying because they pick up required articles while they are on their way to their
destination. They are different from market traders in the sense that they do not change their place of
business so frequently.

(d) Cheap Jacks

They do business in temporarily rented shops or sheds and move to other localities as
opportunities arises. These traders do not stick to a particular place of business. But change of place
is not as frequent as in case of hawkers, peddlers or market traders. They deal in cheap consumer
items the like fruits, vegetables, sweets, etc. Some of them move from exhibition to exhibition
festivals to festivals etc. Their main aim is to avail of the local opportunities.

2. Fixed shop retailers

Fixed shop retailers have fixed place of business. They maintain permanent establishment to
sell their merchandise.They, therefore, do not move from place to place to sell their merchandise.
Compared with itinerant traders, fixed shop retailers have greater resources and operate on a
relatively large scale. These shops may differ as regards their size and scale of business.

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Difference between Itinerant Traders and Fixed Shop Retailers

Itinerant Traders Fixed Shop retailers

No fixed place of business Fixed place of business

Small Scale
May be small or large scale

Move from place to place They do not move from one place to another

Generally dealing in single line of product Generally dealing in different line of products

Comparatively lower credibility in the mind of Greater credibility in the minds of consumers
customers because fixed shop retailers are in a position to
provide greater services like
guarantees,repairs,spares etc.

Fixed shop retailers can be classified into two distinct types on the basis of their size.

(1) Fixed Shop Small Scale Retailers (2) Fixed Shop Large scale Retailers

Fixed Shop Small Scale Retailers

They operate on small capital at a fixed place. They are mainly of six kinds:.

(a) General stores

General stores are most commonly found in a local market and they generally deal a large
variety of products required to meet the day to day needs of the customers. Most of the customer
products are available at one shop. Hence consumers can save time and effort in shopping. Most of
their customers are residents of the same locality. They generally provide credit facility to some of
their regular customers. Limited choice to the customers is the major drawbacks of general stores.

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(b) Single line stores

Such stores deal in one line of goods. Medical stores, cloth stores, book shops, jewellary
shops etc are examples of these stores. A textile shop, say, pulimootil silk house, deals in all types
garments such as ladies wear, gents wear, kids wear etc. They often stock goods of different styles ,
qualities, sizes, designs etc.

(c) Specialty shops

These types of stores becoming very popular in urban areas.Specialty shop specialize in a
single product of a certain line. Shops dealing in children’s book or kids wear, men’s wear, college
books etc. instead of all types of books or garments.

Eg: Hello Kids-shop for kids, K.P Chacko Kids Jewelry

(d) Street shops

These small retailers are commonly found at street crossing or other places where flow of
traffic is heavy.These stalls are wooden shops, sometimes placed on tables or platforms having
shelves and stands. These stores generally sell low priced consumer goods. They sell goods like
magazines, pens, bread, toys etc. Travelling pubic usually depend on these shops.

(d) Second hand Goods shop

These retailers deal in second hand or used goods such as books, furniture, car, cloths etc.
They sold goods at lower prices. People who can’t afford to buy new articles, generally becomes
their customers.

(e) Second shops

These are retail shops which are selling goods which have some manufacturing defects. Such
goods can’t be sold along with the goods which are produced according to the required
specifications. They are known as second shops and the goods they are dealing as second goods.
These goods are usually sold at discounted prices.

Ease formation, flexibility in operation, direct and personal services, limited capital
managerial r e s o u r c e s e t c . are t h e m a i n a d v a n t a g e s o f s m a l l
s c a l e r e t a i l organizations?

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B. Large Scale Retailers

Large scale retailing is the retail trade involving operations on a large scale and the sale of
good in small quantities. The most common forms of large scale retailing are.

(a) Departmental stores

(b) Multiple stores/ Chain stores
(c) Mail order Houses
(d) Consumer co-operative stores
(e) Super Markets
(f) Vending machines
(a) Departmental stores
A departmental store is a large scale retail organization offering a wide variety of products,
classified into well defined departments, aimed at satisfying every customer’s need under one roof.
A departmental store is a combination of several stores under one roof and unified control. One
department deal only one line of goods. There may be separate department for books, furniture,
cloth, medicine, electronics etc. Departmental store sells everything from ‘a pin to elephant’.‘ In
departmental store the consumers are likely to spend more time while making their shopping. So
they provide services like rest rooms, restaurants, telephone free home delivery etc. They are
generally organized as Joint Stock Company. In India real departmental stores have not yet come in
a big way in the retailing business.
Eg Spencers in Chennai

Features
1) The size of these stores is generally very large, so they are generally formed as joint stock
companies.
2) These are generally located at a central place in the heart of a city.
3) A number of retail shops under one roof and one management.
4) A wide variety of products are available from one departmental store.
5) The products are arranged in separate departments. Each department deals only one line of
product. For eg. Books, furniture etc.

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6) It offers various services and facilities to the consumers like restaurant, travel and information
bureau, telephone booth etc to satisfy the needs of richer and better class of population.
7) Centralized purchase by purchase department and sales are centralized in different departments.

Advantages of Departmental stores

1) Central location

It is generally established at the centre of the city, they attract large number of customers.

2) Shopping convenience

It enables the consumers to buy all their requirements at one place. It saves their time, energy
and money.

3) Economies of large scale operation

As it is organized on large scale the economies of large scale operations such as economy in
purchasing, transporting, advertising etc can be enjoyed.

4) Consumer services

Free home delivery, restaurants, reading rooms, telephone booth etc in the store are added
attraction to the consumers.

5) Wide choice
Consumers can select products of their choice from large stock of different brands. They are
assured of high quality of goods purchased by expert’s buyers from the best manufacturers.
6) Mutual Advertisement
As all departments are under one roof there is economy in advertising.

7) Risk distribution

If there is a loss in one department, it may be compensated from the earnings of the other
departments.

8) Promotion of sales
They are in a position to spend considerable amount of money on advertising and other
promotional activities, which help in boosting their sales.

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Disadvantages of departmental stores.

1) Lack of Personal attention

As it has to deal with large number of customers, it is difficult to give personal attention to
customers.
2) High prices
Due to high cost of operations, the prices charged by departmental stores are comparatively
high.

3) High operating cost

High salary to expert, huge rent, expensive services etc increases the operating cost.

4) Location disadvantages

The number of departmental stores is limited and they are located at central places, so
common man finds it difficult to visit these stores for purchasing goods of day-to-day needs.

Lack of effective Control

5)
As it works through a large number of departments it creates the problems of effective
control and supervision.

(b) Multiple shops (Chain Stores)

Multiple shop is a large scale retail organization with a number of branches at different places
under one ownership and management and dealing in one line of product. These stores are identical
in their appearance, sign boards and interior decoration. These groups of branches are known as
‘multiple shops’ in Europe and ‘Chain stores’ in US. Maveli stores, Bata shop, Usha sewing
machines etc are examples for multiple shops functioning in India. Branches of the shop are located
throughout the nation. They specializes in one or two lines of goods. The goods required by the
branches are supplied by the head office. The branches only sell the goods at the prices fixed by the
head office on cash basis. Chain stores completely avoid middlemen. The idea behind the formation
of chain stores is to eat up the profit at the manufacturing and sale stage of goods. Chain stores may
be established by a manufacturer or by a merchant.Examples. Bata shoe stores, McDonald etc.

Features chain stores

1) It deals only one or two lines of product.

2) Each branch deals the same type of goods.

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3) There is uniformity in shop design and lay out.

4) It has centralized management purchasing and pricing.
5) It’s aim is to eliminate middleman.
6) It works on the basis of cash and carry principle.
7) It has centralized buying and decentralized selling.

Advantages chain stores

1) Economies of buying

As all purchases are made by the central office for all branches. They enjoy the gain of large
scale buying such as higher discount, lower rates, less transportation cost, advertisement etc.

2) No bad debts

The multiple shop sells goods mostly on cash basis. Hence there is no risk of bad debts.

3) Low cost of operation

The economy in large scale buying, centralized management, economy in advertisement, cash
sales etc will help the store to operate at a low cost.

4) Public confidence

All the branches of the shop sell standard goods at uniform price. This creates public
confidence.

5) Flexibility

If one store runs out of stock, goods can be easily transferred from a nearby store belonging
to the same chain. Such inter – branch transfers help to avoid loss due to shortage or surplus of stock.

6) Economy in advertisement

There is economy in advertisement because it is done by the head office and not by the
branches.

7) Better turnover

Multiple shop attain quick and better turn over by locating branches all over the country.

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8) Easy identification of stocks

Chain shops have uniform external appearance and interior display, so it can be easily
identified even by ordinary illiterate persons.

Disadvantages of chain stores

1) Absence of choice

As multiple shops deal in limited line of products, generally one brand, so they can’t offer
choice.

2) No credit facilities

No credit facilities are provided by these shops to customers. This would affect the volume of
sales of the shop.

3) No personal contact

The company and the customers have no direct contact as the business of the branches is
managed by the salaried branch manager.

4) Lack of flexibility

Chain shops are centrally controlled. As such, there is no scope for branch managers to adjust
prices, market techniques etc to exploit local needs and opportunities.

5) No initiative
The branch manager has no initiative of his own. It is centrally controlled and the branch
Manager has little powers. He can’t change the product line or marketing technique etc.

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Difference between Departmental stores and Multiple shops

Basis of Departmental stores Multiple shops

differences
1. Types of goods Deals in all types of goods Deals in limited line of goods
2. Location Located at central place Located at a number of places
3. Transferability There is no scope for mutual transfer of Goods can be transferred from
of goods goods from one department to another. one branch to another.
4. Pricing Prices charged in a departmental store Prices charged in chain stores
are not fixed and uniform. are uniform and fixed.
5. Supplier They collect the products of various They deal in products of only
manufacturers. one manufacturer.
6. Services They provide various services to No such services are provided
customers like free home delivery to by multiple shops.
goods, rest rooms, telephone etc.
7. Risk Greater risk is involved in In chain store risk is low as
departmental stores. There is no unprofitable branches can be
flexibility. closed or shifted to some other
locality.
8. Types of It attracts customers belonging to They attract all classes of
customers higher income group. customers.
9. Credit sales Departmental stores usually credit Credit facilities are not
facilities to regular customers. offered.
10.Size of stores It requires large building to It needs small size of shops.
accommodate several departments.
11. Satisfaction of It satisfies almost all needs of It meet only limited needs of
needs. customers as they provide varying of the customers because they del
goods. only limited line of products.

(c ) Mail order business

Mail order business is a form of retail business where they sell their merchandise through
mail. There is generally no personal contact between the buyers and the sellers in this type of trading.
Under mail order business for obtaining orders, potential customers are approached through
advertisement in news papers, magazines and TV, catelogues, and price lists sent to them by post.
All information relevant to the products are described in the advertisement.On receiving orders,the
mail order houses packs goods and send parcels by V.P.P.(Value Payable Post). The postman
delivered goods to the customer on receipt of payment. Thus, mail order business is shopping by post
from the customers view point and ‘selling by post’ from the sellers view point.

There can be different alternatives for receiving payments:

1) Customers may be asked to make full payment in advance

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2) Value Payable Post (VPP)-under this system goods are sent through post and are delivered to
the customers only on making full payment for the same.
3) Goods may be sent through a bank. Bank handed over the goods to the buyer only after he
makes full payment.

Features

1) The whole business is conducted by post. There is no face – to- face contact between the
seller and the buyer.
2) It may be started at any where even at home. Location of business is not important.
3) It may be started with less capital.
4) There is no need to keep stock. It need to keep stock. It need to purchase goods only after
getting orders.
5) No middlemen are involved.
Advantages of mail order business
1. Limited Capital : -This type of business can be started with limited capital as it does not
require huge buildings, fixtures and fittings and stock of goods.
2. Convenience in buying :- Goods are available at the door steps of customer. Hence it is
free from troubles, inconveniences and expenses of going to bazar.
3. Avoidance of middlemen:- Avoidance of middle man help in reducing the cost of
marketing.
4. No bad debts :- There is no risk of bad debts as sales are made on cash basis.
5. Lower cost :- Elimination of middle man result in avoiding expenses like sales man salary,
shop maintenance etc. It makes possible to fix a reasonable price or lower prices.
6. Wider scope:- Area of operating is very wide. Even international trade is possible.
7. Avoidance of ever stocking of goods ;- Goods are collected only after receiving the order.
Hence there is no need for stocking large quantities of goods.

Disadvantages of mail order business

1. Heavy expenses on advertising: - Mail order business depends on advertisements. It has to
spend a large amount on advertisement as compared to other forms of retail business.
2. Absence of personal contact: - There are no direct contacts with the buyer and seller.
3. No Personal inspection: - Buyer can’t inspects the goods before buying it.
4. Not suitable for all items: - Only limited type of goods can be sold on this basis.

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5. Delay in delivery: - Goods are not available in due time.

6. Absence of credit facility :- Goods are sold only on cash basis. Credit facility is not
available.
7. Unsuitable to illiterate class: - Mail order business is based on advertisement. It is not
suitable for illiterate class as they are unable to know about the product.

(d) CONSUMERS CO-OPERATIVE STORES

Consumers co-operative store is a large scale retail organization owned, managed and
controlled by consumers themselves. The objective such organization is to eliminate middlemen and
thereby reduce the cost of merchandise. Consumer co-operative store deals all type of consumer
goods of daily use such as grocery stationery, utensils dress materials etc. It purchases goods in bulk,
and sells in small lots to customers. The profit earned by them are utilized to declare bonus to
members and strengthening the general reserve and general welfare funds, or similar funds for social
and educational benefits of the members.

The minimum number of members to form a consumer cooperative store is 10 .The capital
for this store is raised by the issue of shares to its members. The elected managing committee
manages day to day activities. Each member has single vote irrespective of the number of shares held
by them.

Advantages of consumers co-operative stores

1. Easy Formation
Any ten people can come together to form a voluntary association and get themselves
registered with the Registrar of Cooperative Societies by completing certain formalites.
2. Limited Liability
The liabilities of members are limited to the capital contributed by them.
3. Economies of large scale
Economies of large scale purchasing are enjoyed because goods are purchased in bulk
quantity.
4. Democratic Management
It is managed by managing committee, who are the elected representatives of members. Each
member has single vote irrespective of the number of shares held by them.

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5. Lower Price
It purchases goods in bulk from manufactures and whole sealers and sell them to members
and others. Elimination of middlemen results in lower prices.

Disadvantages of consumers co-operative stores

1. Limited Capital
The primary source of fund for a cooperative store is the money raised from members by
issue of shares; it is limited and generally insufficient. Shortage fund is a challenge for their
growth and expansion.
2. Lack of initiative
It is managed by people who work on honorary basis; there is lack of initiative and
motivation amongst them to work hard.
3. Lack of business training
The people who manage the consumer cooperative stores lacks expertise as they are not
trained in running a business smoothly.
4. Inefficient management
The cooperative stores are not managed by professional managers and may lead to its closure.

(e) SUPER BAZAR (SUPER MARKETS)

A super market is a large scale retail shop selling a wide variety of consumer goods. They are
more attractive to consumers because of wide variety, low price, self service and huge collection of
merchandise. They usually traded branded and widely used consumer goods such as grocery, clothes,
house hold goods, medicine etc.Goods are kept on racks with clearly labeled price and quality tags in
super markets. The absence of salesmen is the distinctive feature of super Bazar. Hence they are also
called “self service store”. Products are properly packed and placed in separate sections in order to
make convenient purchase to consumers. The customers move into the store to pick up goods of their
requirements, bring them to the cash counter, make payment and take home. Only cash sales are
allowed here.

Features

1. They are generally located at the central locations to secure high turnover.
2. They sell goods on cash basis only.

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3. They deal in wide variety (complete line) of goods.

4. They operated on the self service principles.
5. They have low sales overhead as no salesmen are employed.

Advantages of super markets

1. One roof, low cost

Super markets offer a wide variety of products at low cost under one roof. They are not only
convenient but also economical to the buyers for making their purchases.
2. Wide Selection
Super markets keep wide variety of goods of different designs,colours etc.which enable the
buyer to make better selection.
3. No bad debts
Sales are on cash basis, so there is no chance for bad debts.
4. Complete freedom to buyers
There is no sales man. Buyer is free to take his decision.
5. Shopping convenience
All the required goods of daily need are available at one place. It save customer’s time and
energy.

Disadvantages of super markets

1. No personal attention
Super market works on the principle of self service. The customers, therefore, do not get any
personal attention at the time of their purchase.
2. No credit
In supermarkets no credit facilities are made available to consumers. This restricts the
purchasing power of buyers from such markets.
3. Huge capital expenditure

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Establishment and running a supermarket requires huge investment. This can be successful
only in big towns.
4. Difficulty of space
Large premises at central location are not available easily.
5. It is not suitable for products which require personal selling.

(f) Vending machines

A revolution in the marketing method is the emergence of vending machines. These are coin
operated machines found very suitable in selling products like hot beverages, platform tickets, soft
drinks, news papers etc.Absence of sales man is the special feature of this machine. It is useful
techniques of selling low priced goods of standard quality and uniform size.

At present, vending machines are working as Automated Teller Machines (ATM) in the
banking services.

Advantages of vending machines

1. Vending machines are useful for selling pre-packed items of low priced products, with
uniform size and weight.
2. As like ATM its working time is 24x7.
3. It is very convenient for both buyer and seller.

Disadvantages of wending machines

1. Initial cost of the machine and its maintenance charges on regular basis and repair are quite
high.
2. Consumers can’t see the product before buying.
3. Return of goods is impossible in case of vending machine.

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 Chapter-10

Role of commerce and industry associations in promotion of internal trade

Associations of commerce and industries are formed to promote and protect their common
interests. Associations concerned with commerce in our country are Associated Chamber of
Commerce and Industry (ASSOCHAM), Confederation of Indian Industry (CII) and Federation of
Indian Chambers of Commerce and Industry (FICCI).These three national level associations act as
guardians of trade, commerce and industry. These associations make negotiations with the
government relating to matters connected with trade and industry.Goverment, at the time of
presentation of budget, usually convene meeting of these associations and accept their suggestions.
These associations usually intervene in the following matters to protect the interest of trade,
commerce and industry.

1. They influence the government at the time of framing policies regarding interstate movement
of goods.
2. Otroi and other local taxes are charged by local self government at the time of entering goods
to the municipal limit. Commerce organization plays an important role to minimize these
levies.
3. A rational structure of the sales tax and its uniform rates across states, are important for
promoting a balance in trade. The chambers of commerce and Industry play an important role
in interacting with government to develop a harmonise sales tax structure
4. The Chambers of Commerce and Industry and the government are constantly interacting on
labour issues.
5. The Chambers of Commerce and Industry hold discussion with government agencies to
improve infrastructure like road, port, electricity, and railway etc.That are very crucial for the
development of trade.
6. The Chambers of Commerce and Industry interact with government to formulate laws
relating to weights, protection of brands, prevention of duplication etc
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