10120140502015 2

International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 116-125 © IAEME
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MARKETING SUPPLY CHAIN MANAGEMENT OF BRINJAL:
CHALLENGES AND OPPORTUNITIES
Hena Imtiyaz and Peeyush Soni
School of Environment, Resource and Development, Asian Institute of Technology, P.O. Box 4,
Klong Luang, Pathumthani 12120, Bangkok, Thailand
ABSTRACT
The study was carried out in Allahabad district, India from November, 2011 to March, 2012
to examine the existing four marketing supply chains (SC1: Producer Consumer; SC2:
Producer Retailer Consumer; SC3: Producer Commission agent Retailer Consumer and SC4:
Producer Commission agent Wholesaler Retailer Consumer) for brinjal. The marketing
supply chains had significant effect on net marketing price of producer, net profit of producer, total
marketing cost, total marketing loss, total net marketing margin, marketing efficiency, producer share
in consumer price and consumer purchase price for brinjal. The net price of producer, net profit of
producer, marketing efficiency and producer share in consumer price were significantly higher in
marketing supply chain SC1 followed by SC2, SC3 and SC4. The total marketing cost, total marketing
loss, total net marketing margin and consumer purchase price for brinjal were significantly lower in
marketing supply chain SC4 followed by SC3, SC2 and SC1. The standardized beta coefficient
indicates that commission charges for marketing of brinjal was most dominant factor which
influenced the marketing cost. The results revealed that net profit of producer, marketing efficiency
and producer share in consumer price decreased significantly as well as marketing cost, marketing
loss, marketing margin and consumer purchase price increased significantly with the increase of
number of intermediaries in marketing supply chain. The most challenging issues in existing
marketing supply chains for fresh vegetables in Allahabad district are high marketing cost, high
marketing loss, low net profit of producer and low marketing efficiency caused by high number of
intermediaries, poor logistics, lack of coordination between chain partners and poor linkage of
producer to potential market. In order to improve socio – economic condition of small and marginal
farmers / producers and provide competitive price to consumer in Allahabad district, it is feasible to
introduce cooperative marketing supply chain as well as to improve transportation storage, and
marketing facilities and provide accurate marketing information, technical knowledge and financial
support to producers and intermediaries.
INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)
Volume 5, Issue 2, February (2014), pp. 116-125
© IAEME: www.iaeme.com/ijm.asp
Journal Impact Factor (2014): 3.2150 (Calculated by GISI)
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© I A E M E

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Keywords: Supply Chain, Marketing Cost, Marketing Loss, Marketing Margin, Marketing
Efficiency, Brinjal
INTRODUCTION
India is the second largest producer of fruits and vegetables in the world. India’s production
of fruits and vegetables currently stands at 64 million tons and 126 million tons respectively, making
up for around 12% of fruits and 14% of vegetables world production. The major fruits and vegetables
export from India are Mango, Guava, Onion, Potatoes, Okra, Bitter Gourd and Green Chillies. Fruits
and Vegetables are highly perishable and cannot be stored for long periods without proper
arrangement of post harvest facilities. The trading of fresh vegetables and fruits is very complicated
due to its high perishability and therefore, it is a great challenge for the producers, supplier,
processers, exporters and traders to maintain the desirable quality for domestic consumption and
export. Apart from perishable nature of fruits and vegetables, the desired quality assurance,
competitive global environment, stringent quality standards, etc. add to the vulnerability and
complexity of business. Uttar Pradesh (U.P.) in India is fifth largest and most populous state, located
in the North Western part of the country. The share of U.P. in total horticultural production of the
country is 26%, second largest in the country after West Bengal. The major vegetables grown in U.P.
are peas, chillies, okra, tomato, brinjal, cauliflower, cabbage, spinach, melon, radish, carrot, turnip
and cucurbits. The State Government of Uttar Pradesh has brought forward various schemes and
policies in order to facilitate the production and marketing of horticultural crops. However, even after
measures taken by the state government, the economic condition of majority of the marginal and
small-scale farmers has not improved significantly due to poor unevolved marketing systems, large
numbers of intermediaries in supply chain, poor logistics and storage facilities, lack of food
processing industries, inconsistency and high fluctuation in price, etc. In the present scenario, the
farmer is most exploited due to lack of proper marketing supply chain system and linkage between
farmer to potential market (Berdegue et al. 2008; Cavatassi et al. 2009).
Supply chain management is a wide business process encompassing planning, implementing
and controlling the operations of the supply chain which aims at providing the consumers with
desirable goods and commodities. Supply chain management includes movement and storage of raw
materials, inventory and finished goods from producers to consumers. Supply chain management can
be explained as the flow of plans, materials and services from the supplier to the consumer including
the close cooperation between the various entities in supply chain. An efficient supply chain
management contributes to improve efficiency in production, value additions, storage, transportation
and marketing which in turn maximize the profitability of the chain partners and minimize the cost
for consumers. The major issues in existing marketing supply chain of fresh vegetables in India are
high marketing cost, high marketing loss, low marketing efficiency and producer’s share in consumer
price as well as high consumer price (Chauhan et al. 1998; Ladaniya et al. 2005; Pawar and Pawar
2005; Talathi et al. 2005; Zulfiqar et al. 2005; Murthy et al. 2007; Gangwar et al. 2007; Sidhu et al.
2010; Emam 2011; Pandey et al. 2011). The marketing cost, marketing loss and marketing efficiency
of fresh vegetable in India is largely affected by the poor infrastructure and lack of linkages between
producer and intermediaries in the supply chain. The marketing efficiency of fresh vegetables is also
affected by the substantial amount of wastage, deterioration in quality, mismatch in supply and
demand and fluctuation in price. High perishability, seasonal in nature and bulkiness make the
marketing of fresh vegetables extremely complex (Anil and Arora 1999; Gupta and Rathore, 1999;
More 1999; Begum and Raha 2002; Sudha et al., 2002; Murthy et al., 2002; Singh and Chauhan
2004; Bala 2006; Lu 2006; Murthy etal., 2007;Rupali and Gyan 2010; Barakade et al. 2011).
The brinjal is an economically and forth most important vegetable grown in India. The brinjal
crop is primarily grown by small and marginal farmers in Uttar Pradesh. The brinjal is an important

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source of income for marginal and small scale farmers. Approximately 1.4 million small scale
farmers in India grow brinjal crop, which provide them regular income (Chaudhary and Gaur, 2009).
The major producing state in India for brinjal are West Bengal, Orissa, Andhra Pradesh, Gujrat,
Bihar, Madhya Pradesh, Maharashtra, Chhattisgarh, Karnataka, Haryana, Jharkhand, Assam, Tamil
Nadu and Uttar Pradesh. The marketing supply chain for brinjal in Uttar Pradesh involves large
number of intermediaries which results in high marketing cost, high marketing loss, low marketing
efficiency, low producers share in consumer price and high consumer price (Chauhan et al. 1998;
Ladaniya et al. 2005; Pawar and Pawar 2005; Talathi et al. 2005; Zulfiqar et al. 2005; Murthy et al.
2007; Gangwar et al. 2007; Sidhu et al. 2010; Emam2011; Pandey et al. 2011). Inspite of economic
importance of brinjal production in Allahabad district, Uttar Pradesh, little information is available
on marketing supply chain management. Therefore the objectives of the study were to evaluate
existing marketing supply chains of brinjal in relation to producer net marketing price, net profit of
producer, marketing cost, marketing loss, marketing margin, marketing efficiency, producer share in
consumer price and consumer purchase price in order to identify major constraints and opportunities
to develop efficient marketing system.
MATERIALS AND METHODS
The marketing supply chain of brinjal consist of various intermediaries such as commission
agents, wholesalers and retailers who move the fresh produce from producer / farmer to consumer.
The following marketing supply chains were analysed in the present study because these are
commonly used supply chain for brinjal in Allahabad district, India.
i. SC1 : Producer Consumer
ii. SC2 : Producer Retailer Consumer
iii. SC3 : Producer Commission Agent Retailer Consumer
iv. SC4 : Producer Commission Agent Wholesaler Retailer Consumer
The primary data for evaluation of four marketing supply chains of brinjal in relation to
transportation, packaging and marketing costs, spoilage during transportation and marketing,
loading, unloading and commission charges, cleaning, washing and grading charges, sale price,
problems faced and expectations of producers, commission agents, wholesalers, retailers and
consumers were collected by using well structured questionnaires. During the survey ten producers,
ten commission agents, ten wholesalers, ten retailers and twenty consumers for each marketing
supply chain were interviewed and data were collected.
The producer net marketing price (NMPP), net profit of producer (NPP), net marketing
margin of wholesaler (NMMW), net marketing margin of retailer (NMMr), total net marketing margin
(TNMM), total marketing cost (TMC), total marketing loss (TML), marketing efficiency (ME as
estimated by Shepherd 1965, Murthy et al. 2007 and Acharya and Agarwal 2011) and producer share
in consumer price (PSCP) for four marketing supply chains of brinjal were estimated by the
following methods :
NMP୔ ൌ GMP୔ െ ሾMC୔ ൅ PL୔ x GMP୔ሿ …(1)
NP୔ ൌ GMP୔ െ ሺCP ൅ MC୔ ൅ PL୔ x GMP୔ሻ …(2)
NMM୛ ൌ SP୛ െ PP୛ െ ሺMC୛ ൅ PL୛ x PP୛ሻ …(3)
NMM୰ ൌ SP୰ െ PP୰ െ ሺMC୰ ൅ PL୰ x PP୰ሻ ...(4)

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TNMM ൌ NMM୛ ൅ NMM୰ …(5)
TMC ൌ MC୔ ൅ MC୛ ൅ MC୰ …(6)
TML ൌ ሺPL୔ x GMP୔ሻ ൅ ሺPL୛ x PP୛ሻ ൅ ሺPL୰ x PP୰ሻ …(7)
Shepherd, 1965 ‫׷‬ ME ൌ
C୔
TMC
െ 1 …(8)
Murthy et al. , 2007: ME ൌ
NMP୮
TNMM ൅ TMC ൅ TML
… ሺ9ሻ
Acharya and Agarwal, 2011 ‫׷‬ ME ൌ
NMP୮
TNMM ൅ TMC
…(10ሻ
PSCP ൌ
NMP୮
C୮
x 100 ….(11)
Where,
NMPp = net marketing price received by producer (Rs/kg); GMPp= gross marketing price
received by producer (Rs/kg); MCp = marketing cost of producer for transportation, packaging,
loading and unloading and commission (Rs/kg); PLp = physical loss of brinjal by producer during
transportation and marketing (kg/kg); NPp= net profit of producer (Rs/kg), CP = cost of production
(Rs/kg); NMMw= net marketing margin of wholesaler (Rs/Kg); SPw= wholesaler sale price (Rs/kg);
PPw= purchase price of the wholesaler (Rs/kg); MCw= marketing cost of wholesaler for
transportation, packaging, loading and unloading, commission, rent, electricity and labour, etc
(Rs/kg); PLw= physical loss of brinjal by wholesaler during transportation and marketing(kg / kg);
NMMr = net marketing margin of retailer (Rs/Kg); SPr= retailer sale price (Rs/kg); PPr= purchase
price of retailer (Rs/kg); MCr= marketing cost of retailer for transportation, packaging, loading and
unloading and commission, rent, electricity and labour etc. (Rs/kg); PLr = physical loss of brinjal by
retailer during transportation and marketing (Kg / kg); TNMM = total net marketing margin (Rs/kg);
TMC = total marketing Cost (Rs/kg); TML= total marketing loss of brinjal (Rs/kg) ; ME = marketing
efficiency; Cp = consumer price (Rs/kg) and PSCP = producer share in consumer price (%).
The descriptive statistics, analysis of variance, post hoc tests for multiple comparisons of
means and multiple regression were used to analyse the data. The analysis was performed with SPSS
version 20.
RESULTS AND DISCUSSION
Gross marketing price, net marketing price and net profit of producer and consumer price
between different marketing supply chains SC1 (Producer Consumer), SC2 (Producer
Retailer Consumer), SC3 (Producer Commission agent Retailer Consumer), SC4
(Producer Commission agent Wholesaler Retailer Consumer) were highly significant. The
gross marketing price of producer (Rs. 8.00 / Kg), net marketing price of producer (Rs. 7.35 / Kg)
and net profit of producer (Rs. 5.21 / Kg) were significantly higher in marketing supply chain SC1,
followed by SC2, SC3 and SC4 due to involvement of commission agent, retailer and wholesaler in
trading of brinjal. The consumer purchase price for brinjal was significantly minimum in marketing
supply chain SC1 (Rs. 8.00 / Kg), because consumer purchased the brinjal directly from producer /

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farmer in local market. The consumer purchase price for brinjal increased significantly in marketing
supply SC2, SC3 and SC4 due to the involvement of intermediaries in marketing supply chain.
Furthermore, the consumer purchase price was significantly higher in marketing supply chain SC4
(Rs. 10.80 / Kg) compared with SC1, SC2 and SC3, because in marketing supply chain SC4 maximum
number of intermediaries such as commission agent, wholesaler and retailer were involved in trading
of brinjal (Table 1).
Table 1. Gross marketing price, net marketing price and net profit of producer and consumer
price of brinjal in different marketing supply chains
Marketing
supply chains
Gross marketing
price of producer
(GMPP)
Rs/kg
Net marketing price
of producer (NMPP)
Rs/kg
Net profit of
producer (NPP)
Rs/kg
Consumer
price (CP)
Rs/kg
SC1 8.00a
7.35a
5.21a
8.00a
SC2 6.75b
6.14b
4.00b
10.00b
SC3 5.95c
4.57c
2.43c
10.00b
SC4 5.25d
4.16d
2.02d
10.80c
Values followed by same letter in superscript have no significant difference (p < 0.05)
The overall results revealed that for gross marketing price of producer (15.6 to 34.4%), net
marketing price of producer (16.5 to 43.4%) and profit of producer (23.2 to 61.2%) decreased as well
as purchase price of consumer (25 to 35%) increased considerably with increased in number
intermediaries in marketing supply chain of brinjal. In Allahabad as well as in Uttar Pradesh the
major portion of fresh vegetables including brinjal are sold through marketing supply chain SC2, SC3
and SC4. In order to improve net profit of producer / farmer and provide competitive price to
consumer for brinjal, it is necessary to reduce number of intermediaries in marketing supply chain by
introducing cooperative marketing supply chain which does not exist in Allahabad district as well as
strengthening local / village market for direct sale of fresh vegetables particularly brinjal by producer
to consumer. Similar results were reported by many researchers for wide variety of vegetables / fruits
amd marketing supply chains (Chauhan et al. 1998; Radha and Prasad, 2001; Pawar and Pawar 2005;
Murthy et al. 2007; Sidhu et al. 2010; Hena and Soni, 2013).
Total marketing cost, total marketing loss and total net marketing margin between marketing
supply chain SC1 (Producer Consumer), SC2 (Producer Retailer Consumer), SC3
(Producer Commission agent Retailer Consumer) and SC4 (Producer Commission
agent Wholesaler Retailer Consumer) were highly significant. The total marketing cost, which
includes the expenses for transportation, commission by commission agent, packaging loading and
unloading, rent, electricity and labour was significantly lower in marketing supply chain SC1 (Rs.
0.42 / kg) and it increased significantly in marketing supply chain SC2 (Rs. 1.64 / Kg), SC3 (Rs. 2.56
/ Kg) and SC4(Rs. 3.07 / Kg). The total marketing cost which includes the marketing cost of producer
and intermediaries (Commission agent, wholesaler and retailer) increased considerably with the
increase in number of intermediaries in marketing supply chain for example the number of
intermediaries in marketing supply chain SC1, SC2, SC3 and SC4 were none, one, two and three
respectively (Table 2). The total marketing loss, which includes physical loss during transportation,
loading unloading and marketing by producer, wholesaler and retailer was significantly minimum in
marketing supply chain SC1 (Rs. 0.23 / Kg) and it increased significantly in marketing supply chain
SC2 (Rs. 0.56 / Kg), SC3 (Rs. 0.74 / Kg) and SC4 (Rs. 0.85 / Kg). This is due to fact that the total
marketing loss of brinjal increased considerably with increase in number of intermediaries in
marketing supply chain, because producer, wholesaler and retailer perform the transportation and
marketing process separately (Table 2). The total net marketing margin, which includes net

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marketing margin of wholesaler and retailer, was significantly higher in marketing supply chain SC4,
because both wholesaler and retailer were involved in marketing of brinjal (Rs. 2.72 / kg). However,
no significant difference in net marketing margin between marketing supply chain SC2 and SC3 was
found because in these supply chains only retailer was involved in marketing of brinjal (Table 2).
Table 2. Marketing cost, marketing loss and net marketing margin of brinjal in different
marketing supply chains
Marketing supply
chains
Total marketing cost
(TMC)
Rs/kg
Total marketing loss
(TML)
Rs/kg
Total net marketing
margin (TNMM)
Rs/kg
SC1 0.42a
0.23a
0.00a
SC2 1.64b
0.56b
1.66b
SC3 2.56c
0.74c
2.14c
SC4 3.07d
0.85d
2.72d
The packaging, Transportation, loading, unloading, commission, rent, electricity and labour
expenses had significant effect on marketing cost of brinjal. The multiple regression analysis for
standardized Beta co-efficient indicate that commission charges (0.388) paid by producer and
wholesaler / retailer to commission agent was the most dominant factor, which influenced the
marketing cost of brinjal, followed by transportation (0.286), rent, electricity, and labour (0.265),
packaging (0.082) and loading and unloading (0.075) charges (Table 3). The results clearly revealed
that in order to reduce the marketing cost of brinjal, it is necessary to minimized expenses for
transportation, commission, packaging, loading and unloading, rent, electricity and labour by
providing appropriate and effective logistic system to producer and intermediaries.
The overall results reveled that marketing cost, marketing loss and marketing margin
increased significantly (p < 0.05) with the increase in number of intermediaries in marketing supply
chain, which in turn significantly reduced the net profit of producer as well as increased the
consumer purchase price of brinjal. The results
Table 3. Multiple regression results to explain the effect of logistics on marketing cost of brinjal
in different marketing supply chains
Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B
Std.
Error
Beta
1 (Constant) -.006 .012 -.499 .621
Packaging 1.027 .069 .082 14.827 .000
Transportation .991 .026 .286 37.853 .000
Loading and Unloading 1.052 .094 .075 11.216 .000
Commission Charges 1.004 .014 .388 72.438 .000
Rent, Electricity and Labour .986 .027 .265 36.634 .000
a Dependent variable: Marketing cost
further revealed that transportation cost, commission charges and rent, electricity and labour
expenses were the important factors, which influenced the marketing cost of brinjal. The lack of
appropriate and efficient transportation, storage, grading, packaging, marketing facilities, mismatch

122
between supply and demand as well as poor coordination between producer and intermediaries
resulted in considerable physical loss of brinjal. The similar results were reported by many
researches for fresh vegetables and fruits under wide range of marketing supply chains (Sudha et al.
2002, Zulfiqar et al. 2005, Murthy et al. 2007, Gangwar et al. 2007, Sidhu et al. 2010 and Pandey et
al. 2011).
The marketing supply chains had significant effect on marketing efficiency and producer
share in consumer price of brinjal. The marketing efficiency estimated by Shepherd (1965), Murthy
et al. (2007) and Acharya and Agarwal (2011) were significantly higher (p < 0.05) in marketing
supply chain SC1 (Producer Consumer), SC2 (Producer Retailer Consumer), SC3
(Producer Commission agent Retailer Consumer) and SC4 (Producer Commission
agent Wholesaler Retailer Consumer). The results revealed that marketing efficiency of brinjal
decreased significantly with the increase in number of intermediaries in marketing supply chains.
This is due to fact that marketing cost, marketing loss, marketing margin and consumer purchase
price increased significantly as well as net marketing price of producer decreased significantly with
increase in number of intermediaries in marketing supply chains, which in turn decreased the
marketing efficiency of brinjal (Table 4). The producer share in consumer price for brinjal was
significantly higher (p < 0.05) in marketing supply chain SC1 (91.85%) due to significantly higher
net marketing price of producer and lower consumer purchase price, followed by marketing supply
chain SC2 (61.42%), SC3 (45.65%) and SC4 (38.54%). The results revealed that producer share in
consumer price decreased significantly (91.85% to 38.54%) with increase in number of
intermediaries (0 to 3) in marketing supply chain due to significant decrease in net marketing price of
producer (Table 4).
Table 4. Marketing efficiency and producer share in consumer price for brinjal in different
marketing supply chains
Marketing
supply chains
Marketing efficiency
Producer share in
consumer price, %Shepherd
(1965)
Murthy et al.
(2007)
Acharya and
Agarwal (2011)
SC1 18.22a
11.31a
17.67a
91.85a
SC2 5.12b
1.60b
1.88b
61.42b
SC3 2.90c
0.84c
0.97c
45.65c
SC4 2.52c
0.63c
0.72c
38.54d
The overall results revealed that marketing efficiency and producer share in consumer price
decreased considerably as the number of intermediaries increases in marketing supply chain due
considerably increase in marketing cost, marketing loss, marketing margin and consumer purchase
price as well as significant decrease in net marketing price of producer and net profit of producer.
The results clearly indicate that marketing supply chain SC1 was most efficient in terms of marketing
efficiency and producer share in consumer price because no intermediaries were involved in trading
of brinjal. Therefore, in order to improve the marketing efficiency and producer share in consumer
price, it is necessary to reduce the number of intermediaries in marketing supply chain as well as to
reduce marketing cost and marketing loss by providing appropriate and efficient logistic and
marketing facilities to supply chain partners. Similar results were reported by many researches for
wide varieties of fresh vegetables and fruits and marketing supply chains (Ladaniya et al. 2005;
Murthy et al. 2007; Gangwar et al. 2007; Emam, 2011; Pandey et al. 2011; Gaurav, 2011).

123
CONCLUSION
The present study evaluated four existing marketing supply chains in relation to marketing
cost, marketing loss, net marketing price of producer, net profit of producer, net marketing margin of
intermediaries, marketing efficiency, consumer purchase price and producer share in consumer price,
in order to develop policies and strategies for efficient marketing system for brinjal in Allahabad
district, India. The net marketing price of producer, net profit of producer, marketing efficiency and
producer share in consumer price for brinjal decreased significantly with the increase in number of
intermediaries in marketing supply chain. Furthermore, the marketing cost, marketing loss, net
marketing margin and consumer purchase price increased significantly with increase in number of
intermediaries in marketing supply chain. The marketing cost was most important factor which
influenced the marketing efficiency and producer share in consumer price. The commission paid by
producer and retailer / wholesaler was the most dominant factor influencing marketing cost.
In order to improve net profit of producer and provide competitive price to consumer, it is
necessary to reduce number of intermediaries in marketing supply chain which can be achieved by
forming cooperative marketing supply chain system for brinjal. The cooperative marketing supply
chain may be helpful to improve marketing efficiency and producer share in consumer price. To
improve marketing efficiency and net profit of producer and to provide good quality and competitive
price to consumer under existing marketing supply chain system, where large number of
intermediaries are involved for marketing of brinjal in Allahabad district, it is important to provide
accurate market information regarding supply and demand, proper grading, storage, packaging,
transportation, credit and insurance facilities to producer, retailer and wholesaler.
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