A marketing system is defined as the chain of links between producers/suppliers and consumers/users, including all mechanisms, flows, interchanges, services and operators, and which determine the relationships between producer earnings and the supply of the physical product. Flows through a well-functioning marketing system include information on prices, market situation, trends, consumer preferences etc. as well as flows of physical product, and of money, credit and property rights.
The potential economic benefits of well-functioning marketing systems are immense. By facilitating specialization and exchange, dynamic and creative forces are released with large potential benefits for economic development, employment and higher income for producers and suppliers and better deals for consumers. However, the extent to which effective market signals about consumers and consumers needs actually reach the producers and suppliers and the responsiveness of producers/suppliers to supply these needs depend to a large degree upon the efficiency and design of the system.
In most markets, the present structure is a result of organic growth and dynamic structural adjustments over time, rather than the result of a specifically designed development strategy. Where the supply chain is found to be well operating there is little need for direct involvement of the government. However, in many countries, the prerequisites for well-operating markets are missing and corrective interventions by policymakers are needed.