Standardization and Grading
Standardization and Grading
Standardization refers to the process of setting up basic measures or standards to which the products must conform and taking steps to ensure that the goods actually produced adhere to these standards. Standards reflect desirable features of a product in terms of its design, weight, color, etc. Standardization means that goods are of a specified and uniform quality.
Grading is the process of sorting individual units of a product into well defined classes or grades of quality. The goods are graded or sorted out into different lots in accordance with the specified standards. The established standards lay down the grades of the product. In case of manufactured goods, goods can be of uniform quality. But agricultural products like fruits and vegetables, etc., vary in quality. Therefore, classes or grades of quality are set and different units of the product are sorted into the established standard grades. Thus, grading involves the division of products into classes made up of units possessing similar characteristics of size and quality.
Standardization and Grading are interdependent activities. Standardization lay down the standards or grade of quality. Grading involves classifying the products into specific lots as per the established standards.
Advantages of Standardization and Grading
Standardization and Grading are useful marketing functions as they offer the following advantages:
1. Standardization and Grading facilitate buying and selling of goods by sample or description. When goods are of standardized quality, customers do not insist on detailed inspection.
2. Standardized goods sell better and fetch a better price to the seller because customers have more faith in them.
3. Standardization and Grading enable the producer to direct the goods of different qualities towards the market best suited to them. The task of middlemen becomes easy because they can communicate well the characteristics of standardized products to customers.
4. Transportation, storage and advertising expenses can be reduced by handling different grades or lots.
5. Standardized goods enjoy a wider market.
6. Standardization and Grading facilitate trading of goods on the commodity exchange. Hedging, future trading and price comparisons become easy.
7. Standardization and Grading helps in raising finance because standardized products enjoy a ready market and they are readily accepted as a collateral security for granting loans.
8. Standardized products can be easily valued and their prices fluctuate less widely. This helps in making insurance claims in the event of loss or damages to the goods.
As you can see there are advantages to each method. Grading is comparing apples to apples and oranges to oranges. And that is important to those that rely on real life comparisons. This means that grading compares size to size and weight to weight and price to price, a real comparison.
Standardization has the advantage of uniformity in quality.
With standardized goods, there is homogeneity and consistency in quality. Hence, a consumer can buy a product without much hesitation and risk as the quality of product will not change over a period of time, thus leading to better goodwill. Which is more of a metric comparison that grading.