Aids to Trade

Trade or exchange of goods involves several difficulties, which are removed by auxiliaries (ensure smooth flow of goods from producers to the consumers) known as aids to trade.It refers to all those activities which directly or indirectly facilitates smooth exchange of goods and services. Examples include; transport, communication, warehousing, insurance, banking, advertising, salesmanship, mercantileagent, trade promotion organizations and global organizations.

  1. TransportIn the modern times, there is a vast distance between centers of production and centers of consumption. This difficulty is removed by an important aidto trade known as transport. Transport creates place utility. There are several kinds of transport such as air, water and land transport. The geographical distance between producers and consumers is removed with the help of transport i.e. land=road, railway. Water=river,sea,canals.air=airway.
  2. Communication -This means transmitting or exchange of information from one person to another.It can be oral or in writing.It is necessary to communicate information from one to another to finalize and settle the terms of sale such as prices of goods, discountallowed, facility of credit etc. The modern means of communication like telephone, telex, telegraph, email,teleconferenceetc. plays an important role in establishing contact between business man, producers and consumers.
  3. Warehousing – There is a time gap between production and consumption.In other words, goods which are produced at one time are not consumed at the same time. Hence it becomes necessary to make arrangements for storage or warehousing. Agricultural commodities like wheat and rice are seasonal in nature but are consumed throughout the year, on the other hand goods such as umbrellas and woolen clothes are produced throughout the year but are demanded only during particular seasons. Therefore goods need to be stored in warehouses till they are it creates time utility by supplying the goods at right time to consumer.Insurance-This reduces the problem of risks. Business is subject to risks and uncertainities.Thisare inevitable in the field of business. Risks may be due to fire, theft, accident,or any other natural calamity. Insurance companies who act as risk bearer cover risks. Insurance tries to reduce risks by spreading them out over a greater number of people. The rate of premium depends upon the type of risks and the period for which the risk is covered.
  4. Banking – This solves the problem of finance. Businessmen receive money and also pays money in large is risky to carry large amount of cash from one place to another. Here comes banking as a solution. Banking and financial institutions solves the problem of payment and facilitate the exchange between buyer and seller. The business men may also require short term and long term funds. Banks provide such finance to business men. Banks also advances loans in the form of overdraft, cash credit and discounting bills of exchange.
  5. Advertising – Advertising fills the knowledge gap and it solves the difficulty of information. Exchange of goods and services possible only if producers can bring the products to the consumers. Advertising and publicity are important Medias of mass communication. Advertising helps the consumers to know about the various brands manufactured by several manufacturers. The medias used to advertise products are radio, newspapers, magazines, TV, internet etc.
  6. Salesmanship – It facilitates personal selling. Many a times sales force is required to book orders directly from the dealers or customers. Salesmanship is very much required in the sales of services and industrial goods. Again the sales force plays an important role in direct marketing, especially in the case of selling insurance policies. This is a process that allows people to exchange information among each other.
  7. Mercantile agents – it removes personal difficulties. Mercantile agents are middlemen who form a link between the buyers and the sellers. They do not carry on business in their own name.

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