6 ABE_Agricultural Marketing - Handout.pdf

AGRICULTURAL MARKETING MARKETING  Series ofservices or process of moving the product from the point of production to the 1 point of consumption. MARKET Place where buyers and sellers meet to exchange goods and services. Group of buyers and sellers with the facilities for trading...

AGRICULTURAL MARKETING MARKETING  Series ofservices or process of moving the product from the point of production to the 1 point of consumption. MARKET Place where buyers and sellers meet to exchange goods and services. Group of buyers and sellers with the facilities for trading with each other. ELEMENTS OF MARKET 2 1. Buyers - Ultimate buyers - Industrial Buyers 2. Sellers 3. Trading Facilities POINT OF PRODUCTION  Point of first sale by the farmers, typically at the farm or at the farmers home. 3 POINT OF CONSUMPTION  Point where marketing ends or points of last purchase or sale. SERVICES  Functions perform on a product to alter its form, time, place or characteristics that 4 involves costs and added value to the product and somebody has to pay it. PRODUCT SERVICES  Servicesadded prior to the point of production. MARKETING SERVICES  Servicesadded after the point of production. 5 MARKETING SERVICES 1.Processing 2.Transporting 3.Storing 6 4.Buying and Selling  DIFFERENCE IN MARKETING OF AGRICULTURAL AND MANUFACTURED GOODS 1.Perish ability of the product 2.Seasonality of production 3.Bulkiness of products 4.Variation in quality of products 5.Irregular supply of agricultural products 7 6.Small size of holdings and scattered production 7.Processing  IMPORTANCE OF AGRICULTURAL MARKETING 1.Optimization of resource use and output management 2.Increase in farm income 3.Widening of markets 4.Growth of agro-based industries 8 5.Price signals 6.Adoption and spread of new technology 7. Employment 8. Addition to national income 9. Better living 10. Creation of utility a. Form utility b. Place utility c. Time utility d. Possession utility DIMENSIONS OF A MARKET 9 1.Location 2.Area or coverage 3.Time span 4.Volume of transactions 5.Nature of transactions 6.Number of commodities 7.Degree of competition 8. Nature of commodities 9. Stage of marketing 10. Extent of public intervention 11. Type of population served 10 12.Accrual of marketing margins MARKET STRUCTURE  How a market is organized based on the characteristics that determine the relationship among the various sellers in the market, among the various buyers, and between the various buyers and sellers in the market. CLASSIFICATION OF MARKET STRUCTURE 11 1. Purely Competitive Market 2. Absolute Monopoly 3. Monopolistic Competition 4. Oligopoly a. Pure Oligopoly b. Differentiated Oligopoly 5. Monopsony MARKETING CHANNELS 12 1. Contract-buyers 2. Wholesaler 3. Commission Agent 4. Wholesaler-Retailer 5. Assembler-Wholesaler 6. Butcher-Retailer 7. Retailer WAYS TO SUBDIVIDE MARKETING MARGIN INTO DIFFERENT 13 COMPONENTS 1. MARKETING COST  Returns tothe factors of production used in providing the processing and marketing services rendered between the farmers and consumers. COMPONENTS: 1.Wage – return to labor 2. Interest – return to borrowed capital 14 3. Rent – return to land and buildings 4. Profit – return to entrepreneurship and risk capital 2. MARKET CHARGES  Returns according to the various agencies or institutions involved in the marketing of products. TYPES OF MARKETING MARGINS 15 1. Absolute Margin (AM) =Selling Price (SP) – Buying Price (BP) 2. Percentage Margin (PM) =(AM/SP) x 100 3. Percentage Mark-up =(AM/BP) x 100 BREAKDOWN OF CONSUMER’S PESO 16 1. Farmer’s share =(Farm Price / Final Retail Price) x 100 2. Middleman’s share =Middlemen’s Absolute Margin / Final Retail Price a. Wholesaler Share (WS) =WS Absolute Margin / Final Retail Price b. Contract Buyer Share (CB) =CB Absolute Margin / Final Retail Price c. Retail Share =Absolute Margin / Final Retail Price THE FOUR (4) P’s OF MARKETING 17 1. Product 2. Price 3. Place (or Distribution) 4. Promotion MARKETING TOOLS OF THE FOUR (4) P’s OF 18 MARKETING 1. Product: variety, quality, design, features, brand name, packaging, services 2. Price: list price, discounts, allowance, payment period, credit terms 3. Place: channels, coverage, assortments, locations, inventory, transportation, logistics 4. Promotion: advertising, personal selling, sales promotion, public relation THE FOUR (4) P’s AS THE FOUR (4) C’s 19 1. Customer solution, not products 2. Customer cost, not price 3. Convenience, not place 4. Communication, not promotion “ Trust in the Lord with all your heart and lean not on your understanding; in all your ways submit to him, and he will make your paths straight.” ~~ Proverbs 3:5-6 20 “Be strong and courageous. Do not be afraid; do not be discouraged, for the Lord your God will be with you wherever you go” ~~ Joshua 1:9