Agricultural Marketing PDF

AGRICULTURAL MARKETING KRINGLE MARIE P. MERCADO, L.AGRI, MSC, MBA MARKETING A series of services involved in moving a product from the point of production to the point of consumption Licensure Examination for Agriculturists // Review Materials // Kri...

AGRICULTURAL MARKETING KRINGLE MARIE P. MERCADO, L.AGRI, MSC, MBA MARKETING A series of services involved in moving a product from the point of production to the point of consumption Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA “SERVICES” a function performed on or for a product that alters its form, time, place, or possession characteristics add value to the product & thus entails costs may or may not involve physical handling Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA “POINT OF PRODUCTION” the point of usual first sale by the farmer farm-gate maybe done in the farm, farmer’s house, along the road, mountain trail, or assembly market transaction occurs between the farmer & the buyer Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA “POINT OF CONSUMPTION” the point of last purchase or sale transaction occurs between the seller & the buyer (consumer) Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Acclaim_Images_comp_0269-0801-1115-1757 Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Stock Photo of The Floating Market of Damneon Saduak, Thailand Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA MARKETING A series of services involved in moving a product from the point of production to the point of consumption Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA market a group of buyers and sellers with facilities for trading with each other Consists of 3 elements buyers sellers trading facilities Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Stock Photo of East Jerusalem Peddler With Transport Carts Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Stock Photo of Businessman Figures and aToy House Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Stock Photo of an Arts Crafts Show on Cape Cod Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Stock Photo: Supermarket Trolley Fun Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Why Marketing is Costly & Complex? Farms are scattered throughout the country Small production unit of several commodities Large production unit of a single commodity Highly perishable Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Why Marketing is Costly & Complex? Varied in quality Seasonal Performance of marketing services involves a large amount of money Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Problem Areas in Marketing Characteristics of the product perishability, seasonality of production, bulkiness, non- homogeneity (quality) Number of producers Characteristics of consumers Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Problem Areas in Marketing Poor conditions of physical structures Minimal flow of market information Lack of definite marketing policies Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA RESULTS OF AN INEFFICIENT MARKETING SYSTEM High wastage Poor product quality Low farmgate price High marketing costs High price to consumers Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA WHAT IS MARKETED? 1. Goods WHAT IS MARKETED? 2. Services WHAT IS MARKETED? 3. Events WHAT IS MARKETED? 4. Experience WHAT IS MARKETED? 4. People WHAT IS MARKETED? 5. Places WHAT IS MARKETED? 5. Properties WHAT IS MARKETED? 6. Organizations WHAT IS MARKETED? 7. Information WHO PERFORMS MARKETING MARKETING UTILITY Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA MARKETING UTILITY 1. FORM UTLITY - if good posses the required properties change the form of raw materials & create something new Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA MARKETING UTILITY 1. PLACE UTLITY - when products are made available where they are most wanted transportation Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA MARKETING UTILITY 1. TIME UTLITY - when products are made available when they are most wanted storage Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA MARKETING UTILITY 1. POSSESSION UTLITY - when goods are transferred or are placed under the control of the persons who desire to use them Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Agricultural Marketing System COMPONENTS Producer Subsystem – initiator of production Channel Subsystem – the actors often branded as the “necessary evil” Flow Subsystem – product, financial & information flows Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Agricultural Marketing System COMPONENTS Functional Subsystem – marketing processes & marketing functions Environmental Subsystem – climatic, physical, socio-cultural, economic, technology Consumer Subsystem – final repository of products produced by farmers Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Approaches to the study of Agricultural Marketing Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA 1. Commodity Approach studying the commodity concerned product-oriented than marketing –oriented study may cover the characteristic of the product, demand & supply situation, prices, consumer preferences, market potential of new products, etc. Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA 2. Institutional Approach Studying the various agencies & business transactions involved in the marketing processes attempts to answer the question “who” considers the nature & character of various middlemen & related agencies also the arrangement & organization of the marketing machinery Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Institutional Approach Middlemen Individuals or business concerns that specialize in performing the various marketing functions involved in the purchase & sale of goods as they are moved from producers to consumers Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Classifications of middlemen A. Merchant middlemen They take title to & therefore own products they handle; Buy & sell for their own gain (contract buyers, grain millers, wholesalers, shipper, wholesaler- retailer, assembler) Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Classifications of middlemen B. Agent middlemen Act as representative of their clients, Do not take title to & therefore do not own the products they handle; Income is in the form of fees & commission Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Classifications of middlemen C. Broker He/she does not have the physical control of the product, ordinarily follows the instructions of his principal closely & has less discretionary power in the price negotiations than the commission agent Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Institutional Approach Processors and manufacturers changes the form of the products Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Institutional Approach Facilitative Organizations Aid the various middlemen in performing their tasks Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Institutional Approach Market Associations Buying & selling of goods Buying – seeking out sources of supply Selling – merchandising activities; proper unit of sale, proper packaging, best market channel Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA 3. Functional Approach Attempts to answer “what” in the question “who does what” Marketing process Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Functional Approach Exchange Function – activities involved in the transfer of title of goods (buying & selling) Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA FUNCTIONAL APPROACH Physical Functions – those activities that involve handling, movement & physical change of the actual commodity itself; answer when, what, & where of marketing Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA FUNCTIONAL APPROACH Physical Functions storage – making goods available at a desired time transportation – making goods available at the proper place processing – manufacturing activities (carrying/freezing/drying) Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA OTHER RELEVANT TERMS IN AGRICULTURAL MARKETING Transportation - Space Dimension of Marketing Primary Concern: Time & Transfer Cost Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA OTHER RELEVANT TERMS IN AGRICULTURAL MARKETING Storage - Time Dimension of Marketing Primary Concern: help balance supply & consumption to balance periods of plenty & periods of scarcity Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA OTHER RELEVANT TERMS IN AGRICULTURAL MARKETING Storage (Reasons) Seasonal nature of production Demand for the different products thru-out the year Time required to perform the various marketing services Need for a carry-over into the following season Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA OTHER RELEVANT TERMS IN AGRICULTURAL MARKETING Storage (Costs) The costs necessary to provide & maintain the physical facilities for storage & for moving the products into & out of storage (repairs/depreciation/ insurance/handling fee/utilities) Interest on the amount of capital invested in the stored products Cost of quality deterioration, shrinkage, insect & rodent damage Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA OTHER RELEVANT TERMS IN AGRICULTURAL MARKETING Storage (Risks) Risk of physical loss Risk of loss due to price change (the most important risk) Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA FUNCTIONAL APPROACH Facilitating Functions makes possible the smooth performance of the exchange & physical functions; acts as the grease of the agricultural marketing machinery Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA FUNCTIONAL APPROACH Facilitating Functions Market Intelligence – the job of collecting, interpreting & disseminating the large variety of data which are necessary to the smooth operation of the marketing processes Market research – alternative marketing channels, routes, marketing functions,, market potential of new products, policies, etc. Demand creation – effective advertising & use of promotional devices Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA FUNCTIONAL APPROACH Grading – sorting of products into lots or units according to one or more of its attributes Standardization – the establishment & maintenance of uniform measurement Financing – the advancing of money to carry-out the aspects of marketing Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA FUNCTIONAL APPROACH Risk-bearing – the acceptance of the possibility of loss in the marketing of a product Packaging – to preserve the product & to protect it from contamination, to make it easier to handle, & to make the product more attractive to the buyer Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA 4. Market-Structure-Conduct- Performance Approach How market behaves Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Market-Structure-Conduct-Performance Approach Market Structure refers to how a market is organized that determines the relationship among the various sellers & buyers in the market degree of buyer-seller concentration, degree of product differentiation, the condition of entry to the market & the degree of knowledge of the market Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Types of market structures 1. Pure (Perfect) Competition 2. Monopolistic Competition 3. Oligopoly 4. Monopoly Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Market-Structure-Conduct-Performance Approach Market Conduct the behavior or pattern that the firm exhibits in the market (marketing practices) Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Market-Structure-Conduct-Performance Approach Market Performance appraisal of how much the economic resource of the industry’s market behavior a conduct deviates from the best possible contribution it can make to achieve relevant socio-economic goals Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Marketing channel Choice of Marketing Channel 1. Nature of the Product – perishability/unit value/newness of the product 2. Nature of the Market – consumer buying habits / size of average sale / total sales volume / concentration of purchases / seasonality of sales Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Marketing Channels of Selected Farm Products 1. Merchant Middlemen 1. Wholesalers – merchant middlemen who sell to retailers & other merchants but not to consumers 2. Wholesaler-Retailers – get produce in large quantities and sell to retailers on wholesale basis as well as to consumers on retail basis 3. Contract-buyers – a contract is made between the producer & the buyer Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Marketing Channels of Selected Farm Products 4. Assembler-Wholesalers – they buy from producers & contract buyers, assemble the products in large volume & transport to market centers; also known as viajeros 5. Butcher-Retailers – buy live poultry & livestock & sell them in dressed or carcass form 6. Retailers – sell to ultimate consumers Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA  Marketing Channels of Selected Farm Products 2. Agent Middleman – does not take ownership of the items sold a. Sales Agents – exchange products with a markup b. Commission Agents – exchange products in local areas just get commission as payment for their services c. Broker – has less powers than commission agents Licensure Examination for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA