Chapter 5 The Marketing Sector PDF

CHAPTER 5 THE MARKETING SECTOR Andrew Del-ong Lecture Notes in AB 11, 1st Semester 2024-2025  Agribusiness Marketing System  Consist of participants and activities which effect product movements within the agribusiness chain.  Action of the participants and activities performed hig...

CHAPTER 5 THE MARKETING SECTOR Andrew Del-ong Lecture Notes in AB 11, 1st Semester 2024-2025  Agribusiness Marketing System  Consist of participants and activities which effect product movements within the agribusiness chain.  Action of the participants and activities performed highly dependent on the nature of interrelationship within and on how they react and interact with the forces in the marketing macro and micro environment.  General Marketing Activities  Transactional activities – Exchange activities  Physical handling and distribution of products Assembly Packing Storage Processing Grading Transportation  General Marketing Activities  Facilitating activities - performance of agribusiness marketing services Marketing research Marketing information dissemination Financing Provision of marketing support facilities  Agribusiness Marketing System Participants  Four major agribusiness system components  Marketing sector is the key player 1. Assemblers – do the accumulation and bulk these for storage or for distribution to wholesalers Agribusiness Marketing System Participants 2. Wholesalers – usually handle products in bulk and sell to retailers, processors or other wholesalers.  Requisites for effective wholesaling operations  Substantial working capital  Availability or access to market facilities such as warehouses and refrigeration facilities  Communication and transportation facilities  Ability to conduct market research and market espionage activities  Requisites for effective wholesaling operations Three types of Wholesalers  Merchant wholesalers Wholesale brokers and agents Manufacturer sales branches and offices  3. Retailers  Deal directly with end users; wholesalers partners in distribution activities  Also buy in bulk and repack or reprocess the products for easier distribution 3. Retailers  Usually carry an assortment of different products and stock small quantities of different product types.  4. Agents and Brokers  Do the business of negotiating in behalf of the producers and buyers.  Do not get profit from performing selling or distribution activities.  Do not assume ownership of products that they are handling. Marketing functions  Negotiation – facilitates transfer of ownership.  Assembly – bulking/accumulation of products to attain desired volume.  Grading – size, weight, over-all quality standardization. Marketing functions  Storage – stocking for goods availability when needed.  Processing – undergoing some levels of transformation for increased marketability. Marketing functions  Packing/packaging – wrapping products for protection, easier product handling and over – all presentation.  Financing – financial allocation for working capital and investments in marketing facilities.  Marketing functions  Risk-taking – bearing risk associated with physical damages, increased costs, and other types of losses.  Market research – gathering relevant data for the purpose of making or fine-tuning decisions to respond to the ever-changing consumer preferences. Marketing functions  Promotion – done for the purpose of giving information regarding product availability, features etc. with the end view of increasing sales Issues in Agribusiness Marketing Marketing issues at the farm level  Low prices of agricultural produce  Lack of buyers or markets  Poor access to major markets due to lack of market infrastructure  Lack of relevant market information  Issues in Agribusiness Marketing Marketing issues at the traders’ level  Irregularity of volume of production  Inability of farmers to meet demand  Lack of market infrastructure resulting to increased cost and delayed distribution  Competition Issues in Agribusiness Marketing Marketing issues at the consumers’ level  High prices of produce  Variability in quality of agro- industrial products in the market Marketing Management for Agribusiness Products Types of agribusiness products:  Raw or fresh agricultural products  Semi-processed and processed agribusiness products  Processed/finished products * The above product categories have different product characteristics, are operating in different competitive environments and have different target markets. Agribusiness Market Analysis Market Characteristics  Who are the buyers?  What specific agribusiness products do they buy?  Where are the buyers located?  What are their types of business organizations? Agribusiness Market Analysis Market Characteristics  For what purpose do they buy?  What are their quality and volume requirements  What are their specific marketing terms and conditions? Agribusiness Market Research  Design of marketing strategies depend on the outcome of market research  Importance of Market Research Reduces uncertainty in the formulation of marketing strategies Agribusiness Market Research  Importance of Market Research Helps an agribusiness man to continuously monitor marketing activities based on prepared plans Helps an agribusiness man identify market entry points Market Strategies for Fresh Agricultural Products  Product Strategies Careful handling in transporting produce Grading, packaging and labeling Market Strategies for Fresh Agricultural Products Pricing Strategies  Going rate pricing strategy (for undifferentiated agricultural products)  Cost-plus pricing (for differentiated products) Market Strategies for Fresh Agricultural Products Distribution Strategies  Conventional distribution system  Cooperative marketing system  Export and domestic marketing through contract growership  Direct and indirect marketing by commercial farms  Market Strategies for Fresh Agricultural Products Promotion Strategies  Rarely done for agricultural products due to:  Perishability  Lack of brands  Additional cost Market Strategies for Processed Products  Product strategies  Branding  Packaging  labelling Market Strategies for Processed Products Price Strategies  Consider demand, cost, competition  Consider world market prices  May use going-rate or cost plus Market Strategies for Processed Products Distribution Strategies Local Export Market Strategies for Processed Products Promotion Strategies Trade fairs Export promotion Media promotion Marketing Alliance in Agribusiness Contract marketing arrangements Physical distribution arrangements Joint marketing collaborations Promotional alliances