Marketing-subsystem.pptx

THE MARKETING SUBSYSTEM

Topic Outline • Classification of Agribusiness Products • Characteristics of Agribusiness Products • Classification of Marketing Strategies • Key Players in the Agribusiness Marketing Subsystem

Topic Outline, cont… • Market Functions • Issues in Agribusiness Marketing in the Philippines • Marketing Considerations and Strategies for Agribusiness Products

The Marketing Subsystem • One of the 5 aggregates of the agribusiness system • Objective: satisfy the needs and wants of the consumers

Classification of Agribusiness Products 1. Fresh agricultural products 2. Semi-processed agribusiness products 3. Finished products

Fresh Agricultural Products • Directly harvested from farms • Do not pass higher level of transformation • Cleaned, sorted, graded

Semi-Processed Agricultural Products • Underwent second level of transformation • Inputs for industry/processing • May not be consumed

Semi-processed products

Finished Products • May be consumed by the buyers • Not intended for further processing

The Marketing Sector • Forms the link between the other sectors mentioned, play different role. • Middlemen – major sectoral players – Though not directly involved but play a very important role – Assemblers, wholesalers, retailers, agents and brokers

1. Assemblers • Rural traders or barrio buyers • Accumulate produce of individual farmers • Bulk for storage, then distribute to wholesalers

2. Wholesalers • Handles products in bulk • Do not deal with end-users of the product (operate between farmers and consumers or between processors and end-users)

3. Retailers • Directly deal with endusers • Have owned outlets • Carry an assortment of different products in small quantities • Some buy in bulk and repack products for easier selling

4. Agents and Brokers • Negotiation is their main activity (bring the two parties together) • Do not get profit, do not assume ownership of the product. – But get incentives in the form of commission (% of sales)

• Advantage: they are well informed of the goings-on in the market

Marketing Functions • • • • • • • •

Negotiation • Market intelligence/market Assembly research Grading • Promotion Storage Processing Packing/Packaging Financing Risk-taking or risk-bearing

Marketing Functions, cont… • Negotiation – Starts with finding buyers and bringing the sellers and buyers together to make arrangements – Becomes smoother if buyer-seller relationship is already established

• Assembly – Accumulate produce of small farmers or producers

Marketing Functions, cont… • Grading – Facilitate buying, selling, transportation, storage and pricing. – Standard measurements – size, weight and overall quality

• Storage – to make goods available when it is needed either for processing or for consumption.

Marketing Functions, cont… • Processing – Largely a marketing function (AB products pass through this)

• Packing/Packaging – Total product presentation

• Financing – To handle all market-related costs and problems – Sourced from banks, or own money - middlemen

Marketing Functions, cont… • Risk-taking or risk bearing – Must be ready to assume risks considering losses to be incurred during operations. – Must be able to devise ways to cushion business against risks.

Marketing Functions, cont… • Market intelligence/market research – Important in process conceptualization • To assure product-market fit

– process of gathering and analyzing relevant market information for the purpose of making and fine-tuning marketing decisions to respond to the ever-changing consumer preferences. – Map out competitive strategies (4Ps) if there are many competing firms

Marketing Functions, cont… • Promotion – Continuous function of marketing – Objective: inform buyers, increase sales – Fresh VS Branded • Fresh are rarely promoted, processed are. Why? • Fresh are not branded and are homogeneous to justify cost of promotions • Processed are differentiated and branded, to capture markets and develop brand loyalty

Marketing Functions, cont… • At the end of the day, performance is the key. – Depends on how participants perform functions according to expectations

• Participation is developed through continuous interaction

The three types of agribusiness products namely: fresh farm products, semi-processed goods and processed products have different product characteristics, are operating in different competitive environments, and have different target markets. Each group therefore merits separate marketing strategies. Question: What strategies could you suggest so that fresh farm products will be effectively marketed?

Issues in Agribusiness Marketing in the Philippines TWO MAIN ISSUES:

1. Inefficiency 2. Dependence on Middlemen

Inefficiency • the failure of the source or the producer to bring the produce to the market at the time it is needed and at the lowest possible cost – levels of post harvest handling – bulkiness of agribusiness products – distance of farms to major market

Dependence on Middlemen • smallness of farmers’ scale of operations – impractical to market to end consumers the small produce – not capable to buy his own market facilities – wants ready cash for his products

Dependence on Middlemen • producer’s lack of market awareness – lack of market information that reach the producers • increasing importance of middlemen’s participation in the production and harvesting process

Specific Issues: Farmers’ Level • Low prices of agricultural produce/ cost price squeeze • Perceived lack of buyers or market (there is actually a mismatch between what is produced and what is required by the buyers) • Poor access to major markets due to lack of market infrastructure • Lack of relevant market information

Specific Issues: Traders’ Level • Irregularity of volume of available products and inability of farmers to meet demands • Lack of market infrastructure, which results in increased marketing cost and delayed distribution • Competition due to relatively many traders handling the same products

Specific Issues: Consumers’ Level • High prices of agricultural produce • Variability in quality of agricultural products in the market

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? 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 – helps agribusinessman to continuously monitor marketing activities based on prepared plans – helps agribusinessman identify market entry points

Strategies for Agribusiness Products Fresh Farm Products • efficient product movement from the farm to the major markets – who are the buyers – what farm products do they buy – how much and how often do they buy

Strategies for Agribusiness Products Fresh Farm Products • efficient product movement from the farm to the major markets – where the buyers are located, – what are the types of business organization – for what purpose do they buy and use the farm products – what are the product requirements of the buyers

Strategies for Agribusiness Products Fresh Farm Products 1. Product Strategies • Value-adding for farm products – overall market attractiveness (that is, what is visible to buyer’s eyes) – quality and packaging- depending on the target market – Quality control: inputs, production, postharvest activities

Strategies for Agribusiness Products Fresh Farm Products 2. Distribution Strategies • Production scheduling – producers could time their production to help even out shortages in the lean months

Strategies for Agribusiness Products Fresh Farm Products 3. Distribution Strategies, cont… • Farmers should provide quality produce on a continuous basis and on the part of the middlemen, they must offer higher prices for the premium produce that they are getting from the farmers • Expand market coverage through networking

Strategies for Agribusiness Products Fresh Farm Products 4. Promotion Strategies • trade fairs • market matching activities • attendance to business forums

Strategies for Agribusiness Products Semi-Processed and Processed Products

• well conducted analysis of the market –trends in demand, –buying behavior of buyers, and –competition

Strategies for Agribusiness Products Semi-Processed and Processed Products Product and Pricing Strategies • Innovation (create new products and new markets) • Product mix to handle • price determination: demand, cost, and competition

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