Agri-Marketing Functions • There are 2 main agri-mktg functions. • I. Functions in Production (Planning What to Produce): Are functions that occur before the pdt leaves the farm. They involve studying climate, soil capacity, equipment, mkt outlets, labor & gov’t regulations. The goal is to produce the crop that will result in the greatest returns to the farmer. • II. Marketing Functions: Are activities performed in accomplishing the mktg process. There are 3 major mkg functions performed in mktg process: • a. Exchange Functions: • i. Buying (Assembling ) ii. Selling • b. Physical Functions: • i. Storage ii.Processing iii.Transportation • c. Facilitating Functions: • i. Standardization ii. Risk Bearing iii. Market Intelligence iii. Financing • 1.Exchange Functions:Activities involved in transfer of title of goods - buying, selling & price setting • a. Buying function:Finding out sources of supply, assembling pdts & purchases. • b. Selling function: Includes price acceptance & merchandising - display of goods, decisions on place & time to sell pdts, promotion, ads. package. • 2. Physical Functions: Handling, storage movements, & physical change activities. Involved in solving problems of when, what & where in mkg. • a. Storage/Packaging Making pdts available at right Time. Attractive packages & labels are used for promotion & pdts are stored to protect quality & extend shelf life - e.g cucumbers may be preserved by pickling, packaged in attractive labeled jars, & stored in protective warehouses until delivered to supermarkets. (Identify state grown products that are packaged, labeled and stored to extend shelf-life). • b. Transport/Distribution: Making pdt available at right place, i.e. transport, shipping, crating loading. Use transport such as trucks, railroads, ships. Right transportation must be selected to maintain pdt quality, e.g. freshly picked beans are kept cool in refrigeration before delivered to processing plants • c. Processing: Making the pdt in the desired form -converting animals into meat, wheat into flour/bread Pdt nature as well as consumer demands influence the extent of processing that occurs. • 3. Facilitating Functions: make exchange & physical functions perform smoothly • a.Standardization Establishing quality & quantity measurement that makes selling & pricing possible. Grading involving sorting pdt attributes into uniform categories. e.g. eggs, apples, cotton,. • b. Financing: Provision of capital (credit) to carry out the various activities in the marketing process. • c. Risk Bearing: Accepting loss/risk in mkg a pdt. There are Physical risks that occur from destruction of pdts by fire, accident, cold etc. & Market risks that occur from price changes. Physical risks are borne by insurance & market risk in futures markets • d. Market Intelligence: Collecting, interpreting & dissemination of market information e.g. an efficient pricing mechanism depends on wellinformed buyers & sellers. What to buy & sell, when/how much to store, where to transport etc. require good market information. Agribusinesses (Intermediaries or Middlemen) • Are the various middlemen, firms or business structures in the marketing system. • 1. Middlemen of Marketing: Firms involved in the flow of pdts from producers to consumers - include Cooperatives,Proprietors, Partnerships, Corporations • Five (5) broad groups of Middlemen/Intermediaries • a. Merchant Middlemen: i. Retailers ii. Wholesalers • b. Agent Middlemen:i. Brokers ii. Commission men • c. Speculative Middlemen • d. Processors and Manufacturers • e. Facilitators Organizations • a. Merchant Middlemen • They take title to & thus own the pdts they handle. • i. Retailers:Buy for resale directly to final consumer • ii. Wholesalers: Sell to retailers, & industrial users e.g. local buyers or assemblers who buy pdts from farmers & resell to processors ( livestock buyers). • b. Agent Middlemen • Are client representatives, sell services but not pdts, do not take title to, & thus do not own the pdts they handle. The pdt they handle is the market knowledge they provide. Receive their incomes in the form of Fees & Commissions. Are classified into Brokers & • i. Brokers: Do not have physical control of the pdt, & follow directions of their clients, - grain brokers. • ii. Commission Men: Handle pdt physically, arrange for terms of trade, collects & deducts his fees, & remit balance to clients - livestock commission men. • c. Speculative Middlemen • Buy & sell in order to profit from price changes. Do not handle the pdt & operate in the futures market also called scalpers or spreaders • d. Processors and Manufacturers • Change pdt form (by processing & manufacturing), & act as wholesalers & assemblers for finished pdt • e. Facilitating Organizations: Are facilitators, do not usually handle pdt, but provide physical facilities for pdt handling or bring buyers & sellers together, establish the ‘rules of the game’- terms of sale e.g. stockyard firms, grain exchange markets. • CONSUMER AND FOOD MARKETING • 1. Ruler: The ultimate goal of the mkg system is to satisfy the consumer. Thus the consumer is the ruler of the marketing system. • 2. Consumer Preferences Key to Firm’s Survival: If firms & farmers fail to recognize the preferences of consumers they may produce goods & services that nobody wants. They will then not be able to sell in order to attain their profit goals. • 3. Consumer Sovereignty:The act of directing all mkg activities to satisfy the consumer is called doctrine of consumer sovereignty or the consumer is ‘King’. • 4.Exercise of Sovereignty: Consumer exercise their sovereignty over the food industry by their dollar voting & preferences which are powerful influence on farmers & intermediaries, e.g consumers may prefer white sugar over brown sugar despite the industry’s insistence that brown sugar is nutritionally better. We will have white sugar instead (brown eggs against white eggs). • 5. Influence of Consumer Sovereignty: Farmers & intermediaries do not always follow the whims of consumers. Through advertising, packaging, product design & other marketing strategies consumers loose a degree of their sovereignty as firms influence & • 6. Marketing Concept: Consumer sovereignty is recognize in the marketing system by a business philosophy called Marketing Concept - i.e. the most important goal of farmers & intermediaries is to satisfy the consumer at a profit, & that this goal directs all business activities including production, finance, packaging etc. towards satisfying the consumer. • Ag firms adopt marketing strategy - i.e. the 4 P’s to influence consumer sovereignty.
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