LEA - Ag. Marketing

6.
Agricultural Marketing
6.1 Basic concepts of marketing
 Marketing – series of services involved in
moving a product from the point of
production to the point of consumption.
 Service – a function performed on or for a
product that alters its form, time, place or
possession characteristics.
 Point of production – point of first sale
 Point of consumption – point of last sale
Market
 Market – involves buyer, sellers and
trading facilities. Also refers to a
group of buyers and sellers, a place
or could also be a large geographic
area where the law of supply and
demand operates to set prices.
Agricultural Marketing System
 Institutional organization of all activities
necessary to expand and distribute
agricultural production with the following
characteristics:
1. It has objectives or goals to achieve.
2. It has components or participants that
perform certain functions and all the
necessary job between the decision to
produce and the final consumption of the
product.
3. It needs institutional arrangements.
4. It needs planning and management
decision structure which control and
coordinate the forces at work.
5. It has spatial and temporal
dimensions and most often
commodity specific.
decisions aspects facilitated when farmers have a
knowledge of marketing and its accompanying
problems:
1. What to produce and how to prepare

if for sale.
2. When and where to sell
3. How much of the marketing job
should be done by the farmer
himself either as an individual or as
a member of a group.
4. What can be done to expand
markets.
Functions of the marketing system
for middlemen and consumers
1. Provide an outlet for intermediaries
agricultural products.
2. Distributes goods and services to
consumers in the desired forms and
conditions and delivers them at
prices consumers are willing to buy.
3. Provides employment for
middlemen and producers.
Problem Areas in Agricultural
Marketing
1. Characteristics of the Products
2. Number of Producers
3. Characteristics of Consumers
4. Reflecting the demand of
consumers
5. Increasing marketing efficiency
6.2 Approaches to the Study of
Marketing
1. Commodity Approach –product
oriented- covers the characteristics
of the product, the market demand
and supply situation at the domestic
and international level, the behavior
of the consumers in relation to a
specific product and prices either at
the farm, wholesale or retail level.
2. Institutional Approach
- studies the various agencies and
business structure involved in the
marketing process. It considers the
nature and character of the various
middlemen and related agencies and
also the arrangement and
organization of the marketing
machinery.
middlemen
 Those individuals or business concerns that
specialize in performing the various marketing
functions involved in the purchase and sale of
goods as they move from producers to
consumers.
 Classification:
1. Merchant middlemen – contract buyers, grain miller,
wholesalers and retailers
2. Agent middlemen – commission agent, broker
3. Processors and manufacturers
4. Facilitative organizations
5. Market associations
3. Functional Approach – classifying
the activities in the marketing
process into functions. Attempts to
answer “what” in the question”who
does what.”
4. Market Structure-Conduct –
Performance Approach
1. Market structure
 Refers to how a market is organized
as it influences the nature of
composition and pricing within the
structure:
a. Degree of buyer and seller concentration
b. Degree of product differentiation
c. The condition of entry to the market
d. The degree of knowledge of the market
Classification of market structure
• Competitive
• Oligopolistic
• Monopolistic
2. Market Conduct – the behavior or

pattern that the firm exhibits in the
market –marketing practices.
Five dimensions of market conduct
1. The principle and the method
employed by the firm or group of
firms in calculating price and
output.
2. The product policy of the firm or
group of firms.
3. Sales promotion
4. Presence or absence and extent of
predatory or exclusionary tactics.
3. Market Performance
Appraisal of how the market behaves
and deviates from the best possible
contribution it could achieve to attain
relevant socioeconomic goal. It
includes:
1. the price relative to the average
cost of production and thus, size of
the product
2. the relative efficiency of production
3. The size of sales promotion costs relative
to the costs of production.
4. The character of the product, including
choice of design, level of quality and
variety of product within any market.
5. The rate of progress of the firm and
industry in developing both products and
techniques of production.
6. The size of the margin in relation to
marketing cost.
7. The size of sales in relation to marketing
resources.
8. The size of marketing loss.
 At the macro level, market performance is
the achievement of societal and marketing

system goals: efficiency, employment,
equity, progressiveness and effectiveness
of the industry.
6.3 Marketing Functions
 Maybe defined as a major specialized
activity performed in accomplishing
marketing processes.
 Classification:
1. Exchange – activities involved in the transfer of
the title of the goods.
2. Buying – seeking out the source of supply,
assembling of products and the activities
associated with purchase.
3. Selling – covers all the various activities
sometimes called merchandizing.
a. Physical functions –activities
involving the handling, movement
and physical change of the
commodity. Involved in solving the
problems of when, what and where
in marketing.
Include storage, transportation and
processing function.
b. Facilitating function- makes posible the
smooth performance of exchange and
physical functions. It includes the following
functions:
1. standardization
2. financing
3. risk-bearing
4. market intelligence
5. market research
6. demand creation
Marketing Channels
 The alternative routes by which
products flow from the producers to
the consumers.
 They are made up of interdependent
entities that move the product from
the point of production to point of
consumption.
Factors to consider in choosing the most efficient
channel of distribution:
 1. Nature of the product
 2. Nature of the market buying habits,
size of average sale, total sales volume,
concentration of purchases and
seasonality of sales
 3. Cost involved in using each channel
 4. Investment required
 5. Potential net profit from sales
Seven Types of intermediaries
1. Contract-buyers
2. Wholesalers
3. Commission agents
4. Wholesaler-retailers
5. Assembler-wholesalers
6. Butcher- retailers
7. Retailers
6.4 Marketing Margin and Costs
 Marketing margin refers to the
difference between prices at
different levels of the marketing
system.
 Types of Margins:
1. Absolute constant margin
2. Percentage margin
3. Combination of fixed and
percentage margin
Marketing Program – 4 Ps of
Marketing
Marketing mix strategy consist of:
 Product strategies
 Pricing strategies
 Place or distribution strategies
 Promotion strategies
A. Product Strategies
 Product – anything offered for sale,
attention and acquisition.
 Agricultural products can be
categorized into 3 groups:
1. Raw or fresh agricultural products
2. Semi-processed agricultural
products
3. Processed products
 A. Product mix – can be described
as:
 1. Wide if there are lots of product
lines
2. Deep if there are several products
within each line
3. Consistent if the products being
produced are related
 B. Branding – A brand is a letter, word or
symbol used to identify products; has three
parts: the name, mark and the trade mark,
 Functions:
1. Brands make product identification easier.
2. They distinguish one product from another so
that imitations can be prevented.
3. They are also used to emphasize a certain
quality level and facilities setting different prices
for each level.
4. They make handling easier because traders
could sort the products they are carrying by
brands.
 C. Packaging – is the total presentation of
the product. Benefits are:
1. protects the product in storage and transit
2. makes handling convenient
3. promotes the product
4. enhances the product
Characteristics of a good package:
Attractive, recognizable, informative,
immediate, textural, dependable, functional,
labeling
 Label – part of a package which
carries information about the
product such as the brand, expiry
date and other info about the
product.
 3 types of label:
a. brand
b. grade
c. description
B. Pricing Strategies
 Steps in Price Setting
1. Set pricing objectives
2. Determine demand
3. Determine cost
4. Analyze competitor’s prices
5. Evaluate pricing models
6. Select the price
Manufacturer’s Pricing Strategies
a) Skimming the market
b) Moving down the demand curve
c) Penetration pricing
d) Preemptive pricing
e) Extension pricing
f) Formula pricing
g) Tie-in pricing
Retailers’ Pricing Strategies
a) Competitive pricing
b) Psychological pricing
c) Unit pricing
d) Price lining
e) Special prices
C. Distribution Strategies (Place)
 Considerations for effective
distribution system management:
1. choosing between direct and
indirect marketing.
2. if indirect, determination of the
number of channels to be passed
3. channel management system
Factors to be considered in
contemplating a distribution option:
1. Number of potential consumers
2. Complexity of products
3. Distribution budget
4. Seller’s sales and distribution
experience
5. Geography
Functions of Marketing Channels
a. Transactional – refers to the activities
consumed with the changes in ownership like
negotiation, buying and selling and risk-taking.
b. Logistical – refers to the activities concerned
with the physical supply of the products
including transportation, storage and physical
distribution.
c. Facilitating – refers to activities that are
auxiliary to or facilitate either of the above
activities such as collecting and disseminating
information, financing and promotional
activities.
D. Promotion Strategies
 Promotion- is the personal
and/or impersonal process of
assisting a prospective customer
to buy a commodity or to act
favorably upon an idea that has
commercial significance to the
seller.
Importance of Promotion
1. It makes the buyers aware of the

alternative goods and services that exist,
2. Promotions shorter the distance between
the market and the manufacturers by
keeping buyers well-informed about the
different products.
3. Promotions also keep regulate the level
and timing of demand.
Promotional Methods
1. Advertising – any paid form of non-

personal presentation or promotion of
the products.
2. Personal selling – oral presentation of a
product.
3. Sales promotion – are price off, bonuses,
lotteries and premiums.
4. Publicity – non-personal form of
promotion which aims to attract buyers
by publishing commercially significant
news about the product in different
media.
Thank you
and
Good luck!

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6.

1. What to produce and how to prepare

2. Market Conduct – the behavior or

the achievement of societal and marketing

 Place or distribution strategies

1. It makes the buyers aware of the

1. Advertising – any paid form of non-

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