AGRICULTURAL MARKETING/AGRIBUSINESS MARKETING

Contents

Pinoy Marketing

What Marketing is Not

The Strategic 3 Cs of Marketing, Marketing Defined

Core Concepts of Marketing

Agribusiness Defined, Myths of Agribusiness

Importance of Marketing/Agribusiness Marketing

Classification of Marketing Activities

Key Players in the Agribusiness Mktg System

Marketing Functions

Issues in Agribusiness marketing in the Philippines

Marketing Considerations and Strategies for Agribusiness Products

Future Trends in Southeast Asian Markets

Pinoy Marketing
What’s so “hot” about marketing in the Philippines?

Aren’t you proud about the marketing capabilities of the Pinoy? Aren’t you proud to be a Pinoy?

What Marketing is Not

“marketing as selling”

“marketing equals advertising”

Strategic 3 Cs of Marketing
A marketer should always consider the strengths and weaknesses of his company in serving the needs and wants of his
customers. However, it should be able to do this profitably better than his competition.

3 Cs Key Objectives

1. Customers To satisfy the needs and expectations of target customers.

2. Competition To outperform competition.
3. Company To ensure corporate health and profit.

3 Cs Outputs

Customers Sales
Competition Market shares
Company Profit
Marketing Defined
Marketing is the process of continuously and profitably satisfying the target customers’ needs, wants and
expectations superior to competition (Josiah Go)

Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas,
goods and services to create exchanges and satisfy individual and organizational goals.

Marketing is a series of services involved in moving a product from the point of production to the point of
consumption

Core Concepts of Marketing

Target Markets and Segmentation

Target market – the part of the qualified available market the company decides to pursue.

A marketer can rarely satisfy everyone in the market. Therefore, marketers start by dividing up the market into
segments. They identify and profile distinct groups of buyers who might prefer or require varying products and
services mixes by examining demographic, psychographic, and behavioral differences among buyers.

Segmentation is done to “homogenize” markets

Products contain offerings directed to specific target markets

Companies do best when they choose their target market(s) carefully and prepare tailored marketing programs.

Marketers and Prospects

A marketer actively seeks for prospects for exchange of values.

Prospects are those identified to have a certain need and want which a company can effectively serve.

Needs, Wants, Demand

Need - the state of felt deprivation of some basic satisfaction

Wants – specific satisfiers of needs

Demand – wants for specific satisfiers backed up by an ability and willingness to buy them.

Products or Offerings

Products – anything offered for sale, attention and acquisition

Products come in the form of goods, services, and ideas.

10 Types of Entities Marketed by Marketing People: goods, services, experiences, events, places, persons,
properties, organizations, information, ideas

Value and Satisfaction

Value is the consumer’s estimate of the overall capacity of the product to meet desired needs and wants

Satisfaction is the end result when a product is able to meet customer expectations.

Exchange and Transactions

Exchange is the prerequisite of marketing

 Exchange takes place if: there are two parties who are willing to exchange products and services; each party is
capable of communication and delivery; each party has something to offer for exchange

Transaction is the trade of values

Relationships and Network

Relationship marketing – seeks long-term, “win-win” transactions between marketers and other participants in
the marketing system. This is a process of forging long term relationships with the customers.

The creation of this relationship results to marketing network of mutually profitable business relationships

Marketing Channels

Marketers make the products available to the customers through marketing channels.

These channels create time, form, and place utilities.

Marketers make the products known to the customers through information or communication channels (Print
and audio-visual media)

Supply Chain

Also known as the value delivery system

Describes the long process which starts from raw material sourcing to the marketing of the final products.

Competition

One of the realities in marketing

Includes actual and potential rivals in product and service marketing

Marketing Environment

Macro-environment includes demographic, economic, natural, technological, politico-legal and socio-cultural

environments.

Industry environment includes the participants in the supply of raw materials and production, distribution,
promotion and consumption of products.

Marketing Mix

The set of tools a firm uses to pursue marketing objectives with the target market.

Four Ps of marketing – product, price, promotion, place

Four Cs of marketing – customer satisfaction, cost, convenience, communication

Agribusiness Defined
… The sum total of all operations involved in the manufacture and distribution of farm supplies; production
activities on the farm; and the storage, processing, and distribution of farm commodities and items made from
them (Davis and Goldberg, 1957)
Agribusiness Sectors
encompasses the whole of the agriculture sector plus a portion of the industrial & service sectors

AGRICULTURE
INDUSTRY (agroindustries)
SERVICES (agroservices)

Myths of Agribusiness
Agribusiness is agricultural production through farming.
Agribusiness is big business.
Agribusiness is purely a private sector undertaking.

Importance of Marketing
It affects us in every moment of our lives.

It provides a host of opportunities for business and career development

Good marketing system speeds up growth of developing countries.

Effective marketing is needed to link producers and consumers.

Effective marketing addresses discrepancies and separations between consumers and producers.

Vertical Structure & Coordinators

CONSUMERS
RETAILERS Managers
WHOLESALERS Government Officers
PROCESSORS Educators
FARMERS Researchers
FARM SUPPLIERS

Classification of Agribusiness Products

Fresh agricultural products
Semi-processed agribusiness products
Finished products

Classification of Agribusiness Products

Fresh agricultural products – these are products freshly or directly harvested from the farms, which do not
pass higher level of transformation. Fresh agricultural products are cleaned, sorted, and graded according to
standards or grades desired by the markets.

Semi-processed agribusiness products – these are products that underwent secondary or the second level of
transformation. These are in forms which are for use by other industries and processors but may not be
consumed. The ff are examples of semi-processed products:

* stripped abaca for handicraft production

* crude coconut oil for refining

* raw sugar

* natural rubber for tire production

 Finished products – these are agribusiness products that may be directly consumed by the buyers. These are not
usually intended for further processing. Examples are: dairy products like milk, cheese, and yogurt;
woodcarvings; tire; processed meat; canned fish; and herbal soap

Classification of Marketing Activities

Transactional activities

Physical handling and distribution of products

Facilitating activities

Transactional activities – these are exchange activities which lead to the transfer of ownership or property rights.
Examples of these activities are buying and selling, negotiation, and risk-taking.

Physical handling and distribution of products – these refer to activities which enable the different parties to
have physical possession of the product. These activities are concerned with the physical supply of the product
and include assembly and storage, grading, processing, and transportation

Facilitating activities – these are activities which create faster and more efficient performance of transactional
and physical handling activities. These include market intelligence and marketing information dissemination,
financing, provision of marketing support facilities, and promotions.

Key Players in the Agribusiness Marketing System

The Agribusiness System

Input Subsystem
Production Subsystem
Processing Subsystem
Marketing Subsystem
Consumers

Support Subsystem
Coordination
Financing
Manpower
Technology
Information
Infrastructure
Policies/programs
Government agencies
Private institutions
Industry associations
Financing institutions
Education/research
Institutions

Key Players in the Agribusiness Marketing System

Input sector – this is the start of the agribusiness marketing chain. Participants include manufacturers, dealers,
brokers, and other types of intermediaries involved in the production and distribution of farm and agro-
processing inputs.
 Farm sector – contains the primary (crop) and secondary (livestock) factories of agriculture, which produce raw
materials for consumption and for further processing. Marketing participants are the farmers and several layers
of middlemen generally termed as wholesalers, retailers, local buyers, assemblers, dealers, or brokers, who are
mainly involved in the trading of products in their fresh or raw forms.

Processing sector – regardless of the scale of processing activities, processed products are usually marketed
through intermediaries. These intermediaries mainly handle semi-processed or finished agro-based products.

Agroservices – these are entities which function mainly as a provider of services to facilitate performance of
production and marketing functions. Some of the agroservices provided are in the areas of technical assistance,
financing, warehousing, market information dissemination, and breeding services.

Marketing sector – forms the links between the other sectors mentioned. This sector is playing a different role in
the physical movement of products from one sector to another. To illustrate, the middlemen, who are the major
sectoral players, are involved in bringing fertilizers to the farmers, farm produce to the processors, and processed
products to the business and consumer markets.

Classification of Middlemen
Assemblers – these are usually rural traders or barrio buyers who do accumulation of produce of individual
farmers and bulk these for storage or for distribution to wholesalers.

Wholesalers – they usually handle products in bulk or in big volumes and sell to retailers, to processors, or to
other wholesalers. They do not deal with end-users of the product.

Retailers – intermediaries who deal directly with the end-users or the big consumers. They are the wholesalers’
partners in distribution activities.

Agents and brokers – these are the types of middlemen who do business of negotiating in behalf of the
producers and buyers. They function mainly as intermediaries who bring the two parties together.

Marketing Functions
Negotiation

Assembly

Grading

Storage

Processing

Packing/packaging

Financing

Risk-taking or risk-bearing

Market intelligence/market research

Negotiation – this is a function which facilitates transfer of ownership. The negotiation function starts with finding the
buyers and bringing the sellers and buyers together to make arrangements.

Assembly – being done by an intermediary to accumulate the produce of many small farmers or producers to attain
desired volume.
 Grading – because of the variability in agricultural outputs, grading must be done to facilitate buying, selling,
transportation, storage, and pricing of the produce. Grading is done to standardize measurements, which could be in
terms of size, weight, and overall quality.

Storage – done primarily to make goods available when it is needed either for processing or for consumption

Processing – though oftentimes not considered a marketing activity, it is largely a marketing function. This is because
agribusiness products must pass through some levels of transformation before being made available to the users.
Processing increases marketability of products by changing product forms. Examples are meat manufacturing, oil
extraction, fiber stripping and milling.

Packing/packaging – packaging is defined as the total product presentation. Agribusiness products, whether in fresh,
semi-processed or processed forms, must be packed in acceptable and recommended packaging materials. Packaging
serves to protect the product, prolong shelf life, increase product storability, facilitate product handling, and improve
overall presentation to make products appealing to buyers

Risk-taking or risk-bearing – associated with any type of business activity is the loss incurred from operations. This
could be in the form of physical damages due to natural causes or this could be in the form of loss associated with the
changes in costs of raw materials and prices of products handled.

Market intelligence/market research – this is being done to assure that there is a product-market fit, that is, the
produce must match with what the end-users want.

Promotion – a continuous function of marketing. The objective of promoting goods and services is to inform
prospective buyers of product availability and also to increase sales.

Issues in Agribusiness Marketing in the Philippines

Inefficiency – defined as 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.

Dependence on Middlemen

Reasons for farmers’ dependence on the middlemen

Smallness of farmers’ scale of operations

Producers’ lack of market awareness

Increasing importance of middlemen’s participation in the production and harvesting processes

Farmers’ Level

1. Low prices of agricultural produce/price squeeze

2. Perceived lack of buyers or markets

3. Poor access to major markets due to lack of market infrastructure

4. Lack of relevant market information

Traders’ Level

1. Irregularity of volume of available products and inability of farmers to meet demands.

2. Lack of market infrastructure, which results in increased marketing cost and delayed distribution.

3. Competition due to relatively many traders handling the same products.

 Consumers’ Level

1. High prices of agricultural produce.

2. Variability in quality of agricultural products in the market.

Marketing Considerations and Strategies

For fresh farm products

Product Strategies

Product Strategies are changes made to physical products to make them more attractive and saleable to consumers. This
is usually termed as value adding for farm products.

To be assured of quality products, a producer or a farmer adopts grading, packaging, and careful handling in transporting
the produce.

For fresh farm products

Pricing Strategies

Price is defined as the value of a product expressed in monetary terms.

Setting prices for fresh agricultural products is relatively difficult because of the perfectly competitive nature of the
market

Everybody tends to adopt the going-on pricing strategy

For fresh farm products

Distribution Strategies

Producers or farmers can improve distribution by production scheduling. Producers could time their production to help
even out shortages in supply during lean months

For fresh farm products

Promotion Strategies

Given the very little differentiation among farm products, these are rarely promoted. Promotion usually entails cost, an
added burden which the farmers are not willing to shoulder. Only the big companies, which have the resources and
branded products to sell, have the capability to advertise.

For semi-processed and Processed Products

Product Strategies

In addition to producing high-quality products that are well-packaged, product innovation is also needed to make
products saleable and open to new markets. In all cases, innovation is very important to create new products for the
market.

Processed products must be branded and labelled

Pricing Strategies

Three factors must be considered in price determination: demand, cost, and competition
Cost-oriented pricing strategies are usually adopted by processing enterprises. Mark-up pricing is the most commonly
used cost-oriented pricing method. Price is computed by adding all costs and adding a certain mark-up.

Distribution Strategies

The target market is the most important determinant in the design of distribution strategies of the processing
companies. For exported products, processors either export directly or sell to indirect and direct exporters.

Locally distributed products have two groups of target markets: institutional or organizational markets and consumer
markets

Institutional or organizational buyers usually buy directly from the processors.

Products for the consumer markets go to retail stores like supermarkets, grocer shops, and convenience stores.

Promotion Strategies

DTI conducts annual exhibit and trade fairs for food and non-food products.

Membership in export association and processors association

Processors also use advertisement through print media, television, and point of purchase displays.

Glossary of Terms
Market segmentation – the process of dividing the total market into several groups seeking similar benefits from
a product or service and requiring separate marketing mixes

Market shares – the proportion of a company’s total sales of a product during a defined duration in a specific
market or geographical area

Marketing – the process of continuously and profitably satisfying the target customer’s needs, wants and
expectations superior to competition

Marketing mix – the set of controllable and inter-related variables composed of product, place, price, and
promotions that the company assembles to satisfy a target group better than its competitors

Marketing strategy – specifies a target market and a related marketing mix

Needs – the state of felt deprivation of some basic satisfaction

Packaging – all the activities of designing and producing the container for a product

Place – making products available in the right quantities and locations – when customers want them

Place utility – having the product available where the customer wants it

Positioning – communicating the overall positive impression of a brand, relative to competition

Price - the value of a product expressed in monetary terms; the only element of the marketing mix that produces
revenue

Product – the tangible offering of a firm that satisfies customer’s needs and wants

Product development – a company’s growth strategy that identifies and develops new products to sell to
existing markets

Promotion – communicating information between seller and potential buyer to influence attitudes and purchase
intentions.
Prospecting – following down all the sales leads in the target market to identifying potential customers

Psychographics – the analysis of a person’s lifestyle

Quality – the ability of a product to satisfy a customer’s needs and wants

Retailing – all of the activities involved in the sale of products or services directly to final consumers

Sales potential – the portion of market potential where a specific company’s brand of a product could expect to
sell under ideal conditions

Services – activities or benefits that are offered for sale. They are essentially intangible and do not result in the
ownership of anything

Substitutes – products that offer the buyer a choice

Target market – a fairly homogeneous group of people or organizations to whom a company wishes to appeal

Wants - specific satisfiers of needs

Wholesaling – refer to activities that sell to those who buy for resale or business purpose