LESSON 1: INTRODUCTION TO AGRICULTURAL MARKETING

The Concept of Marketing

Marketing is the interfacing of a company and its target market (Go, 1995). The target market is
composed of two interacting components – the customers and the competitors. With this, the three strategic
marketing Cs are: (1) Company, (2) Customers and (3) Competitors

Marketing is also defined as an organizational function and a set of processes for creating communicating
and delivering value to customer relationships in ways that benefit the organization and its stakeholders (Kotler,
2000).

Agricultural Marketing as defined by Shepherd and Fatrell, begins when the product is loaded at the farm
gate and ends when the goods reach the consumer’s table.

Agricultural Marketing is a series of services involved in moving a product from the point of production to
the point of consumption. The Definition given has three elements which include: (1) services, (2) point of
production and (3) point of consumption. A service refers to a function performed on or for a product that alters
its form, time, place and possession characteristics. It adds value to the product generally performed to meet
existing or anticipated consumer demands. It may involve the direct physical handling of the product such as
transportation, packaging, and processing or indirect physical handling such as advertising and assumption of risk.

Two types of services:

1. production services – services added prior to the point of production.

2. marketing services – services added after the point of production

Point of production. This refers to the usual first sale by the farmer, typically at the farm or at the farmer’s home.
At this point, a transaction occurs, and a price is set.

Point of consumption. This is the point where marketing ends. In other words, the point of consumption is the
point of last purchase or sale.

Marketing: A Productive Task

Since Marketing involves creating and adding value to the product, it thus creates utility. Utility refers to
want satisfying power of a product. It has four types as follows:

1. Form utility – It is created if a good is possess the needed properties or the demanded form.
2. Place Utility – This utility is created when the goods are made available where they are most wanted.
3. Time utility – This is created when the goods are made available where they are most wanted.
4. Possession utility – This is created when the goods are transferred or are placed under the control of
person who desire to use them.

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Problem Areas in Agricultural Marketing

The marketing of agricultural products faces a number of special problems – problems that arise from or de to
the conditions surrounding production and the products themselves, the marketing systems and the consumers.

1. Characteristics of the products. The unique characteristics of agricultural products always pose a problem
in marketing. The characteristics concern their perishability, seasonality of production, bulkiness and non
homogeneity.

Perishability is an important characteristic of agricultural products that complicates the marketing job.
Since freshness is one of the gauges of quality, especially for most fruits and vegetables, immediate
disposals of these products become an utmost concern to handlers. Any delay in disposal means quality
deterioration and weight loss that affects the market price. The role of the marketing system then is to
strive to retard or the 3D actions (death, decay and deterioration) or get the products to consumer before
such actions have progressed thus far.

2. Number of producers. The marketing of agricultural products would be simple if only one farm produces a
single item or limited number of different items. But there are over two million farms in the country and
hundreds of different products produced. This creates a special problem in that the small outputs of
individual farms must be assembled into larger volumes before they can be efficiently stored or
transported.

3. Characteristics of consumers. Keeping price of over 90 million consumers is one of the most intriguing
marketing problems. Some have high incomes, others have low; some are old, others are young; some
have sophisticated tastes, others conservative; some perform manual labor, others office work; some live
in major urban areas, others in remote barns; some like a broad range of foods, others just a few; and
other follow their religious tenets closely, others are lax. Not only demand varies from consumer to
another consumer but for a single consumer only, it may also change over time – sometimes rapidly,
sometimes slowly. Demand may vary also according to weather conditions like demand of halo-halo
during hot days and demand of hot choco during cold days. It may also change from regular work days to
fiesta or holidays or as the need in the variety o meals changes, or as the incomes of the people changes.
For the farm-product marketing system to provide a broad selection of appropriate products available at
the right time at the right place and in the right form is a major challenge.

4. Reflecting the demand of Consumers. Another problem involved in marketing farm products is the need
for marketing system to reflect by prices the demand for consumers so that products may flow to the
most appropriate markets. Directing the flow of farm products is not like directing the flow of vehicular
traffic. In marketing agricultural products, there no speed limits, road signs, traffic lights and policy, only
prices direct the flow. For example, if the demand for and prices chicken is higher in Marawi than in Iligan,
the chickens should logically flow to Marawi. High prices call for the products and direct the flow to the
market. The marketing system must reflect demand through prices, and it does these tasks best when
assisted by market information that is appropriately assembled and distributed to all potential buyers and
sellers.

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 5. Increasing marketing efficiency. The need to move the products through the channels at lowest possible
cost, considering the services performed, is still one of the pressing problems hinder efficiency of
marketing in various regions of the country; (a) poor condition of physical infrastructures that link
producers to market intermediaries and final consumers; (b) minimal flow of market information; (c) small
volume of market-oriented output for many agricultural commodities; (d) inadequate know-how on the
part of farmers and traders, especially on grading; and (e) the absence or lack of definitive public
marketing and policies and the none enforcement of public regulatory policies. These problems lead to
high wastage and poor quality of farm produce. The consequences are high marketing costs and low farm
price to farmers but usually to consumers. The challenge then is to solve these problems, and for every
sector of the system to perform the necessary services as efficiently as possible, to be cost conscious and
to strive continually to make the needed change for improvement.

Referecnces:

1. Go, Josiah (1995) Marketing Mix Strategy in the Philippine Setting, Josiah Go foundation
2. Kotler, Philip (2000) Marketing Management
3. Padozo, Ma. Eden (1987) Syllabus on Agricultural Marketing, Department of Agricultural Economics,
CEM, UPLB
4. Ricketts, Cliff and Rawlins, Omri (2001) Introduction to Agribusiness, Delmar Publishing, Delmar-
Thompson Learning
5. Shepherd, G. and Fatrell, G. (1982) Marketing Farm Products Economic Analysis, Iowa State University
Press