4-1

1. The series of services involved in moving the

product from the point of production to the point
of consumption.
a.Marketing operations
b.Marketing
c.Marketing Channels
d.Marketing functions

4-2
2. Study of the various agencies and business
structure which perform the marketing
processes?
a. Commodity approach
b.Institutional approach
c.Functional approach
d.Structure-conduct-performance approach

4-3
3. Makes possible the smooth performance of
both the exchange and physical functions.
a.Buying
b.Selling
c.Market intelligence
d.Transportation

4-4
4. A movement along the demand curve means
a.A change in price
b.A change in quantity
c.A change in demand
d.A change in quantity demanded

4-5
5. The effect of a price change is always
negative
as consumers tend to chose other goods
resulting to a decrease in quantity demanded
a.Income effect
b.Inferior goods
c.Griffen paradox
d.Substitute effect

4-6
6. A -0.60 income elasticity of demand for corn
implies?
a. A corn is a normal good
b.A decrease of 60 kg. of corn consumed for
every 1% increase in income.
c.More quantity demanded for corn as income
increases.
d.Less quantity demanded of corn as income
increases.

4-7
7. Under what condition will demand be likely
elastic?
a.A newly marketed product
b.Perishable product
c.A product has many uses
d.All of the above

4-8
8. A movement along the supply curve is?
a. A change in supply
b. A change in price
c. A change in quantity supplied
d. A change in quantity

4-9
9. Other things being equal, an increase in the
per capita income of consumers will result in
a.A n increase in demand
b.A change in quantity demanded
c.A change in demand
d.A decrease in demand

4-10
10. Which of the following will not cause a shift in
In the demand curve for beef?
a.A rise in the price of some goods which
consumers regard as substitute for beef
b.A change in the price of beef
c.An increase in incomes of beef consumers
d.A change in people’s tastes with respect to
beef

4-11
1. B
2. B
3. C
4. D
5. D
6. D
7. C
8. C
9. C
10.B
4-12
 AGRICULTURAL MARKETING

KING JEHU II QUIRINO RADAZA, MBA

Department of Agribusiness Management
College of Agriculture
CENTRAL MINDANAO UNIVERSITY

MBA, International Management

ASIAN INSTITUTE OF TECHNOLOGY
Bangkok, Thailand

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
MEANING OF MARKETING

What is Marketing?

Change in ownership of agricultural and food products

Link between agricultural production and food consumption

Three aspects of Market transaction?

Spatial- transaction occur across space
Temporal- transactions occur across time
Form- transaction occur in a certain form

FACETS OF MARKETING

oCOORDINATION AND PROCESS OF EXCHANGE

oGEOGRAPHICAL ASPECTS
oVALUE-ADDING ACTIVITIES

4-14
FACILITATING FUNCTIONS OF A MARKET

Business climate
Standardization of measures
Economic information
Financial services

4-15
CHARACTERISTICS OF AGRICULTURAL
MARKETING

4-16
PRICE

4-17
DEMAND

Price per kg. Qty. Demanded M kg.

5 8
4 10
3 20
2 30
1 40

Demand Schedule

Demand Curve

4-18
 Substitution effect
 Income effect

* Griffens paradox- if the income effect is greater than

the substitution effect, then the quantity demanded
increases with an increase in price.

4-19
DEMAND

4-20
PROPERTIES OF DEMAND CURVE

4-21
USES OF DEMAND CURVE IN MARKETING

The demand curves may be used to estimate

the probable price that will result when a given
quantity of product is marketed.

The production of most agricultural items requires a long period of

time, and all producers compete freely with one another. Thus, at
harvest time, most or all of the crops is generally marketed for
whatever it will bring, whether it turns out to be more or less than
the cost of production. (Piadoso, 1987)

4-22
PROPERTIES OF DEMAND CURVE

4-23
DEMAND FUNCTION

4-24
AGGREGATE DEMAND

4-25
4-26
A B

4-27
 Change in Qty. Demanded
P1

P2

A change along the demand curve

P2

P1

4-28
 Change in Demanded

Movement of the demand curve

Upward vs. Downward movement

Upward movement:
Increase in Price, Increase in Demand

Downward movement:
Decrease in Price, decrease in demand
4-29
Factors affecting change in demand

 Income (Normal good (+) Inferior(-))

 Prices of related goods (Substitute (-), Complement (+)
 Tastes and preferences (+)
 Consumers Expectation (+)
 Number of consumers (+/-)

4-30
 Population- Age distribution of the population influences the demand as well as the
demand for different commodities. A teenage population obviously consumes more
calories than one with high proportion for persons over sixty-five. (Paidoso, 1987)
 Income- As income increases, assuming all prices remain stable, the demand for
luxurious foods, liker steak and grapes, may increase while that for food may
decrease. Conversely, if income declines and prices remain unchanged, demand for
rice may increase and that of steak and grapes decreases. (Paidoso, 1987)

4-31
 Substitute Substitute product must be comparable or more desirable, if it is to
become an effective substitute. Example: Instant coffee as substitute to ground
coffee.
A decrease in price of a substitute would result in a new, lower demand schedule for the
original product. Conversely, an increase in the price of a substitute may result in a
new higher demand for the original product. (Paidoso, 1987)

 Change in Working condition may cause to change the demand. From rural to
urban living may lead to reduced demand for the basic, high calorie foods and
increased demand for more luxurious, low calorie food. (Piadoso, 1987)

4-32
 Attitude and preferences for or against particular foods may lead to changes in
demand. Style changes may also cause to change in demand, especially for non-
farm items. Moreover, rainfalls, fiestas, and other environmental factors lead to
short-term changes in demand that influence consumers’ choices, ranging from
beverages to meat. (Paidoso, 1987)
 Other factors that may affect demand are the range of goods available to
consumers and consumers expectations regarding future prices of the product.
(Piadoso, 1987)

4-33
 Elasticity of Demand
a. Price elasticity of Demand
 Reactions of consumers to changes in the price of a particular commodity may either be a
decrease in purchases if prices increase or an increase in purchases as prices decrease. But
the extent to which this occurs varies widely from product to product.

 Consumers may be induced to buy a great deal more beef if the price of beef drops in the
market. On the other hand, consumers may not be induced to buy more salt even if its
price is reduced.

 PRICE ELASTICITY OF DEMAND refers to the extent to which purchases change in

response to price change. It is a ratio of a relative change in quantity to a relative change
in price.

4-34
4-35
 Elasticity of Demand
b. Income elasticity of demand

4-36
 Elasticity of Demand
b. Income elasticity of demand
INCOME
ELASTICITY
Rice and rice products 0.09
Rice a 0.08
Rice Noodles 0.48
Rice Cakes 0.33
Corn and corn Products -0.56
Corn grits -0.61
White corn 0.17
Green corn 0.74
Pork 0.74 Income elasticity of demand differs among various
Beef, carabeef 0.74 agricultural products.
Processed Meat 0.96
Chicken meat 0.6
Dairy products
Evaporated milk 0.75
Condensed milk 0.17
Leafy and yellow vegetables
Cabbage 0.74
Camote tops -0.03
Kangkong 0.03
Pechay 0.63

4-37
 Elasticity of Demand
c. Cross-elasticity of demand

4-38
 Factors affecting the Elasticity of Demand
a. Product characteristics
 Availability of substitutes- The demand for good is elastic if it has more substitute.
 Use of commodity- The larger the number of alternative uses of a commodity, the more
elastic the demand.
 Length of time product has been marketed- A new product that has just entered the market
is relatively more elastic than products that have been marketed for a long time.
 Quality
 Necessary to life- Products which are essential or thought to be essential to life are
generally price inelastic.
 Perishability- As a rule highly perishable products will become more costly, thus making
them more price elastic than when price is low relative to income

4-39
Price flexibility

4-40
SUPPLY

PROPERTIES OF SUPPLY

4-41
4-42
CHANGES IN SUPPLY AND SUPPLY AGGREGATION

Supply shifters

- Changes in joint products

- Seller’s expectation of future prices

4-43
Elasticity of Supply

Es'= 0 Perfectly inelastic

Es' ˂ 0 Inelastic
Es'= 1 Unitary
Es'˃ 1 Elastic

4-44
Factors affecting Elasticity of Supply

1. Change in cost incurred by firms when they alter the quantity

of their output.

2. Adjustment time or time it take the firm to expand or contract.

3. Ease with the which resources are shifted from the production
of one good to another.

4-45
Upward movement/ Left direction Downward movement/ Right direction

4-46
 Resources prices
 Prices of related goods in production
 Technology
 Producer’s expectations
 Number of sellers

4-47
MARKET EQUILIBRIUM

P1

P*

P2

Q1 Q* Q2

4-48
4-49