approaches to the study of agricultural marketing

7/29/2019 Approaches to the Study of Agricultural Marketing

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Approaches to the study of

agricultural marketing


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Functional approach

The study of marketing involved in classificatio

of activities that occur in the marketing

processes by breaking down the processes into

functions. A marketing function is defined as a

major specialized activity performed inaccomplishing the marketing process.

functional approach attempts to answer the

what


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The functions are classified as follows

1. Exchange functions

2. Physical functions

3. Facilitating functions


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1. Exchange functions

Exchange functions are

activities involved in the

transfer of title to goods,

through buying and selling

functions.


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Buying function

This function is largely one seeking source of

supplies.

It can be the assembling the raw products

from the production areas.

It can be the assembling of finished products

into the hands of other middlemen in order to

meet the demands of the ultimate consumer.


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Selling function

It consists of various activities that are

sometimes called merchandizing,

physical arrangements of display of

goods, advertising and otherpromotional devices to influence or

create demand.


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2. Physical functions

those activities that involve

handling, movement, and physical

change of the actual commodity

itself.


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Storage function

It is concerned with making goods available

at the desired time. It may be activities of

elevators in holding large quantities of raw

materials until they are needed for further

processing. It may also be holding ofsupplies of finished goods as the inventories

of processors, wholesalers or retailers.


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Transportation function

It is concerned with making

goods available at the proper

place. It also includes the

activities involved in

preparation for shipment such

as crating and loading.


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Processing function

It includes all those manufacturing

activities that change the basic form

of the product, such as converting live

animals into meat, fresh peas intocanned or frozen peas, or wheat into

flour and finally into bread


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3. Facilitating functions

Facilitating functions are those

activities that make it possible for the

smooth performance of the exchange

and physical functions. These activitiesare not directly involved in either

exchange of title or the physical

handling of products.


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Standardization function

It is the establishment and

maintenance of uniform

measurements of both quality

and quantity.


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Financing function

It is the use of money to carry out

various aspects of marketing.

Financing may take the obviously

recognizable form of credit fromvarious lending agencies or the form of

tying up the owners capital resources.


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Risk bearing function

It is the accepting of the possibility of loss in themarketing of a product.

1. Physical risks are those that occur from

destruction or deterioration of the product itselfby fire, accident, wind, earthquakes, cold, and

heat.

2. . Market risks are those that occur because of the

changes in value of a product as it is marketed.


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Market intelligence function

It is the job of collecting, interpreting and disseminating

the large variety of data necessary to the smooth

operation of the marketing processes.

Market research- to evaluate possible alternative

marketing channels that may be used, the different ways

of performing other functions.

Demand creation- activities involved in advertising the

product and designing a promotional devices using either

mass media or house to house campaign.


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Institutional Approach

study the various agencies and business

structures which perform the marketing

processes.

the institutional approach to marketing

problems focuses attention on the who.

In this approach the human element

receives primary emphasis.


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Middlemen

Middlemen are those individuals or

business concerns who specialize in

performing the various marketing

functions involved in the purchase andsale of goods as they are moved from

producers to consumers.


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Classifications of middlemen

Merchant middlemen- normally take title to, and therefore owthe product they handle. The buy and sell for their own gain

and derive their income from the margins arising from the sale

1. Wholesalers: Any merchant who does not sell to ultimate

consumer in any significant amount. He therefore can sell to

other wholesalers or to industrial users or retailers.

2. Retailers: Any merchant middlemen who buys goods / services

for resale directly to ultimate consumers. Represent the most

numerous types of agencies involved in the marketing process.


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Agent middlemen ofmarketing dont own

what they handle.

Are basically hired by their principals or

clients

they are paid by their clients or

commissions given.


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Agent middlemen

. Commission agents are given more discretionary powers over

physical handling of the product, arrangement for terms of sale/ purchase, collection of revenue from sale.

Brokers: hey are not given any physical control over the

product. They ordinarily follow directions from their principals.

Usually have little power over terms of sale or revenue

collection. Bring seller and potential buyer together.

Auctioneers: They do not own what is handled, may be involved

in a number of activities. Have places for physical display, space

where participants meet, announce the date of auction,

facilitate in price formation.


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Speculative middlemen. Are those who take title to goods / productswith a major purpose of profiting from price movement. They are

specialized risk takers.

Speculative Middlemen are interested in short term price fluctuations.

Speculators derive their income from short term price fluctuations ingoods they handle.

The emergence and growth of speculative Middlemen is due to thefact that merchant middlemen are not willing to engage themselves in

added risk involved in purchasing and storing of goods for longerperiod of time.


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Processors and manufactures

Their role in marketing in to

undertake some action on the

products in order to change their

form. Form changing is basically amarketing service


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The Structure-Conduct-Performance

approach

The Market Structure refers the

organizational characteristics that establish

interrelationships between the buyers and

sellers of a particular market. Its elements

include the number and size distribution ofbuyers and sellers, the degree of product

differentiation, the ease of entry of new

firms into an industry, vertical integration

and cost structure.


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Market structure

Pure competitive market.

Absolute monopoly

Monopolistic market

oligopoly


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Market conduct

Refers to the way firms adjust to

the markets in which they are

engage as buyers and sellers. It is

the behaviour or pattern that thefirm exibits in the market.


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Market performance

is the appraisal of how much the economic

resource of the industrys market behaviour

contribute to achievement of socio

economic goals.

( profitability, growth rate, technologicaladvancement)

approaches to the study of agricultural marketing

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