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Market Development, Information, and Bargaining
Power
• Reasons for market
development
• Strategy in market
development
• Tools and outcomes
• Participation in
commodities market
development• Bargaining power and
market “stabilization”
• Market information
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define
• Market development involves creating or
expanding a market for new or existing products
and/or increasing the value of these products
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Promotion: Strategic and Tactical
Objectives
• wareness
• Trial
• ttitude toward t!eproduct
– Beliefs
– Preference
• Temporary salesincreases
Emerging
Markets/
New Products
Mature markets
/established
products
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Marketing Strateg
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'B(#)T$*#SWhat we want to
accomplish
T''+SUse resources such
as distribution,
advertising, sales
promotion,
demonstrations
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intermediaries
respond
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available resources
to accomplish ob%ectives
under circumstances!Make tough choices"
'-T)'M#&ales are influenced
'e!g!, volume,
fre(uenc, switching,
price sensitivit)
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Strategies, Objectives and t!e "ierarc! of
effects
• *he promotional activities needed for a given product will
depend on factors such as its current stage in the
product life ccle!
• +nce more people know, a significant challenge is going
to get more people to actuall tr the product
• *his ma be difficult to accomplish because of the high
cost of the product and the vast number of choices of
other products that consumers can consume!
• *here is simpl not enough time or mone to tr
everthing available!
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Strategies, Objectives and t!e "ierarc! of
effects
• If a product categor catches on, emphasis ma
then need to switch to brand differentiation and
the firm ma need to work on getting consumers
to hold favorable beliefs about their brand!• In later stages of the product life ccle, where
most consumers opinions have largel been set,
temporar sales increases, usuall through price
promotions, ma be the onl realistic ob%ective!
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Market Development: T!e Objectives
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Market Development Iss#es
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Strateg Iss#es
• ,eciding on ob6ectives – Realism
– Suitability for • )ompany strengt!s
• )ompetitor positions• Market structure and c!ange
• 3ow muc! to spend on ob6ectives – )ost of advertising and.or ot!er promotion relative to gains
– Most appropriate ways of ac!ieving ob6ectives based on
• )ost• #ffectiveness
• Synergy
• )onsistency 7strong8 of ob6ectives
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Some Tools
• dvertising – wareness
– Trial
– Preference
– Reminder
– %ew uses
• ,istribution – vailability in
retail stores
– 9uality of
placement wit!inretail stores
• Price.sales promotion – )oupons
– Sales
– *alue
– Premium• (oint ventures.co0
branding
• ,emonstrations
• Product investment
– 9uality – ,ifferentiation
– Packaging
– -sability convenience
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Setting strateg $
• Improving (ualit, for example, might be
achieved either b increased research and
development, the use of higher (ualit materials,
or b investing in new manufacturing technolog!• *he most appropriate choice will depend on
factors such as cost and effectiveness, but ma
also depend on risk!
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Tactics and implementation $
• If a decision as been made to position a product
as a premium brand through advertising, specific
ads 'advertisement) must be developed and
tested and appropriate media and advertisingschedules should be resolved!
• When implementation begins, results need to be
monitored!
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%ons#mer adoption of new food prod#cts
• +ne wa to spread new foods is through
massive advertising! *his strateg has been
used in marketing 'the convenience products)!
Man foods also spread as some groups ofconsumers -imitate'cop). others the see
consuming them, and some are encouraged to
tr new foods based on wordofmouth
communication!
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%ons#mer &doptions of 'ew (oods or 'ew (ood
)ses
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*evels of market development$
• 1evelopment efforts ma center at several
different levels!
• &ome growers ma want to promote their food,
hoping that preference will be developed relativeto other food categories
• 0lternativel, development efforts can focus on a
branded product, a brand 'e!g!, all #oca #ola
branded products),
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*evel of Market Development
• +evels
– )ommodity
• ,ifferentiation from competing commodities
• $ncrease in demand for commodity – )orporate product category 7e:g:; )oca )ola
drinks8
– Product category brand
– Brand 7product line8
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%ommodities Market Development Programs
• Typically regional4e:g:; "ampot Pepper; "g
Speu Palm Sugaras beef
• $ntention is to differentiate• )ompulsory 7re?uire8 participation in
advertising programs
– ,evelopment is not wort!w!ile for t!e individual
farmer – T!e individual farmer is assumed to benefit from
overall campaign
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+ffects and O#tcomes
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Definitions
Innovation@ “n idea; practice; orproduct perceived to be new by t!e
relevant individual or group:”
1iffusion process= “T!e manner inw!ic! innovations spread t!roug!
t!e market:”
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To dopt or %ot to dopt@ 3ow 2ill )onsumers
nswer t!e 9uestionA
• &ome causes of resistance
to adoption
– Perceived risk00financial and
social
– Self image
– #ffort to implement and.or
learn to use t!e product
– $ncompatibility 7actions or
ideas not acceptable8
– $nertia.overw!elming
e>isting c!oices 7lack of
desire or ability to c!ange8
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Tpes of Innovations
• 1as!ions4tastes go back and fort! overtime4e:g:; food fat content
• 1ads4product is “in” for a s!ort time andt!en fades
• Trends4consumption of a food producteit!er increases or decreases consistentlyover time
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Innovators andImitators (Copy from sb/sth else):
The Lifecycle of A Product
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Implications for (oods
• Many substitutes and individual tastes
• Trying new foods for variety is common
• Social opportunities for trial
• 1ood tastes tend to be “learned” early in life
– Best opportunities for spread are wit! younger
consumers
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Infl#ences on t!e Speed of Diff#sion
• Risk to e>pected benefit ratio 7relativeadvantage84usually not an issue forfoods
• 'bservability4is t!e product
consumed in public• Product pricing4scarce foods are
“rationed” t!roug! cost
• Trialability4usually easy for foods
• Switc!ing difficulties and learningre?uirements. ease 7easy8 of use4nota problem for foods eaten out but maybe for foods to be produced at !ome
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Bargaining Power
• $mpact
– Price
– )onditions
• Returns
• Time of payment• $nterest or finance
c!arges
• 9uality or ot!er
ad6ustments
• Transportation or ot!erservices
• Sources
– Size; number; and
concentration of firms
– Supply control
– -ne?ual information – ,iversification 7A8
– Product differentiation
– )ontrol of resources
– 1inancial resources – Ratio of fi>ed to variable
costs
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Marketing Orders and &greements
• Mandates intended to “stabilize” markets
• Types of issues
– &rades; size
– Packaging – Market allocation 7?uotas8
– Minimum prices
– )ontributions to researc!
– dvertising 7market development8
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Market Information
• Some issues
– )rop forecasts
– ,emand forecasts4?uantity
and prices
•&overnment informationprograms
• Problems
– Price specification
7comparability of location;
time; and ot!er factors8
– %et vs: gross prices
7allowances and discounts8
– )ost vs: accuracy of
information
– )!anging market orientation
and scope of market
7proportion of buyers andsellers involved in open
markets8
– *oluntary 7volunteered8
cooperation