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Food & Fiber System
7/11/2013 2
All economic activities linked to agricultural production, suchas machinery repair, fertilizer production, food processing,and manufacturing, transportation, wholesale and retaildistribution of products, and eating establishments
Also included are the economic activities that link theproduction of plant and animal fibers and hides to fabric,
clothing and footwear.
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Food & Fiber System
7/11/2013 3
Figure 2 Linkage between Food and Fiber Sector
Source : Kriesel and Doherty, The University of Georgia
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Agricultural Agro-BasedProduct
Raw Material to otherindustries or end-usedproduct (ready to eat)
Set up proper amount aswanted and extend time for
storage by preservative
Non-seasoning and Qualitycan be controlled
Production can be doneeverywhere
Raw Material
Bulky and Perishable
Seasonal and Qualityvariation
Geographic concentration of production
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Ninth Malaysia Plan To StrengthenAgriculture And Agro-based Industry
During the Eighth Plan period, the agriculture sector achieved ahigher rate of growth than targeted and contributed towardseconomic growth and export earnings.
Ninth Plan period, the development of the agriculture sector will beintensified to serve as the third engine of growth
Target specific policies and strategies will be implemented toexpedite the transformation of the agriculture sector into a modern,dynamic and competitive sector including with respect to agro-based processing activities and agricultural entrepreneurdevelopment.
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Programme
Development Expenditure And Allocation For Agriculture,2001-2010
8MP Expenditure
9MP Allocation
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Food security Plan
Apr 08 ,the cost of the Governments food securitystrategy to counter the worldwide increase in prices,especially rice, will total RM4bil.
Feb 09,government allocate MYR5.6bn to improvingfood security with the aim of raising self sufficiency inrice to over 85% in 2010.
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Defining a market oriented mission : A statement of the organizations purpose what it wants to accomplish in the larger
environment.
A market oriented mission statement defines the business in terms of satisfyingbasic consumer
Setting company ob jectives and goals
The companys mission needs to be turned into detailed supporting objectives for each level of management . Each manager should have objectives and beresponsible for reaching them.
Designing the b usiness portfolio Guided by the companys mission statement and objectives, management now must
plan its business portfolio the collection of businesses and products that make upthe company .
Business portfolio planning involves two steps .
First the company must analysis its current business portfolio and decide whichbusinesses should receive more, less or no investment .
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Different dimension of strategy (the 3 Rs)
Products
p1 p2 p3
M1
M2
M3
Markets
Strategy as Routes :The direction or paths the firm takeswith regards to moving into newProducts and markets over time
Strategy as Responses :How a firm reacts to challengesFrom the competitors
The competitor The firm
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Strategy as Rationale :How or on what basis the firmChooses to compete
Bases of competitive Advantages
CostleadershipStrategy
DifferentiationStrategy
FocusStrategy
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The firm must develop marketing strategies that enable it to:
Achieve clear com petitive advantages o ver its rivals .
Marketing strategies should create marketing advantages that can besustainable such that it would be difficult for the rivals to catch up or emulate.
Create a response amo ng its target customers.
Marketing strategies must not only impact on competitors they need tocreate positive response from customers, such as increased sales and repeatbuying .
Turn in pos itive contributions to the bottom line.
Marketing strategies must help the company remain profitable and generateadequate reserves to fund ongoing marketing campaigns.
Even not-for-profit organizations rely on marketing to help them build financialreserves to carry out their
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The strategy plan defines the companys overall mission and objectives.Marketings role and activities are shown in under figure . Which summarize the major activities involved in managing marketing and the
marketing mix.
ProfitableCustomer
Relationships
Marketing
Intermediaries
Suppliers
Competitors
publics
Product
price
promotion
place
Market positioning
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Consumers stand in the center .The goal is to build strong and profitablecustomer relationship .
Next comes marketing strategy:
The marketing logic by which the company hopes to achieve strong and profitable customer relationships .it involves deciding which customers to serve (segmentation and targeting ) and with what value proposition
(differentiation and positioning )
Companies know that they cannot profitability serve all consumers in a givenmarket at least not all consumers in the same way .thus each company
must divided up the total market , choose the best segments , and designstrategies for profitably serving chosen segments. This process involvesthree steps :
Market segmentation
Target marketing
Marketing positioning
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Market segmentation :
Dividing a market into distinct groups of buyers who have distinct needs,characteristics , or behavior and who might require separate products or marketing mixes.
Consumers can be groped and served in various ways based ongeographical , demographic, psychographic and behavioral factors .
Target marketing :
The process of evaluating each market segments attractiveness and selecting one or more segments to enter .
After a company has defined market segments, it can enter on or manysegments of a given market.
Market positioning :
Arranging for a product to occupy a clear , distinctive , and desirable place relative to competing products in the minds of target consumers.
After a company has decided which market segment to enter, it mustdecide what positions it wants to occupy in those segments .
A products position is the place the product occupies relative tocompetitors in consumers minds.
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The Four P s of the Marketing Mix
.
TargetCustomers
IntendedPositioning
ProductVarityQualityDesignFeaturesBrand namePackagingServices
Promotion AdvertisingPersonal sellingSale promotionPublic relations
PriceList priceDiscount
AllowancesPayment periodCredit terms
PlaceChannelsCoverage
AssortmentLocationsInventoryTransporting
logistics
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An effective marketing program blends of the marketing mix elements into acoordinated program designed to achieve
the companys marketing objectives bydelivering value to customers
product
place
price
Promotions
Competitiveadvantage
Positioningintegration
Achieving integration, competitiveadvantages and positioningin the Market Mix
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Marketing analysis , planning , implementation , and control
PlanningDevelop strategic
Plans
Develop marketingPlans
ImplementationCarry out the
Plans
ControlMeasure results
Evaluate results
Take correctiveaction
Analysis
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Marketing analysis : managing the marketing function begins with acomplete analysis of the companys situation . The company must analysisits markets and marketing environment to find attractive opportunities and
avoid environment threats.
Marketing plan : a detailed plan for a product or brand that assesses thecurrent marketing situation and outline marketing objectives , a marketingstrategy , action programs, budgets , and controls.
Through strategic planning , the company decides what it wants to do witheach business unit.
Marketing planning involves deciding on marketing strategies that will helpthe company attain its overall strategic objectives.
Marketing implementation : The process that turns marketing strategies and
plans into marketing actions in order to accomplish strategic marketingobjectives.
Marketing control : the process for measuring and evaluating the results of marketing strategies and plans, and taking corrective action to ensure that
objectives are achieved .
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Marketing Plan
A set of objectives, strategies, an tactics thatguide a farmers production and marketingdecision.Consist of:
Current market positionMarket overviewMarketing objectivesMarketing strategiesMarket SWOT analysis
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Current Situation
The rising commodity prices > livestock industry beinghard hit by high corn prices > rising cost of feed.
The retail price of sugar in Malaysia -MYR1.45/kg and
MRY1.55/kg. below the rate in neighboring countries, causing problems of
smuggling.
One in six countries in the world face food shortages severe droughts that could become semi-permanent underclimate change.
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M i l l i o n s
Commodities
Trade of Agriculture Sector
Export
Import
Trade
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Marketing Objectives
Goals to be accomplished by anorganization's overall marketing programsuch as sales, market share, or profitability. Agood objective will be measurable,attainable, and socially significant.
G l
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Goal
Jun 09, Fisheries Department of Malaysia set a target to produce 507,558 tonnes of aquaculture products
by 2010. The involvements of a total of 11,000 participants aretargeted at the end of 2010.
NATIONAL TARGET TOWARD THE YEAR 2015 Increase domestic beef production from 21.78% to 40% by
increasing cattle breeders population to 0.6 million heads. Increase domestic mutton production from 8.99% to 35% by
increasing goat breeders population to 1.5 million heads.
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Marketing Strategies
A plan to achieve market goalexample ; one grocery store may use the strategyof low prices to attract consumers, another mightemploy the strategy of high quality.
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The Marketing Mix
TargetMarket
Product Price
Promotion Place
Customers Competition
Market Conditions
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PRODUCT COMPONENT (1) Core benefits
What the product actually does - the main functions of the product E.g. washing machine it cleans clothes Cinema ticket it lets you see a film
(2) Tangible or physical elements
What the product is made of; what it looks like; dimensions or durationE.g. 500g of ice-creamA flat-screen, plasma television which is HDTV compatible
(3) Other product ("augmented") benefits
These are the extra elements which add to the perceived value of the product inthe eyes of the consumer
Other product benefits can be tangible (e.g. materials, weight, extra features) orintangible (e.g. brand name, after-sales service, reputation for reliability)E.g. free installation, full money-back guarantee
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Branding
One definition of a brand is as follows:A name, term, sign, symbol or design, or a
combination of these, that is intended toidentify the goods and services of one businessor group of businesses and to differentiatethem from those of competitors.
-process of using symbols to communicate the qualities of aproduct made by a particular producer
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Packaging Products
Packaging
Physical container inwhich a product issold, advertised, or
protected
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Labeling
Can help market the product
Nonaerosol Bio-Degradable Recyclable Ozone Friendly Fat Free Salt Free Sugar Free 30% More Free!
Contents Under PressureDo Not Puncture
Address issues of
consumer safety
FlammableDo Not Use Near Open Flame
Child Proof Cap
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Price
Setting the right price is an important part of effective marketing . It is the only part of themarketing mix that generates revenue(product, promotion and place are all aboutmarketing costs).
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The pricing objectives1. To Maximise Profits2. To Meet a Specific Target Return on Investment (or on net
sales)3. To Achieve a Target Sales Level
4. To Maintain or Enhance Market Share5. To Meet or Prevent Competition
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Odd-ending pricing $.99, $.49 endings
How about $.50 ending?
Not for FarmersMarket
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Quantity discount pricing- One for $2.00 and three for $5.00
- Encourage people to buy more
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Strategies for existingproducts
Price leader, price follower, price takerPre-emptive pricing
-Setting prices low to deter new entrants to the marketPrice discrimination-Charging different prices to different market segments, based
on customer willingness to pay
Pl
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Place
Depend on the target markets needs & wants,and where you have a competitive edge.
Farmers markets Pick-your-own farms Farm stands/ Value-added products Entertainment farming/Agri-tourism
Community supported agriculture (CSA) Cooperatives Mail order/ Internet Wholesale: supermarket, restaurants, brokers, etc.
Promotion
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Promotion
1. Advertising
Paid communication - TV, radio, newspaper, etc.Change mind dont change behavior Select the appropriate media -What do they listen?What do they read?
2. Sales promotionCoupons, in-store displays, trade shows, samples, in-store demonstrations, and contests.
Change behavior - Most recalled advertisementSupplement and coordinate efforts in the advertisingand personal selling efforts.
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SWOT ANALYSIS
S: strengthW: weakness
O: OpportunityT: Threat
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StrengthStrong government support
Established network of producers, millers and wholesalersWide variety of species available
Excellent infrastructureLow cost & High returns
High commercialized with modern production technologyStrong expanding downstream activities
Excellent macroeconomic climate
WeaknessSmall Portion of Class 1 land
Lack of R&D and regulatory frameworkHighly depended on imported feed resources
Labor shortages Low quality products among SMEs
Inconsistency of supply due to traditional cultivation system Rising cost of production
OpportunityIncreasing demand for high quality
Emerging new marketsOpportunity for reverse investmentPreference for eco-friendly product
High potential to be major producer for halal foodImport substitution
Potential for new product development
Threat
Competition for land & labor for others economics activitiesDisease and environmental problems
Price instability of imported feedstuffsIncreasing non-tariff barriers such as labeling and sanitary
Competition from other producing state
AGRICULTURE SECTOR
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Approaches to the studying thefood or marketing ofagricultural produce
The Functional Approach
The Institutional Approach
The Behavioral System Approach
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The Functional Approach
As a major specialized activity performed in accomplishing themarketing process or breakdown the processes into function
There 3 functions which areExchange functions
BuyingSelling
Physical functionsStorageTransportationProcessing
Facilatating functionsStandardizationFinancingRisk bearingMarket intelligence
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The Institutional Approach
Consider the nature and character of the variousmiddlemen and related agencies and also the arrangementand organization of the marketing activitiesFood marketing middlemen can be classified as follows
Merchant middlemenRetailersWholesalers
Agent middlemenBrokersCommission men
Speculative middlemenProcessors and manufacturersFacilitative organizations
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The Behavioral System Approach
Particular marketing firm or an organizationof firm such as the marketing channel can beviewed as a system behavior
Four major type problems associated withbehavioral systems
1. Input-output system
2. Power system3. Communication system4. Adapting to internal and external changes
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The Prerequisites to an
Efficient Economic System
A free market economy
Prices reflect the full value of resourcesA high degree of interaction betweenconsumer and producers
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Economic Efficiency
How well these three prerequisites are metlargely determines the level of economicefficiency present in an economic system.
The higher the level of economic efficiency, thehigher the level of overall consumer satisfaction
and producer profits and maintaining a high levelof economic efficiency should be a major
concern of a society.
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The Structure Conduct
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The Structure-Conduct-Performance Model
ConductStructure Performance
The model is based on the notion that the way firms are organizedin a market ( their structure ) tells a great deal about how they make
decisions ( their conduct ), which in turn influences the level of efficiency and fairness present in a market ( their performance )
Bridge the gap between the conflicting needs of producers and consumers,
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Perform the 9 functions of marketing .
By performing these 9 functions, marketing adds the 4 utilities,
which Overcome the separations of time, space, value, and ownership
and
Raise the level of efficiency in the economic system .
This makes consumers and producers better off.
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How do they contribute toGDP? GDP is the value added in production through theuse of the land, labor, capital and managementresources
Measured in term of value added
(the difference between the sale of goods and the
purchase of raw materials or services from other s
Trade of Agriculture Sector (2008)
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