PPT 5301

AGRIBUSINESS MARKETING

PROBLEM BASED LEARNING 1

BY:
KHANSA BT NAZARUDIN GS 24865
HILDA BT HUSSIN GS 26471
MOHD BADRULHISYAM BIN ADNAN GS 26125
MATIN FATEMI GS22312
 Food & Fiber System
“ All economic activities linked to agricultural production, such
as machinery repair, fertilizer production, food processing,
and manufacturing, transportation, wholesale and retail
distribution of products, and eating establishments”

“Also included are the economic activities that link the

production of plant and animal fibers and hides to fabric,
clothing and footwear.”

7/11/2013 2
Food & Fiber System

Figure 2 Linkage between Food and Fiber Sector

Source : Kriesel and Doherty, The University of Georgia
7/11/2013 3
 Agro-Based
Agricultural
Product

Geographic concentration of Production can be done

production everywhere

Seasonal and Quality Non-seasoning and Quality

variation can be controlled

Set up proper amount as

Bulky and Perishable wanted and extend time for
storage by preservative

Raw Material to other

Raw Material industries or end-used
product (ready to eat)
Ninth Malaysia Plan To Strengthen
Agriculture And Agro-based Industry

 During the Eighth Plan period, the agriculture sector achieved a

higher rate of growth than targeted and contributed towards
economic growth and export earnings.
 Ninth Plan period, the development of the agriculture sector will be
intensified to serve as the third engine of growth
 Target specific policies and strategies will be implemented to
expedite the transformation of the agriculture sector into a modern,
dynamic and competitive sector including with respect to agro-
based processing activities and agricultural entrepreneur
development.
 Development Expenditure And Allocation For Agriculture,
2001-2010
5.00
Thousands

4.50
4.00
3.50
Value (RM million)

3.00
2.50
2.00
1.50
1.00
0.50
8MP Expenditure
0.00
9MP Allocation

Programme
Food security Plan

 Apr 08 ,the cost of the Government’s food security

strategy to counter the worldwide increase in prices,
especially rice, will total RM4bil.

 Feb 09,government allocate MYR5.6bn to improving

food security with the aim of raising self sufficiency in
rice to over 85% in 2010.
 Strategic planning

 The process of developing and maintaining a strategic fit between the organization’s goals and
capabilities and its changing marketing opportunities .
It involves defining a clear company mission, setting supporting objectives , designing a sound
business portfolio and coordinating functional strategies .

Steps in strategic planning

Business unit, product , and marketing level

Corporate level

Setting Planning ,
Designing marketing ,
Defining the company
the business And other
company mission objectives
portfolio Functional
and goals
strategies
How well are
what business
our different
are we really in? Where do we Business and
want to go, what products doing?
What business Developing
Are our targets ? What shall
Should we be in? detailed plans
we do about them to for implementation
Improve profitability ?
 Defining a market –oriented mission :
A statement of the organization’s purpose –what it wants to accomplish in the larger
environment.
A market –oriented mission statement defines the business in terms of satisfying
basic consumer

 Setting company objectives and goals

The company’s mission needs to be turned into detailed supporting objectives for
each level of management . Each manager should have objectives and be
responsible for reaching them.

 Designing the business portfolio

Guided by the company’s mission statement and objectives, management now must
plan its business portfolio – the collection of businesses and products that make up
the company .
Business portfolio planning involves two steps .
First the company must analysis its current business portfolio and decide which
businesses should receive more, less or no investment .
 Different dimension of strategy (the 3 R’s)

p1 p2 p3

Strategy as Routes :
The direction or paths the firm takes M1
with regards to moving into new
Products and markets over time
Markets
M2

M3

Products

Strategy as Responses :
How a firm reacts to challenges The firm The competitor
From the competitors
 Cost
Strategy as Rationale : leadership
How or on what basis the firm Strategy
Chooses to compete

Bases of competitive
Advantages
Focus Differentiation
Strategy Strategy
The firm must develop marketing strategies that enable it to:

 Achieve clear competitive advantages over its rivals .

Marketing strategies should create marketing advantages that can be
sustainable such that it would be difficult for the rivals to catch up or emulate.

 Create a response among its target customers.

Marketing strategies must not only impact on competitors – they need to
create positive response from customers, such as increased sales and repeat
buying .

 Turn in positive contributions to the bottom line.

Marketing strategies must help the company remain profitable and generate
adequate reserves to fund ongoing marketing campaigns.
Even not-for-profit organizations rely on marketing to help them build financial
reserves to carry out their
The strategy plan defines the company’s overall mission and objectives
.Marketing’s role and activities are shown in under figure .
Which summarize the major activities involved in managing marketing and the
marketing mix.

Marketing
Competitors
Intermediaries

Product

Profitable
Customer price
place Relationships

Market positioning

promotion

Suppliers publics
Consumers stand in the center .The goal is to build strong and profitable
customer 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 given
market at least not all consumers in the same way .thus each company
must divided up the total market , choose the best segments , and design
strategies for profitably serving chosen segments. This process involves
three steps :
Market segmentation
Target marketing
Marketing positioning
 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 on
geographical , demographic, psychographic and behavioral factors .
 Target marketing :
The process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter .
After a company has defined market segments, it can enter on or many
segments 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 must
decide what positions it wants to occupy in those segments .
A product’s position is the place the product occupies relative to
competitors in consumers’ minds.
Once the company has decided on its overall marketing strategy , it is ready to begin planning the
details of the marketing mix, one the major concepts in modern marketing .

The set of controllable tactical marketing tools-product, price, place and

promotion- that the firm blend to produce the response it wants in the target market.

The marketing mix consist of every thing the firm can do to influence the demand for its product. The
many possibilities can be collected into four groups of variables known as the “ four P s ”:

 Product : means the goods-and-services combination the company offers to the target market
 Price : is the amount of money that customers have to pay to obtain the product.
 Place : includes company activities that make the product available to target consumer
 Promotion : means activities that communicate the metrics of the product and persuade target
customers to buy it.
The Four P s of the Marketing Mix

 .
Product Price
Varity List price
Quality Discount
Design Allowances
Features Payment period
Brand name Credit terms
Packaging
Services Target
Customers

Intended
Positioning
Place
Channels
Promotion Coverage
Advertising Assortment
Personal selling Locations
Sale promotion Inventory
Public relations Transporting
logistics
 An effective marketing program blends of
the marketing mix elements into a
coordinated program designed to achieve
the company’s marketing objectives by
delivering value to customers

product

Competitive
advantage
Promotions place

integration Positioning

Achieving integration, competitive

advantages and positioning
in the Market Mix

price
In addition to being good at the marketing in marketing management ,
companies also need to pay attention to the management in
marketing management .
Managing the marketing process requires the four marketing
management functions :

 Analysis
 Planning
 Implementation
 control
Marketing analysis , planning , implementation , and control

Analysis

Planning Control
Implementation
Develop strategic Measure results
Carry out the
Plans
Plans
Evaluate results

Develop marketing Take corrective

Plans action
 Marketing analysis : managing the marketing function begins with a
complete analysis of the company’s situation . The company must analysis
its markets and marketing environment to find attractive opportunities and
avoid environment threats.

 Marketing plan : a detailed plan for a product or brand that assesses the
current marketing situation and outline marketing objectives , a marketing
strategy , action programs, budgets , and controls.
Through strategic planning , the company decides what it wants to do with
each business unit.
Marketing planning involves deciding on marketing strategies that will help
the company attain its overall strategic objectives.
 Marketing implementation :The process that turns marketing strategies and
plans into marketing actions in order to accomplish strategic marketing
objectives.

 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 .
 The marketing control process

Set goals measure performance evaluate performance take corrective action

What do we want What is What should we
Why is it happening ?
To achieve ? Happening ? Do about it?
Marketing Plan

 A set of objectives, strategies, an tactics that

guide a farmer’s production and marketing
decision.
 Consist of:
 Current market position
 Market overview
 Marketing objectives
 Marketing strategies
 Market SWOT analysis
 Current Situation
• The rising commodity prices > livestock industry being
hard 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 under
climate change.
Market Overview
 Apr 09, Malaysia's trade deficit in the food sector
continues to grow at a rather alarming rate as the
figures climbed to a staggering RM7.1 billion in 2005.
 If this trend continues unchecked, the food trade deficit is
expected to reach RM12.4 billion by 2010
 food imports - RM27.3 billion, exports - RM14.9 billion.

 For agriculture sector, total export excess than total

import due palm oil production.
 Trade of Agriculture Sector
45

Millions
40
40

35

30
27
Value (RM’000/RM’000)

25 24
22

20

13 14
15

10 8
Export
Import
5 3
23 2 2
000 01 11 11
0 01 1 01 01 11
0
1 0 Trade
0
-1 -1 -1 0 0 -1
-5
-5
-10

Commodities
Marketing Objectives

 Goals to be accomplished by an
organization's overall marketing program
such as sales, market share, or profitability. A
good objective will be measurable,
attainable, and socially significant.
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 are
targeted 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.
Marketing Strategies

 A plan to achieve market goal

 example ; one grocery store may use the strategy
of low prices to attract consumers, another might
employ the strategy of high quality.
The Marketing Mix

Customers –
Competition

Product Price

Target
Market

Promotion Place

Market Conditions

41
WHAT IS PRODUCT

Feature
Tangible quality that a company
builds into a product
A product can be defined as “anything that is capable of satisfying customer
needs”.

Product definition:
A product is a good, service, or idea consisting of a bundle of tangible and intangible
attributes that satisfies consumers and is received in exchange for money or some
other unit of value.

Goods are tangible. You can see them, feel them, touch them etc.
Services are intangible. The result of human or mechanical efforts to people or
objects.
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 duration
E.g. 500g of ice-cream
A 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 in
the eyes of the consumer
Other product benefits can be tangible (e.g. materials, weight, extra features) or
intangible (e.g. brand name, after-sales service, reputation for reliability)
E.g. free installation, full money-back guarantee
 Branding

One definition of a brand is as follows:

“A name, term, sign, symbol or design, or a
combination of these, that is intended to
identify the goods and services of one business
or group of businesses and to differentiate
them from those of competitors”.

-process of using symbols to communicate the qualities of a

product made by a particular producer
Advantages of Brands

 to enhance customer recognition

 Well-developed and promoted brands make product
positioning efforts more effective
 a successful brand can extend the brand by adding new
products under the same “family” brand.
 customers who are frequent and enthusiastic purchasers
of a particular brand are likely to become Brand Loyal
Packaging Products

Packaging
Physical container in
which a product is
sold, advertised, or
protected
 Labeling

 Can help market the product

 Address issues of
• Nonaerosol consumer safety
• Bio-Degradable
• Recyclable Contents Under Pressure
• Ozone Friendly Do Not Puncture
• Fat Free
• Salt Free Flammable
• Sugar Free Do Not Use Near Open Flame
• 30% More Free!

Child Proof Cap

 Price

 Setting the right price is an important part of

effective marketing . It is the only part of the
marketing mix that generates revenue
(product, promotion and place are all about
marketing costs).
 The pricing objectives
1. To Maximise Profits
2. 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 Share
5. To Meet or Prevent Competition
 Pricing Strategies
 Strategies for new product

• Skimming
-Setting an initial high price to cover new product costs and generate
a profit
• Penetration
-Setting an initial low price to establish a new product in the market
• Psychological Pricing
-Pricing tactic that takes advantage of the fact that consumers do not always
respond rationally to stated prices
• Odd-even Pricing
-Psychological pricing tactic based on the premise that customers prefer
prices not stated in even dollar amounts
• Discount
-Price reduction offered as an incentive to purchase
 Odd-ending pricing
• $.99, $.49 endings
• How about $.50 ending?

Not for
Farmer’s
Market
Quantity discount pricing
- One for $2.00 and three for $5.00
- Encourage people to buy more
Strategies for existing
products

 Price leader, price follower, price taker

 Pre-emptive pricing
-Setting prices low to deter new entrants to the market
 Price discrimination
-Charging different prices to different market segments, based
on customer willingness to pay
 Place
Depend on the target market’s 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
1. Advertising
 Paid communication - TV, radio, newspaper, etc.
 Change mind don’t change behavior
 Select the appropriate media -What do they listen?
What do they read?
2. Sales promotion
 Coupons, in-store displays, trade shows, samples, in-
store demonstrations, and contests.
 Change behavior - Most recalled advertisement
 Supplement and coordinate efforts in the advertising
and personal selling efforts.
3. Public relations
 Non-paid communication presented by the media.
Publications, Events, News, Community involvement,
Identity media, Lobbying activity, etc.
 Create a positive image
4. Direct marketing/mailing
 Most Targeted
 Database marketing
5. Personal selling
 Employee is your most important asset
 Don’t forget training
SWOT ANALYSIS

 S: strength
 W: weakness
 O: Opportunity
 T: Threat
 Strength
Weakness
Strong government support
Small Portion of Class 1 land
Established network of producers, millers and wholesalers
Lack of R&D and regulatory framework
Wide variety of species available
Highly depended on imported feed resources
Excellent infrastructure
Labor shortages
Low cost & High returns
Low quality products among SMEs
High commercialized with modern production technology
Inconsistency of supply due to traditional cultivation system
Strong expanding downstream activities
Rising cost of production
Excellent macroeconomic climate

AGRICULTURE SECTOR

Opportunity
Increasing demand for high quality
Emerging new markets
Opportunity for reverse investment
Preference for eco-friendly product
High potential to be major producer for halal food
Import substitution
Potential for new product development
Threat
Competition for land & labor for others economics activities
Disease and environmental problems
Price instability of imported feedstuffs
Increasing non-tariff barriers such as labeling and sanitary
Competition from other producing state
Approaches to the studying the
food or marketing of
agricultural produce
The Functional Approach

The Institutional Approach

The Behavioral System Approach

The Functional Approach
 As a major specialized activity performed in accomplishing the
marketing process or breakdown the processes into function

 There 3 functions which are

 Exchange functions
 Buying
 Selling
 Physical functions
 Storage
 Transportation
 Processing
 Facilatating functions
 Standardization
 Financing
 Risk bearing
 Market intelligence
The Institutional Approach
 Consider the nature and character of the various
middlemen and related agencies and also the arrangement
and organization of the marketing activities
 Food marketing middlemen can be classified as follows
 Merchant middlemen
 Retailers
 Wholesalers
 Agent middlemen
 Brokers
 Commission men
 Speculative middlemen
 Processors and manufacturers
 Facilitative organizations
The Behavioral System Approach

 Particular marketing firm or an organization

of firm such as the marketing channel can be
viewed as a system behavior
 Four major type problems associated with
behavioral systems
1. Input-output system
2. Power system
3. Communication system
4. Adapting to internal and external changes
The Prerequisites to an
Efficient Economic System

 A free market economy

 Prices reflect the full value of resources
 A high degree of interaction between
consumer and producers
Economic Efficiency

 How well these three prerequisites are met

largely determines the level of economic
efficiency present in an economic system.

 The higher the level of economic efficiency, the

higher the level of overall consumer satisfaction
and producer profits and maintaining a high level
of economic efficiency should be a major
concern of a society.

7/11/2013 65
 Evaluation of Performance of
Marketing System
 A Marketing system can be measured with two
criteria.
 Efficiency.
 How well goods and services flow from
businesses to consumers.
 Fairness.
 How the marketing system meets the needs of
the consumers.

7/11/2013 66
The Structure-Conduct-
Performance Model
The model is based on the notion that the way firms are organized
in 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)

Structure Conduct Performance

Bridge the gap between the conflicting needs of producers and consumers,

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.

7/11/2013 68
How do they contribute to
GDP?
GDP is the value added in production through the
use of the land, labor, capital and management
resources

Measured in term of value added

(the difference between the sale of goods and the
purchase of raw materials or services from other s

7/11/2013 69
 Trade of Agriculture Sector (2008)
45

Millions
40
40

35

30
27
Value (RM’000/RM’000)

25 24
22

20

13 14
15

10 8
Export
Import
5 3
23 2 2
000 01 11 11
0 01 1 01 01 11
0
1 0 Trade
0
-1 -1 -1 0 0 -1
-5
-5
-10

Commodities
 Conclusion
 Food and fiber industry is a complex and expensive
sector but have a significant contribution to our
country economy.
 A marketing plan is essential for a business since its
provide detailed descriptions of the resources and
actions needed to achieve stated marketing
objectives and every business should have it.
 An efficient marketing system will affected the
smoothes of agribusiness supply chain product.
 Agribusiness sector can’t be denied as one of
important industry since its production contributing
to our country gdp .
 We Have Come a Long Way --
Plan Before You Plant!
Spend 10 percent of your time marketing

Thank you!