Analysis Presentation: Economic Marketing Concepts

Economic Marketing Concepts Presentation Material 01 Marketing Concept Definition and scope of marketing 02 Marketing of Agricultural Products 03 Marketing Efficiency 04 Marketing Approach Agricultural Products Marketing of agricultural products & characteristics of agricultural products Marketing efficiency of agricultural products in terms of cost, technical and price efficiency Functional, institutional, system, and marketing approaches S-C-P (structure, conduct, performance) 1. Marketing Concept Market Marketing of Agricultural Products is a series of business activities from producers to consumers. Marketing A market is defined as a condition where transactions occur between buyers and sellers (whether they physically meet or not). A market can be a : a) Place b) Time c) Commodity market d) On-line marketplace 1. Marketing Concept (1) 01 Transportation Marketing is an economic activity that functions to carry or transport goods and/or services from producers to consumers. Series of Functions Activities 03 02 Distribution Agricultural marketing is a set Agricultural marketing is the demonstration of all business activities in the flow/distribution of goods/services from the producer (farm level) to the final consumer. Agricultural marketing bridges the gap between producers and consumers. of functions required in moving inputs or products from the primary production level to the final consumer. The marketing function consists of the exchange function, physical function, and facility function. 1. Marketing Concept (2) The series of functions in marketing is a business activity and is a productive activity because it increases or creates value added or usefulness: Usefulness of Shape 1 Processing of agricultural products can increase/create added value in the form of Usefulness of Place Through transportation from the production site to the market will increase/create the usefulness of the place. 2 Usability Time Some agricultural commodities are seasonal, prices tend to be low 3 during the peak harvest season. Through storage activities, and selling at certain times (high demand) can increase the value of the crop. added time of the agricultural product Usefulness of Ownership 4 Through exchange activities, value-added agricultural products will be created. 2. Marketing of Agricultural Products 2.1 Definition Agricultural marketing is one of the agricultural sub-systems 🡪 off-farm activities (downstream industry sub-system) In general, marketing of agricultural products is the activity of flowing agricultural products from producers (farmers) to consumers. The end. 2. Marketing of Agricultural Products (Cont...) 2 Seasonal 1 Raw Material 3 Bulky Characteristics Characteristics of Agricultural Products 4 Perishable & Non Durable The characteristics of agricultural products are different from other products, agricultural products have special characteristics 5 Production Risk 6 Price Risk 2. Marketing of Agricultural Products (Cont...) 1 Bulky: takes up a lot of space, but is relatively light in weight 2 Bulky goods usually require high storage and transportation costs 3 Within agricultural products themselves there is diversity in product value and volume 🡪 transportation costs are different, especially when compared to non-agricultural products 2. Marketing of Agricultural Products (Cont...) 1 Horticultural products such as vegetables, fruits and flowers are perishable and cannot be stored fresh for too long. 2 Farmers must sell their products immediately before they spoil, even at low prices 🡪 weak bargaining power 3 Perishable goods require good physical treatment and work as well as special storage to make the goods last longer. 4 If the physical form of the product is damaged or rotten 🡪 quality decreases 🡪 low price PERISHABLE 2. Marketing of Agricultural Products (Cont...) 1 The quality and quality of agricultural products are highly dependent on uncontrollable weather uncertainties. For example: shallots, chili peppers, rice, soybeans 2 Products agriculture facing threat prevention and treatment is not small pests and disease 🡪 cost 3 Farm planning becomes relatively difficult 🡪 production and product quality output is uncertain 🡪 price received is uncertain 3. Marketing Efficiency Marketing efficiency is a measure of the ratio between the value of outputs and the value of inputs to the marketing process. Input values are all marketing costs incurred due to the marketing system, Included in marketing costs are profits received by marketing institutions Output value is an assessment of consumers of goods/services consumed, the assessment is not only physical but also an assessment of the attributes of the product/service that create satisfaction value for consumers. Marketing is efficient if the ratio of output value to input value in the marketing system is maximum Any change that reduces marketing costs per unit of output is desirable, but if also reduces customer satisfaction, it may not improve marketing efficiency. Conversely, if the marketing cost per unit of output increases, but does not cause a decrease in efficiency if the value of output (consumer benefit) increases equal to or greater than the cost, the marketing cost per unit of output increases. Customer satisfaction cannot be measured directly, so changes will be analyzed from the side: a) Technical Efficiency and b) Pricing Efficiency. Marketing Efficiency = Output Value/ Input Value, Technical Efficiency, Price Efficiency 3. Marketing Efficiency (Cont...) Technical Efficiency Efficiency) Emphasizes the way marketing functions are physically performed to achieve the maximum output per unit input ratio. Technological changes can be evaluated to determine whether they reduce marketing costs per unit of output. For example: The use of advanced apple fruit packing machines can increase the number of apples packed per day but also reduce labor costs. Technical Efficiency & Price Efficiency Pricing Efficiency Emphasizes accuracy, precision, and speed in which prices reflect consumer demand channeled through market channels to producers. Therefore, price efficiency is influenced by marketing costs and the level of competition in the industry. Activities that can improve price efficiency are market information and the level of market competition. For example: Improved price information and market competition 4. Agricultural Marketing Approach There are at least 4 (four) marketing approaches for agricultural products, namely: 1. Commodity Approach Product marketing is adjusted to the characteristics of agricultural commodities 2. Function Approach Marketing of agricultural products is based on the functions performed: exchange function, physical function, and facility function. 3. Institutional Approach Marketing of agricultural products is based on the role of individuals or groups/organizations that perform marketing functions 4. Structure - Conduct - Performance Approach Marketing of agricultural products is done with a market organization approach that covers all aspects of the marketing system. 4. Agricultural Marketing Approach (Cont...) 1. Commodity Approach a) The commodity approach focuses on what is done with the product after it has been produced. b) This approach follows the commodity marketing chain between producers and consumers and explains what is done and how the commodity can be handled more efficiently. c) The commodity approach differentiates marketing such as rice marketing, watermelon fruit marketing, carp marketing, beef marketing, and plywood marketing. 4. Agricultural Marketing Approach (Cont...) 2. Function Approach PHYSICAL FUNCTION all actions that are directly related to goods and services, giving rise to utility: (1) place (transportation function), (2) form (processing function), and (3) time (storage function). EXCHANGE FUNCTION FACILITY FUNCTION Activities that facilitate the transfer of ownership of marketed goods and services; consists of functions: buying and selling. all actions that aim to facilitate the exchange activities that occur between producers and consumers; consists of functions: (a) standardization and grading, (b) Finance, (c) risk coverage, and (d) market information. . . 4. Agricultural Marketing Approach (Cont...) 3. Institutional Approach The institutional approach focuses on the role of individuals or groups/organizations that perform marketing functions. Intermediary Trader (Merchant Middlemen) who own and control the product, namely wholesalers and retailers Intermediary Agent (Agent Middlemen), only master the product, namely brokers and commissioners. Speculators (Speculative Middlemen are intermediary traders who buy and sell products for profit by taking advantage of price movements. Usually speculators work on a short-term basis, taking advantage of price fluctuations. Processing and Manufacturing (Processors and Manufacturers), are business groups whose activities handle products and change the form, namely raw materials into semifinished materials or final products. Supporting Organization (Facilitative organizations that help facilitate marketing activities, such as auctions and associations of importers and exporters. 4. Agricultural Marketing Approach (Cont...) 4. S - C - P approach This is approach organization market which includes combines all aspects of the marketing system, namely: or S (market structure), C (market conduct) and P (market performance). • Market Structure can be defined as the characteristics of products and institutions involved in the market which is the resultant or mutual influence of market conduct and market performance. Market Structure can be defined as the type of market structure (e.g. monopoly market and perfectly competitive market). 4. Agricultural Marketing Approach (Cont...) 4. S - C - P approach • Market Conduct 🡪 participant behavior (buyers and sellers), strategies or reactions by market participants as a whole. individuals or groups, in a competitive or negotiated relationship with other participants to achieve specific marketing objectives. For example: business practices by producers/companies in pricing policies, sales promotion and various other sales strategies carried out to achieve specific market results. • Market Performance 🡪 market performance is the The result or effect of market structure and market conduct that is in reality can be seen in the products, prices and costs in certain markets. For example: price efficiency or production costs, sales promotion costs (including the value of information), sales volume and exchange efficiency. Thank You!