AGR 165

CHAPTER 1
INTRODUCTION

AGRICULTURAL PRODUCTS
MARKETING

Assessment
3 tests x 10% : 30%
Assignment : 10%
Presentation : 10%
Final examination: 50%

 Kohls, R.L. and J.N. Uhl 1996. Marketing of Agricultural

Products, MacMilan, NY

Recommended text book

 Define what is AGRICULTURAL

MARKETING in 3 minutes &
your TARGET for this subject..

QUIZ

 Any physical goods or services or ideas that satisfies

wants & needs of the consumers.
Physical goods in a raw forms such as fruits,
vegetables produced by farmers.
Services the farmer will store the goods so that
the physical appearances of the goods will be at
original conditions.
Ideas the farmer will deliver the information of
how to plant vegetables to the customer

The Product
Definition

AGRICULTURAL
MARKETING
AGRICULTURAL MARKETING

OTHERS TERMS IN AGRICULTURAL

MARKETING
Barter
The exchange of product from consumer A to consumer B.

Society
Is a process to identify the need of certain groups in a society such
as the need of a bus station for waiting and shelter purposes.

Agribusiness Marketing
The marketing operations from the first handler to the final
consumer-beginning with suppliers to farmers and covering
producing, processing, and marketing to the final consumer.

MARKETING SCOPE

Marketing is related to business activities and for the

purpose of the consumer satisfaction in exchange of goods
and monetary value between the producer and the
customer.
Scope of marketing is not only focused to buying and
selling also include activities such as transportation,
storage, grading, financing, risks involvements, products
design, price determination, promotions, distribution and
developing marketing channels.
Grade influence price, quality, consumer selection.
E.g. Rice based on % of dust (5%)

MARKETING MODULE
(Marketing circle)
In 1960s Mc Carthy introduced a module on marketing. This
module is known as Marketing Modules or Agricultural
marketing circle.

TARGET
CUSTOMER

ENVIRONMENTAL
FACTORS

4P

 Target
customer

First
Circle

Secon
d
Circl
e

Environmental Factors:
1. Political and legal
2. Demographic
3. Economic
4. Technology
5. Legals and regulation
6. Social and cultural

4 Ps
1. Price
2. Products/services
3. Place
4. Promotion

First Circle
Target customer
Examples: Clothes made from silk which is high quality
products. The target consumer is of high income and high
class social status

Cont

Price

Second Circle
4P

-The amount of money that a consumer has to pay for the purchase of goods and
services rendered by the producer.
-Listing of prices, discounts, allowance, credit, periods of payments, sale of
products
Second
Circle - Marketing Mix or Four (4) Ps that can be

controlled
Place,
/ Services
Products
-Goodsviaand Promotion,
services that aPrice,
producer
offers Product
to the target
market in a certain
/services
locations
-Quality, styles, characteristics, brand name, sizes, services etc
Place

-Refers to the company's activities that make the product available to the target
consumers at a specific location or geographical vicinity (area)
-Channels, coverage, locations, inventories, transportation

Promotion

-Activities that persuade the consumers to buy the products

-Publicity, sales enhancements, direct selling, web sites, advertisements

Cont...

Third Circle
Environmental Factors
(macro that cannot be controlled)
1)Political & Legal
It will influence the marketing activities of firms and
organization and the countries economic growth. It can be
categorized :

Monetary and fiscal policy

Laws and regulation
Relation of government and industries

Cont...
2) Demographic
Based on geographical regions, the characteristics of the
population, market segmentation and the distribution on
various aspects such as :
Wants factors: Urban, town, rural areas. Age, education
levels. Sex and occupation. Race and religion. Family
lifestyle.
Sociological factors :Groups either family or social group
Physiological factors : Personality, attitude of buying
behavior

Cont...
3) Economic
Influence the level of macro economy from the aspects of growth
of gross national products, inflation rate, consumption, money
supply, credit support, income and credit flexibility.

4) Technology
Influence the market by:
Transportation (faster), Automobile ,Television (advertising) ,
Retailers (purchasing), Packaging (safe) , Advances in technology
(new tech.) , Market receptiveness to technology (in marketing
process).

Cont...
5) Legal's & Regulation
Agricultural products are mostly substitute or complementary ,
bulky & easy to deteriorate.
E.g.: The application of excessive insecticides to vegetables & a
proper packaging of the products.
6) Social and Cultural
Will influence the economic, political, & technology of certain
countries because of shifts in populations, better job opp., attitudes
towards new tech., & trends in using computers
Social aspects of the society can be seen through the various
changes of consumer products such as artificial to natural
ingredients, product safety or environment & consumerism
awareness (a social movement that tries to increase the rights and
power of consumers in relation to sellers.

MARKETING UTILITY

Utility refers to the value of marketing which adds to goods

and services.
1)Form utility - change raw materials to a finished products.
2)Time utility - availability of products at a specific time.
3)Place utility -available in convenient locations and place.
4)Possession utility - Exchange or transfer of ownership between
buyers and sellers.
5)Information utility - To informs the buyers that the products
exist through promotions.

Management philosophy according to which

a firm's goals can be best achieved through
identification and satisfaction of
the customers' stated and unstated needs and
wants.

MARKETING
CONCEPT
Orientation
towards

Concentration

Purposes

Producer

Production.
Total output of products
offered for sale in the
market.

Producer does not require prior

feedback of consumer wants and
needs.
Profits gained from sale of products.
May occurred surplus of products in
the market

Consumer

Consumer
needs
&
wants.
Total output of products
offered for sale depends
on consumers wants and
needs.

Producer produce based on the

feedback of the consumer.
Profit gained from sale of products.
Surplus of products might not occur
in the market.

SPECIALIZ
ATION

CAREER
OPPORTUN
ITIES

NATIONAL
INCOME

PHYSICAL
FUNCTION

IMPORTANCE OF
1) MARKETING
Specialization

E.g. One village with one particular products. So, it will

increase the family income & expand the markets.
Also leads to the growth of urban areas where people can
migrate to towns or the farmers can concentrate and produce
efficiently.

2)

National Income
Farmers can increase their income either by producing more,
send to factories for processing or self - marketing the
products at a higher sensible price.

Continued..
3)

Physical Function

Marketing lead to the provisions of adequate transport and

communication facilities (e.g. road, railways etc.), storage
facilities and financial arrangements.
4)

Career opportunities

To the farm products and by generating employment in

such areas professional selling, marketing research,
advertising, distribution and etc.
The contribution will grow as the scope of marketing
expand.

ROLE OF AGRICULTURE TOWARDS

PRODUCTION OF AGRICULTURAL
PRODUCTS
Ann
Tovtar ual
al iO
abi
utlpity
ut

Raw
ma
te

r ia
Bulky a l
nd
perisha
ble
produuaclitty
Q
tion
varia

Seasona
ble
variabilit
y in
p
r
o
Geograp duction
hic
concernt
rati
on of
producti
on

Characteristics of product
1) A raw material
Output largely a raw material
E.g. livestock to meat, wheat to cereal
From farm product to food
Successful farmers must be more market orientedA business approach that focuses on identifying
and meeting the stated or
hidden needs or wants of customers..

Continued..
2) Bulky and perishable product

Agricultural products are more bulky and perishable

Bulk effect marketing functions with physical handling.
E.g. fruits, vegetables and meats are quite bulky.
How to reduce bulkiness?

Transport high value or value added instead of raw material

This perishable products require speedy handling and often
special refrigeration.

Continued..
3) Quality variation
Varies from year to year and season to season
So, standardization and grading need to facilitate the
sorting of different variation in grades
Also change the marketing pattern
Variation in qualities and prices due to:
Level of grading of products
Natural disasters such as earthquake, floods
Changing of marketing strategies , demand and supplies
Management in efficiencies in dealing with crops practices

How to control quality variation?

Use the same planting material

CHARACTERISTICS OF
PRODUCTIONS
1) Total output
Upward trend in food production because of
increased in population thus increased per capital
food supplies
Population growth is faster than agricultural growth
so its difficult to maintain fair prices

When output
consequences?

decreased,

Continued..
2) Annual variability in production

Aggregates (whole) farm output varies from year to year due to

farmer responses to the price government programs &
uncontrollable factors such as weather & disease
Changes of farm output influence the food marketing process
and the use of the food marketing systems capacity.
Give an impact to the purchase prices, need for storage
facilities, and plant utilization rates of food marketing firms.

Continued..
3) Seasonable variability in production

Agricultural production in highly seasonal

Some products are produced all year round while some are
seasonal e.g. fruits
How do we solve the problem of seasonal variation?

Fruits produced should be processed and tinned or canned

immediately.
The availability of storage is required, so supply can be
maintained periodically
The efficiency and availability of transportation
Efficiency of management in handling such cases

Continued..

4) Geographic concentration of production

Geographic specialization of farm
production
This depend on the climatic, soil and
environmental factors where certain
commodities are grown.
E.g. Sarawak (pepper), Johor (pineapple)

Continued..
5) Varying cost of production
Cost of production varies by regions and among farmers.
Factors that might contribute to the varying cost of
production are :
Weather
Changes in technology
Types of crops planted annual, biannual, perennial
Management efficiency in handling the cost of materials
Land sizes of the plantation or land tenure.

Proper Management Practices

Proper Timing Applications Of Insecticides

The Need Of Storage Facilities

The Availability Of Transportation

Credit Facilities

HOW OVERCOME
THE PROBLEMS?

NATIONAL
AGRICULTURAL
POLICY (NAP)
The objective of the National Agricultural Policy is to
maximize income from agriculture through the efficient and
effective use of the nations resources and to stimulate the
contribution of this sector towards the overall economic growth
of the nation.

Three NAP
Since 1984, three NAP were formulated to develop agricultural
sector:
Emphasize on NAP 1 (1984-1991)
To develop the export oriented sector

NAP 2 (1992-1998)
NAP 3 (1998-2010)
Increasing competitiveness of the agricultural sector
Maximizing income through optimum utilization of resources

- being in the original

position

Strong growth in exports

of electronics & electrical
products to US

The value of the ringgit dropped from MYR 2.50 per USD to at one point, MYR 4.80
per USD.
Malaysia refused economic aid packages from the International Monetary Fund (IMF)
and the World Bank and by refusing aid from IMF, Malaysia was not affected to the
same degree in the Asian Financial Crisis as Indonesia, Thailand, and the Philippines.

 Enhance food security

Increase productivity & competitiveness of the
agriculture sector
Deepen linkages with others sector
Create new sources of growth for the sector
Adopting sustainable development, utilization and
management of natural resources

SPECIFIC OBJECTIVE
OF NAP 3

1)Agroforestry approached. Agriculture and forestry are

mutually compatible and complementary for joint
development. This approached will addressed the
increasingly scare resources and raw material availability.
2)Product based approached. Address on key products
and market identified based on demand and supply,
preferences and potential to consumers.

STRATEGIES OF THE
NAP3

PROBLEMS FACED BY AGRICULTURE

1)Gross Domestic Products in 1980 has declined in the contribution
of GDP even though the value-added products of agriculture has
increased.
2)Land expansion has been a hindrance (obstacle) because some of
the arable land has been allocated for industrialization,
urbanization and housing projects.
3)Market protection less has been taken into consideration as
compared to automobile industries e.g. Export taxes.
4)Trade and fiscal (financial) measures has been hampered
(disadvantage) for export purposes.
5)Fiscal incentives did not favor in agriculture so thats why large
companies did not enjoy such incentives as compared to
manufacturing industries.

Strategies For Achieving

The NAP Objectives
1) Optimizing The Resources Use
Land, labor, capital and management are to be utilized effectively.

2) Human Resources Development

The use of technologies in the agricultural sectors e.g.
mechanization in planting and harvesting (paddy) will improved
efficiency in used of labor.
Manpower training is required to handle such cases, efficient
agribusiness in marketing, and agro-based processing.

Continued..

Enhancement Of Research
Technological Diffusion

And

Development

And

Would maintained the competitiveness of the agricultural sectors

e.g. rubber, oil palm, rice and other commercial products & must
be market driven, commercially orientated and environmentally
friendly.

Greater Role Of The Private Sectors

Incentives, promotion and packages will enhanced the sale of
products for export purposes.

Continued..

Reformed Marketing Strategies of the producers

Products should be view as commodity and plays its role in the
export of the products to various countries like Middle East,
African, Latin America and China as traditionally to the U.S.A.

Expanded Food Production

The finished products should supply first for the demand of the
domestic populations.
The products produced must be competitive in nature.

Continued..

Development Of Viable And Self-Reliant Farmers Institution

The needs of this institution is highly required to reduce or less
the burden of the farmers.
Some farmers are incapable to supply their products because lack
of facilities such as financial strength, marketing, storage and
transportation purposes.