CHAPTER FOUR

4. MARKETING STRATEGIES FOR AGRICULTURAL

PRODUCTS
Strategy, policy and planning
strategy
• bridges the gap between “where we are” and “where we want to be”.
• It is reflected in the statement of its overall objectives and the means
by which these are to be met.
• To convey the reason for its existence, i.e. its mission.
policy
• Policies are bodies of rules established to guide managers in their
decision making.
• prescribes the boundaries of the alternative courses of action which
the organisation leaves open to him/her within a defined set of
circumstances.
 cont..
Marketing planning
• Basically planning involves setting objectives, designing and
implementing a programme to achieve the organisation's
objectives and having a monitoring and control mechanism to
ascertain whether the planned programme is on track or has
achieved its desired objectives.
Tactics and strategy
• Tactics relate to the plan to achieve short term objectives.
• Tactics deal with marketing problems in the short term.
• Strategic marketing would establish policies for each element of
the marketing mix and would specify how resources are to be
deployed.
 Conti…

Strategic Planning/ Strategic Market planning

• It is proactive in that it prepares managers not merely to expect
change but to anticipate it.
• its focus is upon the market environment within which the
enterprise must operate.
Benefits of strategic market planning:
1. attention on external events.
2. taking a long term perspective .
3. resource allocation decisions.
4. It provides a strategic management control system.
5. It provides a vertical and horizontal communication and
coordination system.
 Cont……

The marketing planning process

Diagnosis
Planning
and
Action
 cont….

Contents of the marketing plan

1. Executive summary- main goals and recommendations of plan
2. Corporate purpose- mission & goal
3. The strategic marketing audit- SWOT
4. Objectives- quantifiable, measurable, achievable,communicable and consistent. non-economic
as well as economic goals.
5. Strategic focus
6. Customer targets
7. Core strategy- differential advantage.
8. The marketing mix
9. Action plan- budget,staffing,communication,cordination &motivation
10.Monitoring, evaluating and controlling the marketing planning
 4.1 Product strategies

What is product?
• A product is anything that can be offered to a market to satisfy a
need or want. For attention, acquisition, use or consumption.
• Good, service & idea
Level of product
1. Core product- what the customer really buys.
2. Tangible products-- characteristics: a quality level, features,
styling, a brand name and packaging.
3. Augmented product- services and benefits might need to be
offered to differentiate a product from that of competitors to
give it a competitive edge.
“The new competition is not between what companies produce in their factories,
but between what they add to their factory output in the form of packaging,
services, advertising, customer advice, financing, delivery arrangements,
warehousing and other things that people value.”
 The product mix and it dimensions
•One reason for the rarity of single product firms is the inherent
seasonality of agricultural products be they inputs or outputs.
•Another major reason for offering a complementary range of
products is to gain entry to the channels of distribution.
A product mix is an assortment of types of products and product
lines.
A product line is a series of related products.
• Eg. For example, a dairy company might offer a product line of
full fat milk, semi-skimmed milk and skimmed milk.
The width of a product mix refers to how many different product
lines an organization carries.
Product line depth indicates the number of product variations
within a particular product line
 Product line extensions

There are several reasons why firms would consider adding to the number of
product lines (breadth) and/or to the number of variants (depth) within a
product mix.
 By extending the range of products offered, a company might gain entry
to as new segment of the market.
 It may be necessary to attract distributors who are interested in offering a
full product line, or
 The business may have spare productive capacity and wish to increase the
contribution to fixed costs by increasing the level of capacity utilization.
 to support other product lines, or as part of their competitive strategy they
want to fill gaps in the market
 Negative side of extension-Cost, added complexity, cannibalize the sales
of its own existing product lines, customer confusion.
 The product map allows management to visualize the intensity of
competition in each segment of the market.
 Product line deletion

• Prune/remove products from the line.

• There are many reasons for this;
• Fragmentation of the overall marketing effort and dilution of the
brand image.
• Increased production complexity
• More errors in forecasting demand and increased logistics
complexity,
• Increased supplier costs due to rush orders
• Distraction of the research and development group from new
product development.
• Where items within a product line no longer have a clear role, it is
in the to either harvest or divest themselves of these items.
 Branding agricultural products

• a brand is “a name, term, sign, symbol or design, or a combination

of them intended to encourage prospective customers to
differentiate a producer's product(s) from those of competitors.”
• Brand is much more than the product itself; it is much more
than merely a label.
• Branding can add value to a product and is, therefore, an
important aspect of product management.
• Branding can also provide the basis for non-price competition.
• The initial decision is whether to brand or not. Historically, most
unprocessed agricultural outputs have been sold as generic
products i.e. unbranded.
 The advantages of branding

I. help consumers
• tell the consumer something about the product's characteristics
• to differentiate between products and identify that which best
meets their needs.
• draw consumers' attention to new products which might meet, or
better meet, their needs.
II. For producer or seller
• to match his/her products to the customers' needs.
• legally protect unique product features.
• provides a basis for non-price competition
• market segmentation and target marketing
 Branding decisions

 must be possible to identify at least one unique dimension in the

product..
 it must be possible to consistently replicate the distinguishing
characteristics of the brand.
• Brand ownership: There are three possibilities. manufacturer's
brand name, that of a middleman , his/her own name.
• Brand quality: When developing a brand, the manufacturer has to
choose a quality level that will support the brand's position in the
target market
Among the desirable features of a brand name are that:
• It should suggest something about the product's benefits and qualities
• It should be easy to pronounce, recognize and remember
• It should be distinctive and not easy to confuse with others
• When exporting, it should translate easily into foreign languages.
 Packaging

• “It is the package that communicates more to the consumer than the
actual product, at the point of purchase where the consumer decides.”
There are four levels of packaging:
• Primary packaging: i.e. that which comes into direct contact with the
product
• Secondary packaging: i.e. that containing the primary packaging
• Display packaging: e.g. crates/boxes, pallet, roll container and
• Shipping packaging: e.g. container.
The functions of packaging
• Packaging provides physical protection for the product.
• Packaging also serves to protect the consumer.
• The packaging-distribution interface
• Packaging and product differentiation:
• The product-packaging interface:
 4.2 Pricing Strategy

When making pricing decisions marketers have to take into account a range of
factors.
• Some of these are internal to the company, such as its marketing objectives,
its marketing mix strategy and the structure of its costs.
• Factors which are external to the company, include the state of market
development, the pattern of supply and demand, the nature and level of
competition and a host of environmental considerations such as legal,
political and economic events and social norms and trends.
Pricing strategies
• Cost-plus methods of price determination
• Breakeven analysis
• Market-oriented pricing-skimming or penetrating
• Discriminatory pricing- segmentation, product form, time
• Psychological pricing- Quality pricing, odd-pricing, price lining and customary pricing
• Geographical pricing
• Administered pricing
 Cont’d …
Pricing Objectives:
Pricing objectives can be classified into six major groups:
• Profitability:
• Volume: Maximizing market share
• Competition: going rate pricing & anticompetitive pricing
• Prestige: image of quality and status-conscious consumers.  
Strategic marketing objectives:
• Price stabilization: met in the same way as that of removing price as the basis of
competition. That is, the company will seek to maintain its own prices at or around
those of competitors.
• Supporting other products: Pricing decisions are often focused upon the aim of
maximizing total profits rather than maximizing profits obtained from any single
product within the portfolio.
• Maintaining cash flow:
• Target markets: The sensitivity of buyers to prices can vary across different market
segments.
• Product positioning: The same product can hold different positions depending upon
which segments of its market are under consideration.
 The meaning of price to consumers

• The price of a product or service conveys many diverse messages

to consumers.
• Some consumers will see price as an indicator of product quality;
• others will perceive the price as a reflection of the scarcity value
of the product or service;
• some others will view price as a symbol of social status; and
• yet others will simply see price as a statement by the supplier
about the value he/she places on the product or service.
 4.3 Distributing Agricultural Products

• defined as: “…the set of firms and individuals that take title,or
assist in transferring title, to a good or service as it moves from the
producer to the final consumer or industrial user.”
Types of distribution system
• Direct marketing systems: Where distances between producers
and consumers are short, direct transactions between the two
groups can take place.
• Retail institutions:
• The retail sector includes a wide range of outlets such as
merchants, equipment dealers (in the case of farmers), department
stores, supermarkets and smaller grocery stores.
• They are characterized by their dealing with the end user of the
product or service.
 cont’d…
• Wholesalers: Wholesalers make marketing systems more
efficient by buying a variety of products, in fairly large quantities,
and selling these items on to other businesses that require
relatively small quantities of a variety of goods.
• Wholesalers may service consumer and/or industrial retail outlets.
• Sales agents and brokers:
• are distinguished from the other types of channel member already
described in that they do not take title to the goods.
• The role of agents and brokers is to facilitate distribution by
bringing buyers and sellers together.
• Sales agents often have close relations with particular
growers/processors/manufacturers and contract to sell on their
behalf in return for a commission.
 4.4 Promoting Agricultural Products
Marketing communications serve five key objectives:
• the provision of information
• the stimulation of demand
• differentiating the product or service
• underlining the product's value,
• regulating sales.
Setting marketing communication objectives
• 1. Identify the target segment
• 2. Determine the behavioral change to be brought about
• 3. Decide what needs to be done to bring about the change in
behaviour.
 Factors influencing the communications mix
• There are at least 5 major influences on what makes a given mix of
promotional techniques appropriate.
• Nature of the market:
• large and dispersed markets are perhaps unsuitable for personal selling
because the costs per contact will be high.
• A target market made up of industrial purchasers, wholesalers or
retailers is more likely to be served by organizations which employ
personal selling than is a market of consumers.
• Nature of the product:
• Highly standardized products, with minimal servicing requirements, are
less likely to depend upon personal selling than are custom designed
products that are technically complex and/or require frequent servicing.
• Standardized, high sales volume products, especially consumer
products, will probably rely more on advertising through the mass
media.
 Cont…..
• Price: Advertising and/or sales promotions are the dominant
promotional tools for low unit value products due to the high per
contact costs in personal selling. Higher value products can
justify, and usually require, personal selling.
• Promotional budget:
• A real barrier to implementing any promotional strategy is the size
of the promotional budget.
• Mass media advertising tends to be expensive although the
message can reach large numbers of people and hence the cost per
contact is relatively low.
• Ideally, a promotional strategy should first be developed and then
costed rather than designing a promotional strategy around a
preset budget.
 Cont….
• Selecting the media
• it is likely that a mix of media will have to be used
within a single marketing communications
programme.