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PPT 5301 AGRIBUSINESS MARKETING PROBLEM BASED LEARNING 1

BY: KHANSA BT NAZARUDIN HILDA BT HUSSIN MOHD BADRULHISYAM BIN ADNAN MATIN FATEMI
GS 24865 GS 26471 GS 26125 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.”

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Food & Fiber System

Figure 2 Linkage between Food and Fiber Sector Source : Kriesel and Doherty, The University of Georgia
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Agricultural
Geographic concentration of production

Agro-Based Product
Production can be done everywhere

Seasonal and Quality variation

Non-seasoning and Quality can be controlled Set up proper amount as wanted and extend time for storage by preservative Raw Material to other industries or end-used product (ready to eat)

Bulky and Perishable

Raw Material

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 agrobased processing activities and agricultural entrepreneur development.

Development Expenditure And Allocation For Agriculture, 2001-2010
Thousands Value (RM million) 5.00 4.50 4.00 3.50

3.00
2.50

2.00
1.50

1.00
0.50 8MP Expenditure 9MP Allocation

0.00

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
Defining the company mission Setting company objectives and goals Designing the business portfolio
How well are our different Business and products doing? What shall we do about them to Improve profitability ?

Planning , marketing , And other Functional strategies

what business are we really in? What business Should we be in?

Where do we want to go, what Are our targets ?

Developing detailed plans for implementation

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

p2

p3

M1 Markets

M2

M3

Products

Strategy as Responses : How a firm reacts to challenges From the competitors

The firm

The competitor

Strategy as Rationale : How or on what basis the firm Chooses to compete

Cost leadership Strategy

Bases of competitive Advantages
Focus Strategy Differentiation 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 Intermediaries

Competitors

Product

place

Profitable Customer Relationships

price

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

.

Varity Quality Design Features Brand name Packaging Services

Product

List price Discount Allowances Payment period Credit terms Target Customers Intended Positioning Channels Coverage Assortment Locations Inventory Transporting logistics

Price

Place

Advertising Personal selling Sale promotion Public relations

Promotion

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 integration Positioning Achieving integration, competitive advantages and positioning in the Market Mix place

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 Develop strategic Plans

Implementation Carry out the Plans

Control Measure results Evaluate results

Develop marketing Plans

Take corrective 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
What do we want To achieve ?

measure performance
What is Happening ?

evaluate performance
Why is it happening ?

take corrective action
What should we 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
Millions 45 40 40 35 30 Value (RM’000/RM’000) 25 20 15 10 5 000 0 -1 -5 -5 -10 -1 -1 0 0 -1 01 13 8 3 01 1 23 14

27
24 22

Export Import 11 0 1 2 2 0 Trade 11 11 0

01

01

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

• • • • • • • •

Nonaerosol Bio-Degradable Recyclable Ozone Friendly Fat Free Salt Free Sugar Free 30% More Free!

Address issues of consumer safety
Contents Under Pressure Do Not Puncture Flammable Do Not Use Near Open Flame

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
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
1.

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, instore 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 Strong government support Established network of producers, millers and wholesalers Wide variety of species available Excellent infrastructure Low cost & High returns High commercialized with modern production technology Strong expanding downstream activities

Weakness Small Portion of Class 1 land Lack of R&D and regulatory framework

Highly depended on imported feed resources
Labor shortages Low quality products among SMEs Inconsistency of supply due to traditional cultivation system 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.
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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.

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The Structure-ConductPerformance 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.
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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

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Trade of Agriculture Sector (2008)
Millions 45 40 40 35 30 Value (RM’000/RM’000) 25 20 15 10 5 000 0 -1 -5 -5 -10 -1 -1 0 0 -1 01 13 8 3 01 1 23 14

27
24 22

Export Import 11 0 1 2 2 0 Trade 11 11 0

01

01

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!

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