Marketing

As you read the story about Peter and David in this week’s introduction and
watched the "Talking to Customers" video in the assignment page for this
week, you should have identified that marketing is different from selling.
Selling generally focuses on the product: the production of the product, and
selling the product in the market.

Marketing, on the other hand, focuses on the customer. Marketing includes

the process of identifying the customer’s needs and wants. The needs and
wants of the customer are identified through asking questions through
interviews, surveys, and general observation (similar to your recent
assignment). Information about the customers’ needs and wants is then
transmitted to the production and processing side of the business.

The marketing approach is based completely on satisfying the customers’

needs and wants. The agribusiness firm that adopts this approach will be
more likely to succeed than those businesses that adopt the selling
approach. The profits earned by the business are directly related to how well
the business satisfies the customer. This approach can be summarized as
the mission of marketing.

The Mission of Marketing: Identifying the needs and wants of the

customer and then bridging the gap between the conflicting needs of
producers and consumers.

In Peter’s pineapple marketing scenario, he identified the wants of his

customers. He was not able to grow (produce) the pineapple on his own; the
distance between the customer and the pineapple producers was too far for
the customer to travel. Peter identified a solution to bridge the gap between
what the customer wanted and the producer. As a result, Peter’s market
sales increased—as did his profits.

Alternatively, marketing can be viewed as the process of adding value to

products through a series of processes that convert inputs into final
products. In many cases, food manufacturers or processors exist because
they convert the raw product into a form or shape that the customer wants.
Customers are willing to pay higher prices for a product that is available to
the customer at a certain place at a given time period. This is consumer
satisfaction. The level of customer satisfaction is often called (by economists
and some business executives) utility. Marketers have observed that a
customer’s utility (i.e. satisfaction from consuming a product) may be listed
in four categories:
 1. Form Utility. The processing or development of a product in a more
desirable form for the customer. Peter’s sweet potato French fries is an
example of form utility. His customers (restaurant owners) have a
higher utility (satisfaction), by purchasing the French fries instead of a
raw sweet potato and then having to cut the potato into the French
fries.
2. Place Utility. This involves transporting the product to where the
customer wants to buy the product. This could include a specific
market place that meets every day or on certain days of the week.
Again, Peter’s example of buying pineapples from the grower and then
transporting the pineapple to his own roadside stand for his customer
is place utility.
3. Time Utility. Often, products are produced at one time but it is not
when the customer wants the product. The producer will find the utility
of the customer increased if he/she can store the product until the
customer needs or wants it. Peter can store his sweet potatoes for a
limited amount of time before he processes them into French fries. The
restaurant owner doesn’t want to buy all the French fries when Peter
harvests his potatoes, but he does want them over time.
4. Possession Utility. This utility is based upon the ownership by the
customer and the utility that the customer gets from having control
over the product. Ownership of the product should come quickly and
not be delayed if the utility of the customer is greater. The ability and
convenience of paying cash for the product will allow the customer to
have possession of the product without delay, thus increasing their
utility.

It should be the goal of every agribusiness manager to increase and

maximize the long-term profits of the business by satisfying the needs and
wants (utility) of the customer. In this week’s material, we will introduce
marketing concepts that will help the business be successful.

The Functions of Management and the Marketing

Approach
Do you remember the four functions of management that we learned in
Lesson 2? The four functions of management are: (1) Planning, (2)
Implementation, (3) Control, and (4) Evaluation and Adjustments. We can
use those primary functions to study the mechanics and activities of the
business in marketing. For example, the planning function is mostly related
to marketing. When planning the business and what will be produced, the
primary question to ask is, “What does the customer need that the business
can meet?” Before the business can even start to produce or operate, it
must plan its course by establishing its marketing mission. Two additional
questions are generally asked in establishing the marketing mission of the
business:

1. How can our business produce, process, and market what the
customer needs better than our competitors?
2. How can our business do everything we plan to do and do it profitably?

These questions (What does the customer need? How can we meet the
customers need better than other businesses? How can we do it profitably?)
should be asked on a regular basis by the manager and his/her employees.

Part of the planning function in marketing management is to organize the

business so that every part is focused on the marketing mission—meeting
the needs of the customer. Organizing the business with the marketing
mission focus will include the planning ways for continued assessment of the
consumer needs. This might include planning to have customer surveys or
personal interviews on a regular basis. Consumers needs and wants can
change over time as their circumstances change. (Recall from Week 04 the
factors that determine consumer demand).

After the planning phase of the marketing activities, the manager proceeds
in implementing the plan. The controlling function includes continued follow
up and monitoring of how the business is meeting the customer needs. The
evaluation function will lead to adjustments to meet the needs of the
customer. Because the marketing system is dynamic and constantly
changing with customer needs and competitors, the manager needs to
continually evaluate refining the marketing mix.

The Four P’s and Marketing Mix

The market management functions of planning, implementation, controlling,
and evaluating should all focus on satisfying the customer in every way. In
the process of marketing, the manager may face factors that he/she does
not have control over, such as weather or adverse natural events that will
happen. However, there are four factors that are typically considered to be
under the control of the manager—or at least the manager should exercise
control over. These four factors make up the marketing mix. The customer
will generally be fully satisfied if the marketing mix is correct. The four
factors are often referred to as the Four P’s of Marketing.

1. Product. The business must make sure that the product or service
that they are offering to the customer is the right product/service,
which gives them the maximum satisfaction.
 2. Price. If the product is right for the customer, then it must have the
right price, given the current market environment and conditions.
3. Place. The product might be right and the price might be right, but if
the product or service is not located in the right place OR is not easily
accessible to the customer then it will not be as successful as it could.
4. Promotion. Educating the customer about the features of the
product/service is imperative to successful marketing. The following
saying may be applied here: “If no one will tell your story, who will tell
your story?”

The proper marketing mix of product, price, place, and promotion that meets
the customer’s needs is the ultimate goal of the marketing function.
Adjustments to the marketing mix will help position the business so that it
can maximize its competitive advantage over other marketers, i.e.
competitors. Finding the right marketing mix for the business can be
challenging but rewarding. As the manager seeks to find the best
combination of the Four P’s in a marketing mix, he/she will be develop the
marketing strategy.

Developing the Marketing Strategy

In developing the marketing strategy, the manager should consider specific
factors that the business can control. Because those factors are controllable
by the business, the marketing strategy will improve the optimality of the
marketing mix of product, price, place, and promotion. The following factors
should be considered in developing the market strategy. (Note the
“reminder” suggestions from Peter and David’s experience in developing a
market strategy. The “reminders” are in the parenthesis of each factor).

 Identify specific target markets. What are the specific needs of the
customer that your business is trying to meet? Who are the primary
customer you are targeting? (Peter targeted his customers that
wanted pineapple as well as the other products that he sold. Who is
your target market)?
 Positioning your product. What do your customers think about your
product? What image do they have of the products that you are
offering? Do they think about the quality of your product, the price you
charge, or the service you offer? (Can you imagine your business?
What does it look like? Peter and David had roadside stands that they
displayed their products on different benches and tables. How will you
display or advertise your products)?
 Variety and number of products you offer. How many different
products will you offer for sale? (David didn’t offer as many products
as Peter. He didn’t ask the customers what they wanted. His
 customers are his target market, but he needs to find out what they
want and then offer more products if he doesn’t offer what they want).
 Prices of your products. What is the price that you are charging for
your product and how does it compare with the competitors? (Peter
wanted to make sure that he could buy pineapple at a price below
what he could sell it for).
 Identify the number of and locations that you will sell your
products. How will you distribute your products? Will you have a
roadside stand, or will you deliver the products wholesale to other
marketers?
 How many and who will be in your sales force? Who will be
responsible for the marketing and sales of your products? (Peter’s
family were mainly responsible for working at the roadside stand each
day).
 What is the level of service and quality of service will you
offer? Will your product require to be wrapped in a special package, in
a special form, etc? Will you offer a delivery service? What other
services will you offer to the customers? (Peter was willing to look for
pineapple and other products that the customer couldn’t get close by
them. Because he offered this service, they trusted him more, and his
business image increased).
 How will you advertise your product and business? In some
areas businesses will post flyers, or advertise on billboards. That can
be expensive. Other businesses depend upon their customers to tell
others about the products, quality and service. In many cases this
“word-of-mouth” advertising is the best but should not be depended
upon.
 Sales promotion. What sort of activities can you do to promote your
product or sales? Some businesses will offer discounts for certain
products. Others will give product “taste samples” to the customer.
You have to be careful if you give taste samples because you could
give too much away and reduce your potential profits.
 Research and Development. A new product or entry into a new
market generally has a certain “life-cycle” that includes the phases of
introduction, growth, maturity, and decline. For some products, the
life-cycle is short and for others longer. A good business manager will
engage in continued research and development of their product(s) to
make sure that the product is meeting the customer’s needs. (Peter’s
research and development in processing his sweet potatoes into
French fries and his tomatoes into tomato paste are examples of
research and development).
 Market research. This factor is one that is ongoing and is important
to help the business achieve its overall objectives and goals. Visiting
with other business owners and customers is an important part in
 developing a marketing strategy. (Peter was consistent in asking his
customers what else he could do for them. He also spoke with other
business owners such as the restaurant owner, finding out they had a
need to be met).

A method of evaluating the marketing mix and the competitive strength or

weakness of the marketing strategy is performing a SWOT analysis.

SWOT Analysis and Porter's Five Forces

The acronym SWOT stands for Strengths, Weaknesses, Opportunities,
Threat. A SWOT analysis is an objective evaluation of the businesses ability
to compete in the industry. The analysis will help to identify those
weaknesses and threats of the business. It is easier for the manager to often
speak about the strengths and opportunities, sometimes ignoring the
weaknesses and threats of the business until it is too late to correct the
problems that arise due to the latter factors. While it is important to identify
what strengths the business has in skills, machinery, resources,
management, etc. it is just as important to identify and discuss the potential
threats and weaknesses.

The SWOT analysis is aided and complemented with an additional analysis

that is referred to as The (Porter’s) Five Forces Model. The Five Forces
Model was developed by Michael Porter (professor at Harvard Business
School). The model evaluates five areas of the business that is related to its
competitors, analyzing those factors that will help to keep the business
competitive. The five areas of evaluation includes:

1. Identifying the threat(s) of new businesses entering a firm’s existing

market.
2. Identifying the threat(s) of new products that are entering the
business firm’s existing market which could replace (i.e. substitute
products) the firm’s current products.
3. Identify the growing bargaining power of the firm’s supplier—who the
business buys its inputs from.
4. Identify the growing bargaining power of the customers.
5. Identify the intensity of rivalry between the current firms in the
industry.

The first two forces of the model are internal to the business firm and can be
assessed by the manger and his/her assistants. Those forces evaluate the
strength or weakness of the product(s) and the service that the business
offers. The last three forces are external to the business firm. Those three
identify the changes in society that are occurring, including the changing
attitudes and circumstances of the customers as well as the supplier of
inputs used by the business.

The combined SWOT and The Five Forces Model analysis will help the
manager develop the best marketing strategy and plan. Continued analysis
will help the business to maintain its competitive edge in the market place.
The marketing plan developed should be closely aligned with the overall
goals, objectives, and values of the business plan. A template for a SWOT
analysis with suggested questions is provided in Figure 8.1.
Figure 8.1: Example of a Marketing SWOT Analysis. An outline of the
“positive” and “negative” factors that identify strengths, weaknesses,
opportunities, and threats. Source: Entreconnection web page.

You will notice in Figure 8.1 that there are “internal” factors the business
firm will have control over which the manager should be focused on
improving. The “external” factors are generally those that the manager
doesn’t have control over. However, a successful manger does not ignore
those external factors, but rather evaluates how those factors may be
evaluated to make the business and their product(s) better.

The SWOT analysis will also include the “positive” and “negative” factors.
The successful manager will focus on those “positive” factors (Strengths and
Opportunities) so that the business can capitalize on those factors that make
the business more competitive and successful. The manager will also focus
on the “negative” factors so that he/she can convert those Weaknesses and
Threats to positive factors. Consider the following scripture that relates to
the faith and hope of converting negative and weak factors to strengths and
opportunities.

“And if men come unto me I will show unto them their weakness. I give unto
men weakness that they may be humble; and my grace is sufficient for all
men that humble themselves before me; for if they humble themselves
before me, and have faith in me, then will I make weak things become
strong unto them.” (Ether 12:27)

In this week’s material, we have looked at the concept of marketing. We

have distinguished between marketing and selling. We have introduced how
to develop a marketing plan and the components of that plan. The functions
of management and the marketing approach were described with the
methods of analyzing the business and marketing plan. The material has
provided you with the basic concepts that can be used in developing a good
marketing plan.