Lecture 1: Introduction to AGEC2102 Flashcards Preview

AGEC2102: Agribusiness Marketing > Lecture 1: Introduction to AGEC2102 > Flashcards

Flashcards in Lecture 1: Introduction to AGEC2102 Deck (24):
1

What qualities of agricultural products make agribusiness market systems unique?

- Predominantly raw materials employed in secondary production processes
- Typically bulky and perishable goods
- Quality variable die to seasonal or geographic factors

2

Challenges faced by AUS agribusiness

- AUS farms typically broadacre (extensive) enterprises - unpredictable weather conditions impact yields
- Once planted, little flexibility to adjust output levels e.g. vinyards
- Cannot predict prices - price uncertainties are a key driver of farm-level decision making
- Strongly engaged with international markets

3

Australia's top 4 agricultural exports by value

1. Wheat
2. Beef
3. Cotton
4. Wool

4

Australia's top 5 ag export markets by value

1. China
2. Japan
3. EU
4. Indonesia
5. US

5

What is agribusiness marketing?

All business activities involved in the flow of products and services from farmers to consumers

6

Tangible vs intangible (or less tangible) activities

- Tangible: physical handling, storage, processing, and transfer of products from producers to consumers
- Intangible: activities concerned with the exchange or price-setting process

7

The food and agribusiness marketing channel can be divided into 3 sectors:

- Input sector
- Farm sector
- Product market sector (processing, wholesale and retail)

8

Food production process is a utility of creation process, which can be classified into 4 types of utility:

1. Form
2. Place
3. Time
4. Possession

9

Define the term 'utility'

Tries to capture abstract benefits that consumers experience when they consume something

10

Form utility

Enhancing a product's utility via physical conversion of one type of product into another
e.g. the process of milling wheat into flour has added benefit to the consumer

11

Place utility

Enhancing a product's utility through movement from one location to another
e.g. moving AUS lamb to consumers in London, instead of moving consumers to the lamb

12

Time utility

Storage of a product to make it available at a time of greater utility
e.g. storage of a product in anticipation of time of shortage --> release into the market when it can be sold at a higher price

13

Possession utility

Enhancing the utility of a product by making it easier for the consumer to purchase it - ease of access
e.g. Supermarkets - diversity of goods offered in one location

14

Marketing: the Functional Approach

Classifies activities in the marketing process by their functions
- Exchange functions: buying and selling
- Physical functions: storage, transportation, processing
- Facilitating functions: standardisation, risk bearing, financing, market intelligence

15

Exchange functions

- Activities involved in the exchange of title to products
- Buyers seek sources of supply at the "best" prices
- Sellers seek buyers through advertising/promotion to receive the "best" price

16

Physical functions

- Activities that involve physical handling, movement or transformation of the product
- Manufacturers, warehousing, transporting

17

Facilitating functions - facilitate the physical and exchange functions of the marketing process (standardisation, financing, risk bearing, market intelligence)

- Standardisation: ensure objective qualities and quantities are known across marketing process
- Financing: enable capital to be tied up in stocks of products between stages (financial institutions providing credit)
- Risk bearing: relate to losses which may be incurred during the holding of the product
- Market intelligence: provide actors with the data and analysis to operate

18

3 important characteristics of the marketing functions in the functional approach

1. Functions affect not only the cost but also the value of marketing food to consumers
2. Possible to eliminate middlemen, NOT possible to eliminate marketing functions
3. Functions can be performed by anyone in the marketing chain

19

Marketing: the Institutional Approach

Classifies activities in the marketing process by the institutions involved
- Merchant middlemen: wholesalers and retailers
- Agent middlemen: brokers, commission men, processors, manufacturers

20

Institutional approach - titles and engaging with consumers

- Merchant middlemen take title to the products they handle and engage with consumers
- Agent middlemen do not take title to the products they handle, they act on behalf of others and don't engage with the final consumer of the product

21

What are the 3 major reasons for the presence of specialised middlemen in the food system?

1. By storing, transporting, processing and retailing, they manifest division of labour and facilitate specialisation
2. Many of the middlemen actions are marked by economies of scale
3. They reduce the market search and transaction costs

22

What are the 2 key marketing principles?

1. Find wants and fill them - a firm's profit is a function of consumer satisfaction
2. Segment and target - groups of consumers can be divided into marketing segments, each sharing similar needs and desires

23

Food and Agribusiness marketing can be considered as an input-output system

- Inputs: resources necessary to perform the marketing functions (costs)
- Outputs: form, place, time and possession utilities (benefits)

24

Food and agribusiness marketing efficiency

- Efficient marketing is the maximisation of this cost/benefit ratio
- Reducing costs: enhanced operational efficiency (same resources for more output)
- Increasing benefits: enhanced pricing efficiency