Agricultural Marketing BAG304

Learn to Market Agricultural Products or Services.

Being a successful rural businessman or woman is a difficult managerial role. Very few non-rural businesses are presented with the continuing changes and variations that confront a rural business. The impact of climate means the rural manager has to continually consider, evaluate, assess (and reassess) often on a daily or even hourly basis, the numerous changes and types of information that may affect the rural business success. A successful rural manager also needs to understand his unique markets, and how to capitalise on market forces to maximise business profit.
 

Course Structure and Contents

This course contains 8 lessons:

1. Agricultural Marketing Concepts
  • Marketing
  • Goods and Services
  • The Marketing Concept
  • Managing the Marketing Process
  • The Role of Marketing
  • Approaches to Marketing
  • The Goals of Marketing
  • Organising, analysing, selecting target markets
  • Developing the Marketing Mix
  • Managing the Market Effort

2. Farm Marketing Objectives and Strategies
  • Supply and Demand
  • Developing the Farm Marketing Plan
  • Organising the Planning process
  • Reviewing the Business's Situation
  • Establishing Marketing Objectives
  • Developing Strategies
  • Market Penetration
  • Price Advantages
3. Target Marketing
  • Preliminary Research
  • Target Markets in Agriculture
  • Defining the Target
  • Resources
  • Analysing Market Opportunities
  • External Influences
  • General Economic Conditions
  • Government Policy and Regulations
  • Overseas influences
  • Demographic Patterns
  • Technological Change
  • Customer Values and Attitudes
  • Alternative Marketing Methods
  • Internal Influences
  • Selecting Target Markets
  • Market Segmentation
4. Handling Produce
  • Developing the Marketing Mix
  • The "Product" element of the Marketing Mix
  • Logos, packaging, positioning and image etc
  • The "Price" Element of the Marketing Mix
  • Pricing objectives and methods
  • The "Promotion" element of the marketing Mix
  • Publicity and Public Relations
  • Advertising, sales and personal selling
  • The "Place" element of the Marketing Mix
  • Market coverage
  • Determining Emphasis with the Marketing Mix
  • Impact of Product Life-cycle
5. Customer Relations
  • Customer Care Policy
  • Levels of Involvement
  • Effective Communication
  • Becoming an effective communicator
  • Dealing with complaints
  • Self evaluation
  • Maximising customer service
6. Market Research
  • The Importance Of Market Research
  • What to Research?
  • The Research process
  • Analysing Costs and Benefits
7. Promotions
  • Promoting Product
  • Creating customer awareness
  • Promotional Campaign Strategy
  • The Promotional Message
  • Promotional Material
  • Making Promotions Cost Effective
  • Channels of Communication
  • Publicity Marketing
  • Advertising
  • Structuring an Advertisement or Promotion

8. Managing Marketing
  • Market Retention
  • Balancing Strategy
  • Market Development
  • Market Growth
  • Managing the Marketing Plan
  • Sales and the Market

Tips for Improving the Farm

Farming has been a very traditional and predetermined way of life for centuries.

Consequently, most farmers have naturally been relatively conservative/safe in their thought processes.

Today successful farmers need to be more innovative than in the past; not just prepared to change, but they need to actively chase new ideas and continually introduce improvements.

A successful modern farmer will probably:

  • Always try to be different
  • Try to determine what competition is likely to do, and introduce innovations before everyone else!
  • Be a lateral thinker (ie. Be able to perceive a problem from a range of different perspectives in order to devise original & innovative solutions)

Think Laterally

Farms have always been product based industries (ie. They make their money out of producing a product such as milk, fruit, meat, vegetables, or grain).

They have sometimes partially processed their products (eg. a dairy farm separating cream from milk); but rarely to a stage where the product is ready for retailing. Some farmers do go the extra "value added" step (eg. A small town butcher using his own stock).

A financially struggling operation may be able to increase their economic viability by turning their attention towards deriving more income by processing their produce, or by providing income generating services such as farm tours or accommodation (eg. Farm stay).

ANALYSE THE MARKETPLACE and THE INDUSTRY

If planning is to be effective, it is essential that you are familiar with changes and trends in any relevant areas of the industry.

This is usually achieved by being continually vigilant about maintaining awareness:

  1. Be Aware of your own property; in particular keep good records (eg, records from the past on weather for a local area). If you know what has happened in the past, you have a basis upon which to predict what is likely to happen in the future.
  2. Be Aware of your industry

    Developments in your industry are beyond your control; but knowing about them sooner, will enable you to adapt faster and reduce any negative financial impact (or optimise any financial gain). eg....subscribing to trade magazines, attending shows, field days, associations/societies/clubs, internet, radio/TV shows, department of agriculture, etc.
  3. Be Aware of wider Global Developments

    Farming today is affected by industries beyond Agriculture. Decisions & developments in politics, science or economics, amongst others, can result in rapid and dramatic changes to the viability of agricultural enterprises.

    It is imperative to stay abreast of local, national & international news. Listen to the news daily on radio or TV, buy and read at least weekend newspapers, and perhaps follow developments on the internet. Some trade or professional associations are also good at monitoring and informing farmers of potential future impacts of developments in such areas.

Remember
....You need to have several information sources to get a balanced perspective
... one source alone can often be biased, or miss out on certain information.

ECONOMIC PRINCIPLES

A basic understanding of economics should be applied to farm planning in order to ensure financial viability is sustained.

LAW OF DEMAND

A fall in price usually causes an increase in demand, while a rise in price usually causes a decrease in demand. If a greater quantity of a good is put on the market then other things being equal it will be sold at a lower price.

Example: An increase supply of beef in the market results in lower prices of the commodity and therefore more people are likely to buy the beef. If supply is reduced as a result of drought, etc. then the small quantity available on the market will fetch a greater price value which tends to reduce the overall demand by the people. If the price of beef is raised, usually due to limited supply, less beef will be purchased, but may give a higher total return to the farmer, especially if they are producing a product in higher demand (eg. lamb compared with mutton).

LAW OF SUBSTITUTION

Expenditure on different commodities is so distributed that the utilities obtained from the last unit of money spent in each form of consumption are equal.

The demand for luxuries is elastic and the demand for necessities is inelastic.

Example: Where an item is low in availability (such as venison), people may buy beef as a substitute if they feel the two meats are similar and therefore good substitutes. For a luxury item such as cashmere, the demand in the textile industry may be volatile (or elastic) whereas the demand for cotton (a more basic essential item) will be more stable (inelastic).

LAW OF DIMINISHING RETURNS

As extra resources are put into production the successive extra units produced decrease.

Example: It is well known that as you increase input into a farm you tend to obtain an increase in yield or productivity. Eventually a point is reached where an equilibrium exists that refers to input to equal yield. Surpassing that point with additional input (labour, fertilisers, etc), may in fact result in a reduced return as yield is less than input.

(ie: If you put twice as much material and labour into producing something, you get less than twice as much product produced), and so reduce your profit due to increased costs.

LAW OF DIMINISHING MARGINAL UTILITY

The more of anything you consume, the less satisfaction is obtained and in some cases the less of it you want.

The first Hemp socks you buy may be worth a lot to you in terms of satisfaction. The second pair may still be worth a lot but the third and fourth may have lost their uniqueness and value in your eyes.

This can have an effect on the farmer as the 'worth' of the item to the customer may reduce if product is oversupplied. This is one of the important reasons to be early into the market with a new product or service.

SCALE OF ECONOMIES

More business does not necessarily mean more profit. Often when a business expands to produce more product, it will find that the amount of profit per unit produced will decrease.

There are usually a series of barriers which need to be broken through, before moving on to greater profit. It can work something like this:

  • A farm sells $200,000 of produce and has a profit of $35,000

  • When the sales increase to $210,000, there is more cost involved in production (eg. more fertiliser, labour & marketing costs), and the profit drops to $34,000

  • When the farm sells $250,000 of produce though, the profit increases to $40,000

In understanding the way economies of scale work, the farmer needs to aim to produce and market specific quantities of product (or services), in order to optimise profit.

 

CHANGE OR DIE

No business (farms included) remains stagnant in the modern world. If you do not manage the farm to achieve continual change, your business will probably shrink. The trick is to achieve a manageable growth in appropriate areas. Excessive growth is risky, not just because it involves greater uncertainty; but also because it requires a much greater increase in the management effort, especially in the required expertise. If a farm business is to be sustained, you must be able to maintain control. You must know everything that is happening, if you are to control it; and if too much happens too quickly, you will probably have things happening that you do not fully know about.

   

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Prices in Australian Dollars

PlanAust. PriceOverseas Price
A 1 x $748.00  1 x $680.00
B 2 x $407.00  2 x $370.00

Note: Australian prices include GST. 
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