Introduction To Food Marketing

1
Introduction To Food Marketing

• AGEC 220
• Chapter 1

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Chapter Preview

• What is Marketing?
• What is the Food Marketing System?
• Who is Involved in Food Marketing?
• What is a Market?
• How Does Marketing Add Value?
• How are Farmers, Middlemen, and Consumers
  Related?
• How Has Marketing Changed?

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Views of Food Marketing

• As a System
• As a Verb
• As a Noun
• As an Occupation
• As a Science
• As a Field of Study
• As a Curse, a Necessary Evil!

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Alternative Viewsof Marketing

• Selling
• Delivering
• Purchasing
• x
• x
• x

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Overview of the FoodMarketing System Fig. 1-1

• Firms
• Functions
• Flows
• Levels
• Activities
• Pricing Points
• Decisions
• Value-Adding

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Elements of the FoodMarketing System

• Firms (farmers, grocers, etc.)
• Market levels (wholesaling, retailing)
• Marketing channels
• Marketing functions, activities
• Trade, exchange, prices
• Decisions, choices
• Outcomes

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Players In the FoodMarketing System

• Farmers, Food Producers
• Middlemen
• Consumers
• Government
• World Community
• Conflicts?

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Definition of Marketing
The performance of all business activities
involved in the flow of food products and
services from the point of initial
agricultural production until they are in
the hands of consumers Text, p. 6
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Other Useful Definitions

• Business activity directed at satisfying needs
  and wants through creating value and facilitating
  exchange
• The process by which people obtain what they want
  and need through creating value and exchanging
  with others.

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According to thisdefinition.

• Farmers are a part of food marketing system
• The farm gate is not where marketing begins
• Farmers and food marketing firms are symbiotic
• etc.

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Scope of Marketing

• Production
• Trading
• Processing
• Transportation
• Merchandising
• Promoting
• Etc.

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Scope of U.S. FoodMarketing System

• 2 Million Farmers
• 270 Million Consumer (plus world)
• 380,000 Marketing Establishments, 380,000
  companies
• 669 Billion Sales (1995)
• 11 of Consumer Income
• 80 of Food Costs
• 22 Million Jobs
• 12-14 of Gross Domestic Product

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The Food Marketing Complex

• 14,000 Assembly Market Buyers/Sellers
• 20,000 Food Processing Plants
• 40,000 Grocery Product Wholesalers
• 240,000 Grocery Stores
• 4000,000 Eating Places
• 260 Million American Consumers

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Maxims of FoodMarketing

• The marriage of farmers and food marketing firms
  is a stormy affair
• Market first, then produce the product

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Definition Agribusiness
Farm Supply Sector (feeds, fertilizer, seeds,
chemicals, etc.)
Production Agriculture
Food Marketing Firms
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Definition A Market

• Where marketing takes place!
• An arena for organizing and facilitating business
  activities such as
• WHAT to market
• HOW much to market
• HOW to market
• WHEN to market
• WHERE to market
• WHO to market to

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Alternative Views ofMarkets

• Time Markets (Harvest corn prices, Winter
  vegetable market)
• Location Markets (Lafayette corn market, world
  wheat market)
• Product Markets (the wheat market, the frozen
  food market)
• Institutional Markets (the grocery store, the
  futures market)

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What Happens InA Market?

• Production and consumption
• Buying and selling
• Exchange
• Specialization and Division of Labor
• Pricing
• Competition
• Communication, Information Flows
• Value Adding

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Most Important Consequencesof Markets

• Increased Output, Efficiency, Income, and
• Standards of Living

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Prerequisites For Exchange

• For exchange to occur, there must be
• buyers and sellers
• unequal valuation
• communication
• voluntary behavior
• mutual benefit
• sum positive gains
• See previous Gain From Exchange slide

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What Do Markets Do?

• Facilitate Exchange
• Create Value
• Allocate Resources to Best Uses
• Stimulate Efficiency
• Discover Prices and Values
• Summarize, Distribute Information
• Resolve Conflicts
• Reward, Punish Decisions
• Economize on Effort
• Raise Living Standards

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Are Markets The Onlyor Best Way To Do These?
No, markets are imperfect in performing these
tasks. They make mistakes, they are sometimes
unfair, they may be wrong!
But, the alternative to markets is not No
Market It is someone else making these
decisions Dictators Government Chaos
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Marketing andValue-Adding, Fig. 1-2
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Marketing Utilities

• Form Utility
• Processing, Packaging
• Time Utility
• Storage
• Place Utility
• Transprtation
• Possession Utility
• Advertising
• Market News

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MAJOR FORCES INFLUENCING THE FOOD SYSTEM
Physical Resources
Institutions
Competition
Processing Distribution
Farm Supplies
Production Agriculture
Consumption
Interest groups
Human Resources
Technology
Forces2.ppt
Christy AJAE, 12/96
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Food Marketing Trendsand Issues

• Globalization
• Integration
• Vertical Coordination
• Concentration
• Control, Market Power

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The Middleman Bias
A widely held belief that middlemen
are Unproductive Exploitative Unnecessar
y
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Micro Vs. MacroMarketing