Chapter 3

Chapter 3 - Role of Marketing Mission of Marketing Bridge...

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Unformatted text preview: Role of Marketing Mission of Marketing Bridge Bridge Gap Between Conflicting Conflicting needs Producers Producers and Consumers Consumers complete production process Definition of Marketing Marketing Marketing is defined as the set of economic and behavioral activities that are involved in coordinating the various stages of economic activity from production to consumption. Economic states of activity in a marketing system are: Consumption Consumption Retailing Retailing Wholesaling Wholesaling Processing Processing Assembly Assembly Production Production 1 How Marketing System Evolved Advantages of Specialization and Trade Use of Central Market Use of Money Use of Middlemen Role of Marketing in Economy Five Barriers to Consumer Satisfaction 1. 2. 3. 4. 5. Ownership Separation Time Separation Value Separation Space Separation Information Separation Role of Marketing in Economy Nine Marketing Functions Exchange Functions 1. 2. Buying function Selling function 2 Role of Marketing in Economy (cont.) Nine Marketing Functions General Marketing Functions 3. 4. 5. Storage function Transportation function Processing function Role of Marketing in Economy (cont.) Nine Marketing Functions Facilitating Functions 6. 7. 8. 9. Grades and standards function Financing function RiskRisk-taking function Market information function Role of Marketing in Economy Four Utilities of Marketing Form Form utility Place Place utility Time Time utility Possession Possession utility 3 Role of Marketing in Future Agribusiness American Agribusiness faces increased competition Need efforts of Marketing Management Marketing can help Agribusiness firms better compete Marketing Approach A firm’s success does not come from producing a technically superior product, but from satisfying consumers’ needs Prerequisites to Efficient Economic System Free Free market economy Prices Prices reflect full value of resources High High degree of interaction between Consumer Consumer Producers Producers 4 Criteria Used to Evaluate Performance Efficiency: Efficiency: How How efficiently Goods and services flow Goods and services flow Producers Producers to consumers Fairness: Fairness: How How well marketing systems Meets Meets needs of consumers Structure-ConductStructure-Conduct-Performance Model The model is based on the notion that the way firms are organized • Market tells a great deal about how they make • Structure • Decisions which in turn influences the level of • Conduct • Efficiency and fairness present in a market • Performance Structure-ConductStructure-Conduct-Performance Model Structure Conduct Performance 5 Structure Sufficient Sufficient number of firms in market Large Large enough Operating Operating costs per units of output Few Few barriers To To enter Exist Exist from market Firms Firms differentiate Improve Improve products over time Conduct Price Price change uncertainty No No unjustified price discrimination by firms firms No No collusion among firms No No unfair trade practices Product Product claims are truthful Performance Optimum Optimum level of output Produced Produced at minimum cost per unit Profits are reasonable Profits are reasonable Product Product and process innovation encouraged Levels Levels of investment Reinvestment Reinvestment of profits Research Research and development are reasonable 6 Discussion Questions 3. 4. Explain how completing the production process resolves the conflicting needs of producers and consumers, and leads to greater consumer satisfaction. Define the five barriers to consumer satisfaction, the nine marketing functions, and four utilities of marketing. Explain how they combine to raise the level of economic efficiency in the economy. Discussion Questions 5. 6. The goal of the U.S. marketing system is to dispose of what farmers have produced as quickly and efficiently as possible. Do you agree or disagree? Explain the reasons for your answer. Define the marketing approach. Discuss its relevance to the agri-food system. agri- Discussion Questions 7. 8. 9. Explain why a society should spend time evaluating the performance of its marketing system. Define the prerequisites to an efficient economic system. Explain why they are important. What criteria should be used to evaluate the performance of a marketing system? How do these criteria relate to the structure, conduct, and performance of a market? 7 Discussion Questions 10. 11. Explain why an agribusiness manager should be interested in understanding market performance. Explain the role of government in keeping markets fair and efficient. Give examples of when this occurred and describe why it worked or not. 8 ...
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