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Approaches to the study of
agricultural marketing
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Functional approach
The study of marketing involved in classificatio
of activities that occur in the marketing
processes by breaking down the processes into
functions. A marketing function is defined as a
major specialized activity performed inaccomplishing the marketing process.
functional approach attempts to answer the
what
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The functions are classified as follows
1. Exchange functions
2. Physical functions
3. Facilitating functions
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1. Exchange functions
Exchange functions are
activities involved in the
transfer of title to goods,
through buying and selling
functions.
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Buying function
This function is largely one seeking source of
supplies.
It can be the assembling the raw products
from the production areas.
It can be the assembling of finished products
into the hands of other middlemen in order to
meet the demands of the ultimate consumer.
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Selling function
It consists of various activities that are
sometimes called merchandizing,
physical arrangements of display of
goods, advertising and otherpromotional devices to influence or
create demand.
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2. Physical functions
those activities that involve
handling, movement, and physical
change of the actual commodity
itself.
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Storage function
It is concerned with making goods available
at the desired time. It may be activities of
elevators in holding large quantities of raw
materials until they are needed for further
processing. It may also be holding ofsupplies of finished goods as the inventories
of processors, wholesalers or retailers.
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Transportation function
It is concerned with making
goods available at the proper
place. It also includes the
activities involved in
preparation for shipment such
as crating and loading.
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Processing function
It includes all those manufacturing
activities that change the basic form
of the product, such as converting live
animals into meat, fresh peas intocanned or frozen peas, or wheat into
flour and finally into bread
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3. Facilitating functions
Facilitating functions are those
activities that make it possible for the
smooth performance of the exchange
and physical functions. These activitiesare not directly involved in either
exchange of title or the physical
handling of products.
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Standardization function
It is the establishment and
maintenance of uniform
measurements of both quality
and quantity.
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Financing function
It is the use of money to carry out
various aspects of marketing.
Financing may take the obviously
recognizable form of credit fromvarious lending agencies or the form of
tying up the owners capital resources.
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Risk bearing function
It is the accepting of the possibility of loss in themarketing of a product.
1. Physical risks are those that occur from
destruction or deterioration of the product itselfby fire, accident, wind, earthquakes, cold, and
heat.
2. . Market risks are those that occur because of the
changes in value of a product as it is marketed.
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Market intelligence function
It is the job of collecting, interpreting and disseminating
the large variety of data necessary to the smooth
operation of the marketing processes.
Market research- to evaluate possible alternative
marketing channels that may be used, the different ways
of performing other functions.
Demand creation- activities involved in advertising the
product and designing a promotional devices using either
mass media or house to house campaign.
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Institutional Approach
study the various agencies and business
structures which perform the marketing
processes.
the institutional approach to marketing
problems focuses attention on the who.
In this approach the human element
receives primary emphasis.
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Middlemen
Middlemen are those individuals or
business concerns who specialize in
performing the various marketing
functions involved in the purchase andsale of goods as they are moved from
producers to consumers.
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Classifications of middlemen
Merchant middlemen- normally take title to, and therefore owthe product they handle. The buy and sell for their own gain
and derive their income from the margins arising from the sale
1. Wholesalers: Any merchant who does not sell to ultimate
consumer in any significant amount. He therefore can sell to
other wholesalers or to industrial users or retailers.
2. Retailers: Any merchant middlemen who buys goods / services
for resale directly to ultimate consumers. Represent the most
numerous types of agencies involved in the marketing process.
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Classifications of middlemen
Agent middlemen ofmarketing dont own
what they handle.
Are basically hired by their principals or
clients
they are paid by their clients or
commissions given.
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Agent middlemen
. Commission agents are given more discretionary powers over
physical handling of the product, arrangement for terms of sale/ purchase, collection of revenue from sale.
Brokers: hey are not given any physical control over the
product. They ordinarily follow directions from their principals.
Usually have little power over terms of sale or revenue
collection. Bring seller and potential buyer together.
Auctioneers: They do not own what is handled, may be involved
in a number of activities. Have places for physical display, space
where participants meet, announce the date of auction,
facilitate in price formation.
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Classifications of middlemen
Speculative middlemen. Are those who take title to goods / productswith a major purpose of profiting from price movement. They are
specialized risk takers.
Speculative Middlemen are interested in short term price fluctuations.
Speculators derive their income from short term price fluctuations ingoods they handle.
The emergence and growth of speculative Middlemen is due to thefact that merchant middlemen are not willing to engage themselves in
added risk involved in purchasing and storing of goods for longerperiod of time.
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Processors and manufactures
Their role in marketing in to
undertake some action on the
products in order to change their
form. Form changing is basically amarketing service
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The Structure-Conduct-Performance
approach
The Market Structure refers the
organizational characteristics that establish
interrelationships between the buyers and
sellers of a particular market. Its elements
include the number and size distribution ofbuyers and sellers, the degree of product
differentiation, the ease of entry of new
firms into an industry, vertical integration
and cost structure.
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Market structure
Pure competitive market.
Absolute monopoly
Monopolistic market
oligopoly
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Market conduct
Refers to the way firms adjust to
the markets in which they are
engage as buyers and sellers. It is
the behaviour or pattern that thefirm exibits in the market.
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Market performance
is the appraisal of how much the economic
resource of the industrys market behaviour
contribute to achievement of socio
economic goals.
( profitability, growth rate, technologicaladvancement)