Econ Module 7 Flashcards
Types of market
- Public market
- Supermarket/hypemarket
- Market center
- Trading center
- Online shopping
Market Classfication
- Place or location
- Area of coverage
- Time period
- Transactions
- Nature of transactions
- Number of commodities in which transactions takes place
- Degree of competition
- Nature of commodities
- Stage of marketing
- Extent of public intervention
- Population served
- Mrket functionaries to whom marketing margins are credited
Place or location
A market that is situated in a small village, or “taboan,” in our place.
Village markets
Place or location
They are located in important trade centers with great
access to transportation, like the Carbon market in Cebu City. The sizeable transactions are usually between the wholesalers and village traders. The transactions are in considerable quantities. Specialized marketing intermediaries are performing different marketing functions. Examples of these market intermediaries are the commission agents, the brokers, and the weigh men.
Secondary wholesale Markets
Place or location
Located near the centers of agricultural production. Farmers usually bring their product themselves, hence transactions is generally between them and the traders. The trading center in Dalaguete, Cebu, could be one of the examples.
Primary wholesale markets
Place or location
is one where the product is either finally disposed of to the consumers, processors, or assembled for export. These markets are found in metropolitan cities, like Metro Manila or in seaports. Merchants are well organized and use modern methods of marketing. Facilities for forward trading in specific commodities exist in these markets.
Terminal markets
Place or location
Situated near the seashore and are meant mainly for import and, or export goods
Seaboard Markets
Area of coverage
The buyers and sellers of farm products come from the same village or nearby villages. Most of these markets exist for perishable commodities in small quantities, e.g., vegetable market.
Local or Village markets
Area of coverage
The buyers and sellers of farm products come from a larger area, e.g.,
food grains.
Regional Markets
Area of Coverage
When buyers and sellers are at the national level
National markets
Area of coverage
For the worldwide buyers and sellers. The products have worldwide demand and, or supply like the Philippine pineapple, mango, and banana.
World Market
Time periods
A market for perishable products, for instance, fish, fresh milk, and
fresh vegetables. Product prices in these markets are governed by its demand than by its existing supply.
Short-period Markets
Time periods
The products are less perishable, hence it can be stored for some
time e.g., oilseeds and food grains - both the demand and the supply of farm products governed in these markets.
Long-period markets
Time periods
The markets are permanent in nature. The products traded are durable so it can be stored for many years. Manufactured goods and machinery are good examples.
Secular markets
Transactions
The transactions are between traders, and the commodities are traded
in large amounts.
Wholesale markets
Transactions
The transactions are between the retailers and the consumers, and the
commodities are traded according to how much the consumers require.
Retail markets
Nature of transactions
In this type of market, trading is based on samples, and the
commodities are exchanged for money.
Spot or Cash Markets
Nture of transactions
Buying and selling take place at time t, (e.g., time t + 1). Meaning, the
purchase and sale of farm products happened on some specified date in the future.
Forward markets
Number of commodities in which transaction takes place
All types of commodities are bought and sold like food grains, fiber crops, oilseeds, etc.,
General Markets
Number of commodities in which transaction takes place
Transactions happen for a special one or two commodities, wherein each group of commodity has a separate market. An example of this type of markets are the food grain markets, the vegetable markets, and the cotton market.
Specialized markets
Degree of competition
- Buyers and sellers are large enough that no one buyer or seller can impact the market;
- Buyers and sellers have complete knowledge particularly of supply, demand, and prices in the market;
- Prices at any one time are the same in a geographical area, plus or minus, the cost of bringing the commodities from a surplus to a deficit area;
- Prices of the various forms of same commodity are identical, plus or minus, the cost of changing the product from one form to another.
- Prices are the same in any one place over a period of time, plus or minus, the cost of storage from one period to the next.
Perfect Markets
Degree of competition
The markets in which the conditions of perfect competition are lacking
Imperfect markets
Degree of competition-Imperfect markets
when there is only one seller of farm products. Hence, the
monopolist is the only one who controls the quantity or price of the product.
Monopoly Market
Degree of competition-Imperfect markets
The sellers in these markets may mutually agree to give a common price, and usually higher than the price in a regular or common market.
Duopoly Market
Degree of competition-Imperfect markets
A case where there are more than two but, large sellers.
Oligopoly Market
Degree of competition-Imperfect markets
This is the term given to many sellers dealing with heterogeneous and differentiated farm products. The sellers can be identified through the trademarks of their produce.
Monopolistic competition
Nature of commodidties
A market that deals with farm products, such as rice, corn, cotton,
fertilizer, seed, etc.
Commodity markets
Nature of commodidties
The money markets and share markets belong in this type of market. This is the term used for the market for bonds, shares, and securities.
Capital Markets
Stage of Marketing
These are markets in producing areas which primarily assemble the
commodity for distribution to other markets.
Producing markets
Stage of marketing
These markets bring together the farm produce for final disposal to
the consumers.
Consuming markets
Extent of public intervention
When businesses are done through set of rules and regulations made
by a statutory market organization, the marketing costs are commonly standardized, and marketing practices are regulated.
Regulated Markets
Extent of public intervention
The market and marketing practices flow without any set of rules and
regulations.
Unregulated markets
Population served
A market that serves the population in an urban area, e.g., the markets for farm products sold in urban areas is characterized as an urban market for farm products.
Urban market
Population served
This usually refers to the demand originating from the rural population.
Rural market
Market functionaries to whom marketing margins are credited
The bulk of the trade is usually handled by private firms, but there are also marketing cooperatives who share in trading agricultural commodities
Market functionaries to whom marketing margins are credited
a public gathering of buyers and sellers of commodities meeting at an appointed or customary location at regular intervals ranging from daily to monthly
Market
is an applied field of industrial organization & price theory
Agricultural Marketing
Agricultural Marketing includes:
- transforming,
- storing,
- sorting/grading,
- Packaging, and
- transporting agricultural products to the domestic and foreign consumers
is that area of economic activity, which is concern with the flow of goods and services from producers to consumers or from the point of production to the point of consumption.
Marketing
Marketing
is taken as the point of first sale by the farmers.
Point of production
Marketing
is the point where marketing ends or the point of last purchase. (Retail price)
Point of consumption
MARKETING IS PRODUCTIVE it creates:
- Form utility
- Place utility
- Time utility
- Possession utility
MARKETING IS PRODUCTIVE it creates…..
the goods possess the required properties/qualities required by consumers
Form utility
MARKETING IS PRODUCTIVE it creates…..
products are made available where are most wanted
Place utility
MARKETING IS PRODUCTIVE it creates…..
products are made available when they are most wanted
Time utility
MARKETING IS PRODUCTIVE it creates…..
goods or are placed under the control of the persons who desire to use them are transferred
Possession utility
- has objectives and goals to achieve
- has participants that perform marketing functions: transport, storage, processing, grading and standardization
- needs planning and management decision structure which controls and coordinates the forces at work
- has spatial and temporal dimensions and is most often commodity specific
The Marketing System
Components and Goals of Marketing System
- Components (sub-system)
- Intermidiate Goals
- Ultimate Goals
Components and Goals of Marketing System
Produc
APPROACHES TO THE STUDY OF MARKETING AGRICULTURAL PRODUCTS
- Commodity Approach (product oriented)
- Institutional approach
APPROACHES TO THE STUDY OF MARKETING AGRICULTURAL PRODUCTS
- covers the characteristics of the products,
- consumers’ behavior/preference in relation to a specific commodity (fresh or processed),
- supply and demand situation, and
- price analysis (price trends by market levels, by season & location)
Commodity Approach (product oriented)
APPROACHES TO THE STUDY OF MARKETING AGRICULTURAL PRODUCTS
- deals with the study of industry players (producers, assemblers, processors, traders, cooperatives, government agencies), their arrangements & organization of the marketing system.
- operate as individual proprietors, partnerships, clusters (5-8 farmers), cooperatives, POs, NGOs
Institutional Approach
is a set of interdependent institutions and agencies involved in the process of making a product or service available for the consumer or user.
Marketing Channels
an individual or a business concern in operating between producer and the ultimate consumer or industrial user.
Middlemen
Types of Middlemen
those who take title to the goods in which they deal.
Merchant Middlemen
Types of Middlemen
those who do not take title to the goods in which they deal, but merely assist in effecting transfer of ownership
Agent middlemen
TYPES OF INTERMEDIARIES
- Contract buyers
- Wholesalers
- Commision Agents
- Wholesaler-retailers
- Assembler-wholesalers
- Butcher-retailers
- Retailers
TYPES OF INTERMEDIARIES
TYPES OF INTERMEDIARIES
Most prevalent in the fruits and vegetable channels. Buying contracts between the buyer and the producer are made even before the product is harvested.
Contract buyers
TYPES OF INTERMEDIARIES
- These are merchant middlemen who sell to retailers and other merchants in significant amounts but not to ultimate consumers.
- Products are usually sold in large quantities or on wholesale basis.
- Wholesalers are usually located in urbanized areas.
Wholesalers
TYPES OF INTERMEDIARIES
- These are middlemen who buy products in localized areas.
- They buy products for other middlemen such as the viajero or assembler-wholesaler and in return are given commissions as payment for their services.
- They usually buy from the producers and other middlemen in
the area, assemble to products and sell them to the viajeros.
Commision agents
TYPES OF INTERMEDIARIES
- These are business operators who get the produce in large quantities either from wholesalers or contract-buyers.
- They sell mainly to retailers on wholesale basis but they also
retail the rest. - They usually maintain permanent stalls in the market.
Wholesaler-retailers
TYPES OF INTERMEDIARIES
- They buy from producers and contract buyers, assemble the products in large volume and transport them to market centers.
- They are locally known as the viajeros.
- They also sell products on wholesale basis.
Assembler-wholesaler
TYPES OF INTERMEDIARIES
- These are middlemen who buy live poultry and livestock from the wholesaler or direct from the producer and sell them in dressed or carcass form.
- Selling is commonly on retail basis, per kilo dressed or carcass weight.
- They have permanent stalls in the market and sell directly to consumers
Butcher-retailers
TYPES OF INTERMEDIARIES
- These are product handlers who serve as the last link in the marketing channel.
- They have greater utility both in rural and urban centers by selling directly to consumers.
- They occupy permanent stalls in the market or on roadsides.
- Selling is on retail basis and conducted almost everyday
Retailers
implies that more and more products and services are being sold directly to the consumers rather than the intermediaries.
Disintermediation
- classifies the activities that occur in the marketing process according to functions/ services
- answers “what” in the question of “who does what”
Functional Approach
Functional approach classifications
activities in the transfer of title of goods.E.g., buying and sellingfunction.
Exchange functions
Functional approach classifications
involve handling, movement and physical change of the commodity. The when, where and what. E.g., storage, transportation and processing functions.
Physical functions
Functional approach classifications
Those which make the smooth performance of the exchange and physical functions. E.g., standardization
Facilitating funtions
sorting of products according to one or more of their quality attributes.
Grading
size, weight, shape, color, odor, length, diameter, strength density, texture, uniformity, moisture content and foreign materials, and physical damage.
Grade specifications
the practice of making the quality specification of grades uniform among buyers and sellers.
Standardization
space dimension in marketing
Transportation
influence the location of production centers, the market area served, the qualities and sizes of products shipped to market, the form in which they are marketed, and the kind and type of transportation service used
Transportation time and costs
time dimension in marketing
Storage
The primary aim of storage is
to help balance supply and consumption or to balance periods of plenty and periods of scarcity.
inform consumerswhat is available for purchase and to change the demand for the product.
Advertising
is the systematic, objectiveand exhaustive search for and study ofthe facts relevant to any problem in the field of marketing.
Market Research
SCOPE OF MARKET RESEARCH
Past/Present Directions
- price and outlook information,
- cooperatives in marketing,
- marketing arrangements,
- government regulations,
- grades & standards,
- transportation rates
SCOPE OF MARKET RESEARCH
Current/Future Directions :
- supply/value chain analysis,
- food quality and safety,
- physical efficiency (storage, transportation, etc.),
- plant size & location,
- systems analysis and large models,
- spatial & temporal integration of markets;
- demand & supply analysis,
- price analysis,
- policy analysis
primary focus is on reducing costs and marginal inefficiencies in supply
Supply chain
both concepts include the network of organization working together to control, manage and improve the flow of inputs/materials, products and information from suppliers to consumers
Supply and Value Chain
Concentrates more on value creation, innovation, product development and marketing
Value chain
- is used in analyzing the performance of a particular industry.
- deals mainly on understanding the behavior of firms that either act as competitors or interact as suppliers or customers in the selling/buying industr
Structure Conduct
Performance (SCP) Approach
refers to the characteristics of a market organization that seem to exercise a strategic influence on the nature of competition & pricing within the market.
MARKET STRUCTURE
Measures/Dimensions
- describes as the number & size distribution of buyers & sellers who own or control the market
- the degree of concentration may be characterized as low, moderate & high
degree of buyer & seller concentration
Measures/Dimensions
measures the extent to which products are
differentiated/distinguished among competing industries
degree of product differentiation
Measures/Dimensions
- reflect the competitive relationship between established firms & potential entrants
- exist because of economies of scale, high capital requirements, non-tariff barriers, rules/regulations set by the government or inherent technical relationships in the industry
barriers to entry
includes price policies, product policies, firm level policies aimed at coercing market rivals, e.g., setting of freight rates, prices of output & payment of services
BUSINESS CONDUCT/BEHAVIOR
is the appraisal of how much the economic results of an industry’s market behavior deviate from the best possible contribution it could make to achieve socio-economic goals (efficiency, equity,
progressiveness, responsiveness, product safety)
Market performance
Two Efficiency Measures:
under the perfectly competitive model, the pricing efficiency criteria for the firm are
Pricing efficiency
marginal cost (MC)
Output price (Py)
marginal value product (MVP)
Input price (Px)
for a marketing system to be efficient, it must perform its processing, storage, and transportation functions at a minimum cost.
Productive efficiency
is the extent to which firms in the industry make reasonably full use of their available facilities
Load factor efficiency
is the extent to which firms and/or plants are organized to take advantage of economies of scale
Scale factor efficiency
- refers to the differencesbetween prices at different levels
of the marketing system. - the differencebetween what the consumer pays and what the producer receives for his agricultural produce.
- known as “price spread”
Marketing Margin
COMPONENTS OF MARKETING MARGIN
Returns to factors of production
- Wages
- Interest
- Rent
- Profit
COMPONENTS OF MARKETING MARGIN
Returns to various agencies or institution (Marketing charges) or Marketing bill (Cramer, 1991)
- retailers
- wholesalers
- processors, and
- assemblers For the work or services they perform
TYPES OF THE MARKETING MARGIN
Expressed in terms of pesos and are constant over all quantity ranges
Absolute (constant margin)
TYPES OF THE MARKETING MARGIN
The absolute margin divided by the selling price.
Percentage margin
TYPES OF THE MARKETING MARGIN
The absolute margin divided by the buying price.
Mark up
TYPES OF THE MARKETING MARGIN-FORMULA
Absolute Margin
Selling price-Buying Price
TYPES OF THE MARKETING MARGIN-FORMULA
Mark up
Selling price-Buying price/Buying price x 100
TYPES OF THE MARKETING MARGIN-FORMULA
Percentage margin
Selling price-Buying price/Buying price x 100
is composed of controllable and interrelated variables including the product, place, price and promotion that a company needs to design to satisfy the needs of the buyers more efficiently and effectively than competitors.
Marketing Mix or the 4Ps
Meaning of 4Ps
Product
Price
Promotion
Place
