Marketing Flashcards
What are the 2 most important things in marketing?
- Determine target market (Who are you going to sell to?).
- Determine what you are going to sell (What type of cattle will you have and how will you raise them?).
What are the 3 traditional options for livestock marketing?
- Stockyards.
- Auction markets.
- Country markets.
What does the stockyard option require?
Producers consign their cattle to a commission firm that sells their cattle to the packers.
*Less popular due to possible collusion between commission firms and packers.
What 3 types of cattle are primarily sold at auction markets?
- Bulls.
- Cull cows.
- Feeder cattle.
What is the commission charge range on auction market sales?
1.5-4%.
What other costs are associated with auction market sales?
- Feed if housed overnight.
- Health inspection.
- Insurance.
- Yardage.
- $1 Beef check-off program for seller.
What are the 5 advantages of using auction markets?
- Bonded.
- Established trading rules.
- Serves local areas.
- Serves large or small producers.
- Regularly scheduled sales.
What are the 2 disadvantages of auction markets?
- Can be small and attract only a small number of buyers.
- No control over the price you receive.
What are graded sales?
Special sales where the cattle being sold are priced based on specific qualifications (ex: number vaccines they have received).
Why do grade sales favor smaller producers?
It allows them to obtain premiums for management practices.
How is a country market set-up?
Producers sell cattle directly to the next stage in production through order buyers, commission representatives, and/or direct marketing.
*Also called spot or cash sales.
What are the 4 advantages of a country market?
- Animals are on the farm until after they are sold.
- Lower marketing cost.
- Negotiated prices.
- Some health risk protection.
What are the 2 disadvantages of a country market?
- Frequently just larger producers.
- Lacks the competitive pricing of an auction.
What are the 4 newer options for livestock marketing?
- Electronic marketing.
- Cooperative marketing.
- Alliances.
- Carcass based marketing.
What are the 3 ways electronic marketing is conducted?
- Internet/computer auction.
- Satellite video auction.
- Teleauction.
*2 million cattle are sold in the US using this method.
What are the 5 advantages of electronic markets?
- Animals on farm until sold.
- Bonded sales.
- Competitive bidding.
- Flexible delivery terms.
- Sales attract many buyers.
What is the 1 disadvantage of electronic markets?
Frequently limited to large producers.
What is cooperative marketing?
When a group of smaller producers agree to standardize genetic, health, and management practices to create a larger pool of feeder cattle.
What 4 things does joining a cooperative allow for?
- Accountability for management practices.
- Attracting the attention of buyers through larger numbers of animals.
- Participation in larger markets.
- Price premiums.
What is an alliance in the beef industry?
Aligned individuals and companies in different segments of the industry that operate somewhat independently, but through contractual agreements, share in risks and profits when cattle and beef production meet certain specifications.
ex: Consolidated beef.
*Hard to get out of.
What is carcass based marketing?
Where producers are paid based on the carcass trait/carcass merit of each individual animal.
What 4 criteria is used to establish a base price?
- Carcass weight.
- Quality grade.
- Level of carcass defects.
- Yield Grade.
What % of fed cattle are sold on a carcass basis?
62%.
What is forward contracting?
When cattle are priced based on future performance and committed to the buyer at the time the cattle are ready.
