Marketing Subsystem

THE MARKETING
SUBSYSTEM
Topic Outline
• Classification of Agribusiness
Products
• Characteristics of Agribusiness
Products
• Classification of Marketing
Strategies
• Key Players in the Agribusiness
Marketing Subsystem
Topic Outline, cont…
• Market Functions
• Issues in Agribusiness
Marketing in the
Philippines
• Marketing
Considerations and
Strategies for
Agribusiness Products
The Marketing Subsystem
• One of the 5
aggregates of the
agribusiness system
• Objective: satisfy the
needs and wants of the
consumers
Classification of Agribusiness
Products
1. Fresh agricultural products
2. Semi-processed agribusiness
products
3. Finished products
Fresh Agricultural Products
• Directly harvested from farms

• Do not pass higher level of transformation
• Cleaned, sorted, graded
Semi-Processed Agricultural
Products
• Underwent second level of
transformation
• Inputs for industry/processing
• May not be consumed
Semi-processed products
Finished Products
• May be consumed by the buyers

• Not intended for further
processing
The Marketing Sector
• Forms the link between the other sectors
mentioned, play different role.
• Middlemen – major sectoral players
– Though not directly involved but play a very
important role
– Assemblers, wholesalers, retailers, agents
and brokers
1. Assemblers
• Rural traders or barrio buyers
• Accumulate produce of individual farmers
• Bulk for storage, then distribute to
wholesalers
2. Wholesalers
• Handles products in bulk
• Do not deal with end-users of the product
(operate between farmers and consumers
or between processors and end-users)
3. Retailers
• Directly deal with end-

users
• Have owned outlets
• Carry an assortment
of different products
in small quantities
• Some buy in bulk and
repack products for
easier selling
4. Agents and Brokers
• Negotiation is their main activity (bring the
two parties together)
• Do not get profit, do not assume
ownership of the product.
– But get incentives in the form of commission
(% of sales)
• Advantage: they are well informed of the
goings-on in the market
Marketing Functions
• Negotiation • Market
• Assembly intelligence/market
• Grading research
• Storage • Promotion
• Processing
• Packing/Packaging
• Financing
• Risk-taking or risk-bearing
Marketing Functions, cont…
• Negotiation
– Starts with finding buyers and bringing the
sellers and buyers together to make
arrangements
– Becomes smoother if buyer-seller relationship
is already established
• Assembly
– Accumulate produce of small farmers or
producers
• Grading
– Facilitate buying, selling, transportation,
storage and pricing.
– Standard measurements – size, weight and
overall quality
• Storage
– to make goods available when it is needed
either for processing or for consumption.
• Processing
– Largely a marketing function (AB products pass
through this)
• Packing/Packaging
– Total product presentation
• Financing
– To handle all market-related costs and
problems
– Sourced from banks, or own money - middlemen
• Risk-taking or risk bearing
– Must be ready to assume risks considering losses to be
incurred during operations.
– Must be able to devise ways to cushion business
against risks.
• Market intelligence/market research
– Important in process conceptualization
• To assure product-market fit
– process of gathering and analyzing relevant
market information for the purpose of making
and fine-tuning marketing decisions to
respond to the ever-changing consumer
preferences.
– Map out competitive strategies (4Ps) if there
are many competing firms
• Promotion
– Continuous function of marketing
– Objective: inform buyers, increase sales
– Fresh VS Branded
• Fresh are rarely promoted, processed are. Why?
• Fresh are not branded and are homogeneous to
justify cost of promotions
• Processed are differentiated and branded, to
capture markets and develop brand loyalty
• At the end of the day, performance is the

key.
– Depends on how participants perform
functions according to expectations
• Participation is developed through
continuous interaction
The three types of agribusiness products namely:
fresh farm products, semi-processed goods and
processed products have different product
characteristics, are operating in different
competitive environments, and have different
target markets. Each group therefore merits
separate marketing strategies.
Question:
What strategies could you suggest so that fresh farm
products will be effectively marketed?
Issues in Agribusiness
Marketing in the Philippines
TWO MAIN ISSUES:
1. Inefficiency
2. Dependence on Middlemen
Inefficiency
• the failure of the source or the producer to
bring the produce to the market at the time
it is needed and at the lowest possible
cost
– levels of post harvest handling
– bulkiness of agribusiness products
– distance of farms to major market
Dependence on Middlemen
• smallness of farmers’ scale of

operations
– impractical to market to end consumers
the small produce
– not capable to buy his own market
facilities
– wants ready cash for his products
Dependence on Middlemen
• producer’s lack of market awareness

– lack of market information that
reach the producers
• increasing importance of middlemen’s
participation in the production and
harvesting process
Specific Issues: Farmers’ Level
• Low prices of agricultural produce/ cost
price squeeze
• Perceived lack of buyers or market (there
is actually a mismatch between what is
produced and what is required by the
buyers)
• Poor access to major markets due to lack
of market infrastructure
• Lack of relevant market information
Specific Issues: Traders’ Level
• Irregularity of volume of available products
and inability of farmers to meet demands
• Lack of market infrastructure, which
results in increased marketing cost and
delayed distribution
• Competition due to relatively many traders
handling the same products
Specific Issues: Consumers’
Level
• High prices of agricultural produce
• Variability in quality of agricultural products
in the market
Agribusiness Market Analysis
• Market characteristics:
– Who are the buyers?
– What specific agribusiness products do they buy?
– Where are the buyers located?
– What are their types of business organizations?
– For what purpose do they buy?
– What are their quality and volume requirements
– What are their specific marketing terms and
conditions?
Agribusiness Market Research
• Design of marketing strategies depend on

the outcome of market research
• Importance of Market Research:
– reduces uncertainty in the formulation of marketing
strategies
– helps agribusinessman to continuously monitor
marketing activities based on prepared plans
– helps agribusinessman identify market entry points
Strategies for Agribusiness
Products
Fresh Farm Products
• efficient product movement from the farm
to the major markets
– who are the buyers
– what farm products do they buy
– how much and how often do they buy
Products
Fresh Farm Products
• efficient product movement from the farm
to the major markets
– where the buyers are located,
– what are the types of business organization
– for what purpose do they buy and use the
farm products
– what are the product requirements of the
buyers
Products
Fresh Farm Products
1. Product Strategies
• Value-adding for farm products
– overall market attractiveness (that is, what is
visible to buyer’s eyes)
– quality and packaging- depending on the
target market
– Quality control: inputs, production, post-
harvest activities
Products
Fresh Farm Products
2. Distribution Strategies
• Production scheduling – producers could time
their production to help even out shortages in
the lean months
Products
Fresh Farm Products
3. Distribution Strategies, cont…
• Farmers should provide quality produce on a
continuous basis and on the part of the
middlemen, they must offer higher prices for the
premium produce that they are getting from the
farmers
• Expand market coverage through networking
Products
Fresh Farm Products
4. Promotion Strategies
• trade fairs
• market matching activities
• attendance to business forums
Products
Semi-Processed and Processed Products
• well conducted analysis of the market
–trends in demand,
–buying behavior of buyers, and
–competition
Products
Semi-Processed and Processed Products
Product and Pricing Strategies
• Innovation (create new products and new
markets)
• Product mix to handle
• price determination: demand, cost, and
competition
End

Marketing Subsystem

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THE MARKETING

• Directly harvested from farms

• May be consumed by the buyers

• Directly deal with end-

• At the end of the day, performance is the

• smallness of farmers’ scale of

• producer’s lack of market awareness

• Design of marketing strategies depend on

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