agribusiness test 2
Structure portion of the Structure Conduct Performance Model
is based on competition 1) sufficient # of firms in the industry 2)barriers to entry and exit is it free or expensive 3)Amount of product differentiation
What is the mission of marketing?
it is to bridge the gap between the bridge the gap between producers and consumers.
Worldly we are producing
more products now than we ever have
Barrier 1 to Consumer Satisfaction
ownership separation (transfer ownership in the marketing process)
four P's of marketing product maximize customer satisfaction
product maximize customer satisfaction price should be fair place timing depends on the time of year promotion advertising
What is the model used to evaluate marketing efficiency called
structure conduct performance model
Marketing Efficiency- marketing approach
the profitable satisfaction of consumers and their needs should be the driving force behind everything the business does.
USDA
united states department o agriculture
live cattle 1,000 pounds
would sale todayfor $1.23 whole sale, bringing $1,230 of you could sell it based on grade/ yield. Dressing is basically 60-62% that would be a 600IB carcass. As choice 1-3 it would go for 1.963IB bringing $1177.8 meaning it would be better to sell it live, because it it was to sell for select it would be selling for $1.890 grade 1-3
Steps to organize a marketing plan
1) what consumer need will my business fulfill 2) how to gain a competitive edge over your competition 3) how to make a profit
facilitating functions
6,7,8,9 functions make the top 5 functions work better
What percentage of jobs in agribusiness are in marketing?
80%
9 Market Functions to Overcome the 5 Barriers of Separation ( 8 Risk taking)
Forward contract, futures, options overcomes time separation#2
9 Market Functions to Overcome the 5 Barriers of Separation ( 8 Risk taking)
Forward contract, futures, options overcomes time seperation
Example Of How much to produce?
How many employees? Grooming?
Example Who should do the producing?
If your not interested in small animals, the other bet should do that
Barrier 5 to Consumer Satisfaction
Information (relevant information)
Managers today need to focus more on...
Marketing. Marketing levels need to increase.
9 Market Functions to Overcome the 5 Barriers of Separation (7 Financing)
Overcomes Ownership separation#1, Time separation#2, and space separation#3 and helps the top 5 functions operate
9 Market Functions to Overcome the 5 Barriers of Separation (6 grading and standards)
Overcomes the fifth barrier Information and helps buying, selling, and processing.
9 Market Functions to Overcome the 5 Barriers of Separation (2 selling function)
Overcomes the first barrier (ownership separation) to consumer satisfaction
9 Market Functions to Overcome the 5 Barriers of Separation (1 Buy function)
Overcomes the first barrier(Ownership separation) to consumer satisfaction
9 Market Functions to Overcome the 5 Barriers of Separation (5 Processing function)
Overcomes the fourth barrier (value separation) to consumer satisfaction.
9 Market Functions to Overcome the 5 Barriers of Separation (3 Storage function)
Overcomes the second barrier ( time separation) and the third barrier (space separation) to consumer satisfaction
9 Market Functions to Overcome the 5 Barriers of Separation (4 transportation function)
Overcomes the second barrier (time separation) and the third barrier (space separation) to consumer satisfaction
USA agribusiness managers have to realize what?
That they have worldly competition and they have to know how to satisfy the US and World Market both.
Marketing bridges the gap between what two things?
between producers and consumers
Consumer Satisfaction has 4 types of utility
1) Form utility- which can be simple or complex 2) Place Utility- we need it where it needs to be (transportation) 3) Time Utility- means (storage/ how long) lots of money and time. 4) Possession Utility- change of ownership
Marketing strategy
1) Identify your market 2) how to position yourself in the market 3) size of product line 4) price 5) number of stores or outlet 6) size of sales force 7) level of service if any 8) advertising 9) sales promotion 10) research and development 11) Market research 10 and 11 are for big companies
The marketing objectives (Peter Drucker)
1) What is our business 2) Who are our customers 3) What is value to our customers 4) What will our business be in the future 5) What our business should be in the future
3 criteria that must be met to evaluate Marketing efficiency
1) free economic system customer or consumer makes decisions not the government 2) resources to produce product need to reflect a good use of the resource. A) price of good produced B) Price received by producer fair C) Does the consumer think the price is fair 3)Consumer-producer interaction-consumer saying this what I want and producer asking if they are willing to pay A) organics B) High quality products C) Green
Conduct portion of the structure conduct performance model
1) how does price affect our competitors 2) truthful claims 3) no collusion in the setting of prices
Performance portion of the structure conduct performance model
1) output-reasonable compared to cost of inputs 2) reasonable profits 3) research and development (new ideals/ products)
Marketing boils down to the 4 rights ( 4 form utilities)
1) right product 2) right place 3) right time 4) right price
1922 Copper Volstead Act
Ag producers exempt from anti trust laws as a result today we have lots of agricultural cooperatives
Example of What product to produce?
Angust? Feeder Cattle? Small Animal?
China Soybeans
Are for Human consumptions
Soybeans that China imports from other countries
Are for their livestock.
Time Utility (a lot of storage and time invested)
Packing plant- processing, carcass-goes into hot box and temp is 40-60 degrees for 12 hours. Then they go into cooler 40-36 degrees and stays there 24-48 hours. This gives it time for marbling to appear. (helps grading) Then it spends 12-24 hours in grading, further processing cooler. (4 days of processing time utility takes a lot of money)
What are the 2 rules of business?
Rule #1 customer/consumer is always right Rule #2 see Rule #1
Barrier 3 to Consumer Satisfaction
Space Separation (where is product stored)
Pig Virus afflicts US farm
The article is talking about the pigs in China and how it is affecting the USA because we cannot sell as many soybeans to china because their Pigs are sick. Ergo the USA has an over supply over soybeans. China is having to slaughter their hogs to try to rid of the disease.
Railroads
They are shipping lots of agriculture products like grains and oil and they feel that the economy is doing well because they are shipping so many products.
Brazil
They rule the soybean sales they have been exporting soybeans to china while the USA was having tariff wars with China.
Barrier 2 to Consumer Satisfaction
Time Separation ( is the product where it needs to be)
Barrier 4 to Consumer Satisfaction
Value (product in proper form)
what are the 5 key questions we must ask about any agribusiness
What product to produce? How much to produce? When should production begin? Who should do the producing? For who is the product being produced for?
Example of When should production begin?
When should the calves be born?
China
Will allow USA grain that is produced from GMO's (soybeans) to be exported to them. Which is good because they said before they didn't want them. Hopefully this shows we are moving past people being against GMO's a single person has never been sick from GMO's.
Agribusiness manager
You need to understand marketing should increase consumer satisfaction
What is the end result for all marketing functions?
consumers satisfaction
Structure conduct performance model is used for
determining if mergers or take overs will benefit consumers and or producers