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Unit2-Lesson5-Agecon2-Learning-Module

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19 views

Unit2-Lesson5-Agecon2-Learning-Module

this file is all about how to handle a business
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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44 UNIT 2 – AGRICULTURAL COMMODITY SYSTEM ANALYSIS D. O.

LIM

Lesson 5: Marketing and Retailing

Introduction
In this lesson, you will explore the critical role that effective marketing and retail
strategies play in the agricultural sector, influencing everything from production decisions to
consumer choices. You will examine how agricultural commodities are positioned in the
market, the channels through which they are sold, and the impact of branding and consumer
behavior on pricing and demand.
By understanding these dynamics, you'll gain insights into how to optimize the supply
chain and enhance the profitability of agricultural products, ultimately contributing to more
sustainable and efficient agricultural practices. Get ready to delve into the fascinating
intersection of agriculture, economics, and consumer engagement!

Learning Objectives
At the end of this lesson, you are expected to:
1. Analyze the key market dynamics affecting agricultural commodities;
2. Evaluate various marketing strategies employed in the agricultural sector; and
3. Develop a comprehensive marketing plan for an agricultural commodity.

Activate Prior Learning


Marketing Memo
Think about a specific agricultural commodity you are familiar with and its current
market situation. Write a brief memo (approximately 5-7 sentences) addressed to a fictional
marketing team. The memo should include the name of the commodity, a short description of
its current market trends or challenges, and one marketing strategy you believe could enhance
its visibility or sales.

Acquire New Knowledge


I. Key Concepts in Agricultural Marketing

Marketing and retailing are interconnected processes that focus on promoting and
selling goods and services to consumers. Marketing encompasses the strategies and activities
designed to create awareness, interest, and demand for products, utilizing various channels to
reach potential customers. This includes understanding consumer needs, setting competitive
prices, and developing promotional campaigns. Retailing, on the other hand, refers specifically
to the sale of these goods and services directly to end users through physical stores or online
platforms. It involves managing customer interactions, ensuring product availability, and
creating a shopping experience that encourages purchases. Together, effective marketing and
retailing strategies aim to satisfy consumer demands while achieving business profitability and
fostering long-term customer loyalty.

In the context of Philippine agriculture, marketing and retailing play crucial roles in
connecting farmers to consumers and ensuring that agricultural products reach the market

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45 UNIT 2 – AGRICULTURAL COMMODITY SYSTEM ANALYSIS D. O. LIM

efficiently. The agricultural sector often relies on intermediaries, or middlemen, who facilitate
transactions and navigate logistics, which can affect pricing margins and ultimately the farm-
retail price of goods. Effective marketing strategies that consider local consumer preferences,
such as quality and sustainability, are essential for enhancing product visibility and
competitiveness. Moreover, understanding consumer behavior—such as the demand for fresh,
locally sourced produce—enables farmers and retailers to tailor their offerings accordingly,
thereby improving sales and supporting the livelihoods of agricultural producers in the
Philippines.

Supply and Demand Fundamentals

Supply and demand are foundational concepts in agricultural marketing that dictate
market behavior. The law of demand states that, all else being equal, as the price of a
commodity decreases, the quantity demanded increases, and vice versa. Conversely, the law of
supply posits that as the price increases, the quantity supplied also increases.

Market Equilibrium

The point where the supply and demand curves intersect is known as market
equilibrium, which determines the market price and quantity of goods sold. In agriculture,
factors such as weather conditions, crop yields, and consumer preferences can significantly
affect both supply and demand. For instance, a poor harvest due to adverse weather can reduce
supply, leading to higher prices if demand remains constant.

Elasticity of Demand

Understanding the elasticity of demand is crucial for farmers. Price elasticity of demand
measures how sensitive consumers are to price changes. For example, staple crops like rice
may have inelastic demand—consumers will buy them regardless of price fluctuations—while
luxury items like organic berries may have more elastic demand.

Pricing Strategies

Pricing strategies are critical for farmers to ensure profitability while remaining
competitive in the market. Effective pricing can attract customers, increase sales volume, and
enhance market access.

Common Pricing Strategies

1. Cost-Based Pricing: This involves setting prices based on production costs plus a
markup to ensure profitability. While straightforward, it may not account for market
conditions or consumer willingness to pay.
2. Value-Based Pricing: Prices are set based on the perceived value to the consumer
rather than just production costs. Understanding customer needs and preferences is
essential for this strategy.
3. Dynamic Pricing: This strategy involves adjusting prices based on real-time market
conditions, such as changes in supply or demand due to seasonality or events.

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4. Penetration Pricing: Initially setting a low price to attract customers can help build
market share quickly but may sacrifice short-term profits.
5. Loss Leader Pricing: This involves pricing certain products below cost to attract
customers who will then purchase additional items at full price.
6. Bundle Pricing: Grouping several products together at a single price encourages
consumers to buy more items, increasing overall sales volume.
7. Good-Better-Best Pricing: Offering products at different price points allows
consumers to choose based on their budget while maximizing revenue from higher-
quality offerings.

Consumer Behavior

Consumer behavior plays a pivotal role in agricultural marketing strategies. Farmers


must understand what drives consumer choices, including quality, price sensitivity, and brand
loyalty.

Trends Influencing Behavior

1. Health Consciousness: Increasing awareness about health and nutrition influences


consumers to seek organic or locally sourced products.
2. Sustainability Concerns: Many consumers prefer products that are sustainably
sourced or environmentally friendly, prompting farmers to adopt sustainable practices
in their marketing strategies.
3. Convenience Factors: The rise of e-commerce has shifted consumer expectations
towards convenience and accessibility in purchasing agricultural products.
4. Brand Loyalty: Building a strong brand can lead to repeat purchases as consumers
develop trust and preference for specific products over competitors.

II. Marketing Strategies for Agricultural Commodities

Marketing strategies for agricultural commodities encompass a range of approaches


that can be broadly categorized into traditional marketing approaches and digital marketing
techniques. Each has its own set of advantages and challenges, particularly in how they engage
consumers and promote products.

Traditional Marketing Approaches

Traditional marketing strategies have long been integral to promoting agricultural


commodities, especially at the local level. These methods include:

1. Print Advertising: Utilizing newspapers, magazines, and brochures allows farmers to


target local consumers effectively. Print ads can showcase seasonal products, special
offers, or farm events, creating awareness in the community.
2. Broadcast Media: Television and radio commercials can reach a broader audience
during peak listening or viewing times. These channels allow for storytelling that
highlights the farm's unique practices or product quality, fostering emotional
connections with potential customers.

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3. Direct Mail Campaigns: Sending personalized flyers, postcards, or catalogs directly


to households can create a sense of exclusivity and encourage purchases. For example,
a farm might send recipe cards featuring their produce along with discount coupons to
entice customers.
4. Face-to-Face Engagement: Participating in local farmers' markets or community
events enables direct interaction with consumers. This personal touch builds trust and
loyalty, as customers can ask questions and learn about the farm's practices firsthand.
5. Word-of-Mouth Marketing: Satisfied customers often share their experiences with
friends and family, which can significantly enhance a farm's reputation and attract new
buyers without additional costs.

Traditional marketing remains vital for building brand awareness, establishing local
connections, and maintaining customer relationships, particularly in regions where digital
access may be limited.

Digital Marketing Techniques

As technology evolves, digital marketing techniques have become increasingly


important for reaching consumers in the agricultural sector. These strategies include:

1. Social Media Marketing: Platforms like Facebook, Instagram, and Twitter allow
farmers to showcase their products visually and engage with consumers directly.
Sharing stories about farming practices, seasonal offerings, or behind-the-scenes
content helps build a community around the brand.
2. E-commerce Platforms: Establishing an online store enables farmers to sell directly
to consumers without intermediaries. This approach provides convenience for
customers while allowing farmers to retain more profits by eliminating middlemen.
3. Email Marketing: Regular newsletters can keep customers informed about new
products, promotions, or farm events. Email campaigns can be personalized based on
customer preferences, enhancing engagement and encouraging repeat purchases.
4. Content Marketing: Creating informative content such as blogs or videos about
sustainable farming practices or recipes using farm products helps establish authority
in the field while attracting potential customers through search engines.
5. Digital Advertising: Targeted online advertising through Google Ads or social media
platforms allows farmers to reach specific demographics based on interests or
behaviors, maximizing marketing efficiency.
6. Influencer Collaborations: Partnering with local food bloggers or influencers can
expand reach and credibility. Influencers can showcase products to their followers,
driving traffic to the farmer's online store or social media pages.

Digital marketing techniques provide greater flexibility and data-driven insights


compared to traditional methods, enabling farmers to adapt their strategies quickly based on
consumer feedback and market trends.

III. Branding and Positioning

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Branding and positioning are critical components of marketing in agriculture, as they


help differentiate products in a competitive marketplace, enhance consumer recognition, and
build loyalty.

Importance of Branding in Agriculture

Branding is essential in agriculture because it transforms commodities into


recognizable products that convey quality and value to consumers. In a market where many
agricultural products are perceived as homogenous, effective branding allows farmers to
distinguish their offerings from competitors. This differentiation can lead to higher price
premiums, as consumers often associate brands with superior quality and reliability.
Additionally, branding fosters trust and loyalty among consumers, encouraging repeat
purchases and word-of-mouth referrals. As agricultural markets become increasingly saturated,
branding becomes a vital tool for farmers to capture consumer attention, enhance market
positioning, and ultimately improve profitability.

Elements of Effective Branding

Effective branding encompasses several key elements that work together to create a
strong brand identity:

1. Brand Identity: This includes the visual aspects of the brand such as logos, colors, and
packaging design. A well-designed logo can create immediate recognition and
communicate the essence of the brand.
2. Unique Selling Proposition (USP): The USP defines what makes the product unique
compared to competitors. This could be organic farming practices, local sourcing, or
special crop varieties that appeal to specific consumer preferences.
3. Consistency: Maintaining consistency across all marketing channels is crucial for
building brand recognition. This includes consistent messaging, visual identity, and
customer experience.
4. Emotional Connection: Successful brands often evoke emotions through storytelling
about their farming practices or community involvement. This connection can enhance
consumer loyalty and preference.
5. Quality Assurance: Brands must consistently deliver high-quality products to build
trust with consumers. Quality assurance mechanisms can include certifications or labels
that signify adherence to standards.
6. Community Engagement: Active participation in local events or charitable activities
can enhance brand perception and foster a sense of community among consumers.

Case Studies of Successful Agricultural Brands in the Philippines

Several agricultural brands in the Philippines exemplify successful branding strategies:

1. Bounty Fresh: Known for its chicken products, Bounty Fresh has established itself as
a trusted brand by emphasizing quality and safety through rigorous farming practices.
Their branding focuses on freshness and healthiness, appealing to health-conscious
consumers.

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2. Magnolia: A well-known brand in dairy products, Magnolia leverages its heritage and
commitment to quality in its marketing campaigns. The brand emphasizes its long-
standing reputation for producing high-quality milk and ice cream, which resonates
with Filipino families.
3. Coco Coir: This brand specializes in coconut-based products for gardening and
agriculture. By highlighting sustainability and eco-friendliness in its branding, Coco
Coir appeals to environmentally conscious consumers looking for natural alternatives.
4. Kalinga Rice: This regional rice brand has successfully positioned itself by promoting
its unique flavor and quality associated with its geographical origin. The branding taps
into local pride while also targeting niche markets interested in premium rice varieties.

These case studies illustrate how effective branding can enhance product differentiation,
build consumer trust, and ultimately drive sales within the agricultural sector in the Philippines.
By focusing on quality, emotional connections, and community engagement, these brands have
successfully carved out their niches in a competitive market landscape.

IV. Retailing in Agricultural Commodity Systems

Retailing in Agricultural Commodity Systems

Retailing in agricultural commodity systems involves the processes and channels


through which agricultural products are sold to consumers.

Types of Retail Channels

1. Supermarkets and Grocery Stores: Supermarkets and grocery stores are among the
most common retail channels for agricultural commodities. They offer a wide variety
of products, including fresh produce, dairy, meats, and packaged goods, all under one
roof. These retail outlets benefit from economies of scale, allowing them to offer
competitive prices while providing consumers with convenience. Supermarkets often
engage in promotional activities and loyalty programs to attract customers, thereby
influencing purchasing decisions. Additionally, they play a crucial role in the supply
chain by sourcing products from various suppliers, including local farmers, which helps
ensure a steady supply of fresh goods.
2. Specialty Food Retailers and Local Markets: Specialty food retailers focus on niche
markets by offering high-quality or unique agricultural products, such as organic
produce, artisanal cheeses, or gourmet items. These retailers often emphasize product
quality, sourcing practices, and local origins, appealing to consumers who prioritize
health and sustainability. Local markets, including farmers' markets and community-
supported agriculture (CSA) programs, allow consumers to buy directly from
producers. This direct-to-consumer model fosters relationships between farmers and
consumers, enhances transparency in sourcing, and often results in fresher products.
Both specialty retailers and local markets are increasingly popular as consumers seek
more personalized shopping experiences and are willing to pay premiums for quality.
3. Direct-to-Consumer Models (CSAs, Farm Stands): Direct-to-consumer models such
as Community Supported Agriculture (CSA) programs and farm stands enable
producers to sell their products directly to consumers without intermediaries. In a CSA,
consumers subscribe to receive regular shares of seasonal produce directly from the

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farm, fostering a sense of community and commitment to local agriculture. Farm stands
provide a convenient way for farmers to sell their goods on-site, allowing for immediate
customer feedback and reduced transportation costs. These models not only enhance
profit margins for farmers but also create stronger connections between consumers and
their food sources.

Trends in Agricultural Retailing

1. Sustainability and Local Sourcing: There is a growing trend towards sustainability in


agricultural retailing as consumers become more environmentally conscious. Many
shoppers prefer products that are locally sourced or produced using sustainable
practices. This shift is driven by an increasing awareness of the environmental impact
of food production and transportation. Retailers are responding by highlighting local
products on their shelves, promoting sustainable farming practices, and adopting eco-
friendly packaging solutions. By aligning with consumer values around sustainability,
retailers can enhance brand loyalty and attract a dedicated customer base.
2. Consumer Demand for Organic and Ethically Sourced Products: The demand for
organic and ethically sourced agricultural products continues to rise as consumers
prioritize health and nutrition in their purchasing decisions. Organic certification
assures consumers that products meet specific standards regarding pesticide use and
environmental impact. Additionally, ethically sourced products—those produced under
fair labor conditions or with minimal environmental harm—are increasingly sought
after by socially conscious consumers. Retailers are adapting by expanding their
organic offerings and ensuring transparency in their supply chains, thereby appealing
to a market segment willing to pay higher prices for perceived quality and ethical
considerations.

V. Challenges in Agricultural Marketing and Retailing

Agricultural marketing and retailing face numerous challenges that can significantly
impact the efficiency and profitability of the agricultural sector.

1. Market Volatility and Price Fluctuations

Market volatility is a defining characteristic of agricultural markets, influenced by


various factors such as weather conditions, supply chain disruptions, and global economic
trends. Agricultural products are often subject to significant price fluctuations due to their
inelastic supply and demand characteristics. For instance, changes in weather can drastically
affect crop yields, leading to sudden surges or drops in prices. When supply decreases due to
adverse conditions, prices may rise sharply; conversely, if there is an oversupply, prices can
plummet, adversely affecting farmers' incomes.

The inherent time lag between production decisions and marketable output exacerbates
this volatility. Farmers may be unable to respond quickly to price signals due to the time
required for crops to grow or livestock to mature. This situation creates uncertainty in
investment decisions, as farmers cannot predict future prices with confidence. As a result, many
may underinvest during low-price periods or overinvest when prices are high, leading to
cyclical adjustments that further destabilize the market. Consequently, excessive price

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volatility can undermine economic stability within the agricultural sector, making it difficult
for producers to plan for the future and manage their operations effectively.

2. Competition from Alternative Sources

Competition from alternative sources poses a significant challenge for agricultural


marketing and retailing. This competition can come from imported goods or substitute products
that provide consumers with more options at potentially lower prices. For instance, imported
agricultural products may be cheaper due to lower production costs in exporting countries or
favorable trade agreements that reduce tariffs. This influx of imports can pressure local
producers to lower their prices, which may not be sustainable given their higher production
costs.

Additionally, consumers increasingly have access to substitute products that may fulfill
similar needs without being direct competitors. For example, plant-based alternatives to dairy
and meat products have gained popularity among health-conscious consumers and those
seeking sustainable options. This shift in consumer preferences can challenge traditional
agricultural sectors by diverting demand away from conventional products.

To remain competitive, local producers must focus on differentiating their products


through branding, quality improvements, and unique selling propositions that resonate with
consumers. They may also need to adapt their marketing strategies to highlight local sourcing
and sustainability practices that appeal to increasingly conscious consumers.

3. Regulatory Challenges Affecting Marketing Strategies

Regulatory challenges significantly impact how agricultural products are marketed and
sold. Regulations can vary widely by region and may include food safety standards, labeling
requirements, environmental regulations, and trade policies. Compliance with these regulations
can impose additional costs on producers and retailers, particularly smaller operations that may
lack the resources to navigate complex regulatory environments.

For example, stringent food safety regulations require farmers to implement specific
practices that ensure product safety from farm to table. While these regulations are essential
for protecting consumer health, they can also lead to increased production costs and potential
barriers to market entry for small-scale farmers who cannot afford the necessary certifications
or infrastructure upgrades.

Moreover, trade policies can affect the competitiveness of local agricultural products
in both domestic and international markets. Tariffs on imports can protect local farmers but
may also lead to retaliatory measures from trading partners that could disrupt export
opportunities.

VI. Future Trends in Agricultural Marketing

The landscape of agricultural marketing is evolving rapidly, driven by technological


advancements, shifting consumer preferences, and innovative distribution methods.

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The Role of Technology in Marketing

Technology plays a pivotal role in transforming agricultural marketing strategies. Key


advancements include:

1. Data Analytics: The use of data analytics allows farmers and marketers to gain insights
into consumer behavior, market trends, and operational efficiencies. By analyzing
purchasing patterns and preferences, businesses can tailor their marketing strategies to
meet specific consumer needs, leading to more effective campaigns and improved sales
outcomes.
2. Artificial Intelligence (AI): AI technologies are increasingly being utilized in
agricultural marketing to enhance decision-making processes. AI can analyze vast
amounts of data to predict market trends, optimize pricing strategies, and personalize
marketing messages. For instance, machine learning algorithms can identify which
products are likely to perform well based on historical data, allowing marketers to focus
their efforts on high-potential items.
3. Precision Agriculture: This approach leverages technology such as GPS and IoT
devices to monitor crop health and optimize resource use. By integrating precision
agriculture with marketing strategies, producers can promote their products as
sustainably grown or high-quality based on precise farming practices.
4. E-commerce Platforms: The rise of online shopping has led to the development of e-
commerce platforms specifically for agricultural products. Farmers can now reach
consumers directly through online marketplaces, reducing reliance on traditional retail
channels and enhancing profit margins.
5. Blockchain Technology: Blockchain offers enhanced traceability in the supply chain,
allowing consumers to verify the origin and quality of agricultural products. This
transparency builds trust with consumers who are increasingly concerned about food
safety and ethical sourcing.

Emerging Consumer Trends

Consumer preferences are shifting dramatically, influencing how agricultural products


are marketed:

1. Health Consciousness: There is a growing demand for healthy food options as


consumers become more health-conscious. This trend has led to increased interest in
organic produce, superfoods, and minimally processed items. Marketers must highlight
the health benefits of their products to attract this segment of consumers.
2. Sustainability: Sustainability is a significant factor influencing consumer purchasing
decisions. Many consumers prefer products that are environmentally friendly or
produced using sustainable practices. Brands that communicate their commitment to
sustainability through eco-friendly packaging or sustainable farming practices are
likely to resonate with these consumers.
3. Ethical Sourcing: Consumers are increasingly interested in the ethical implications of
their food choices, including labor practices and animal welfare standards. Marketing
strategies that emphasize fair trade certifications or humane treatment of animals can
appeal to this socially conscious demographic.

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4. Convenience: The demand for convenience continues to rise, with consumers seeking
quick and easy meal solutions. Retailers are responding by offering pre-packaged meals
or ready-to-cook kits that incorporate fresh agricultural products.
5. Local Sourcing: There is a growing preference for locally sourced products as
consumers seek to support local economies and reduce their carbon footprint associated
with food transportation. Marketers can leverage this trend by highlighting local
partnerships and community involvement in their branding efforts.

Innovations in Distribution Channels

Innovations in distribution channels are reshaping how agricultural products reach


consumers:

1. Direct-to-Consumer Models: The rise of direct-to-consumer sales models, such as


Community Supported Agriculture (CSA) programs and farm stands, allows producers
to sell directly to consumers without intermediaries. This model fosters closer
relationships between farmers and consumers while improving profit margins for
producers.
2. Online Marketplaces: E-commerce platforms specifically designed for agricultural
products enable farmers to reach a broader audience beyond their local markets. These
platforms facilitate direct sales while providing logistical support for delivery.
3. Mobile Apps: Mobile applications are becoming increasingly popular for connecting
consumers with local farmers and producers. These apps allow users to order fresh
produce directly from farms or find nearby farmers' markets, enhancing convenience
and accessibility.
4. Subscription Services: Subscription-based models that deliver fresh produce or farm
products directly to consumers' doors have gained traction. These services cater to busy
lifestyles while ensuring a steady market for farmers.
5. Innovative Logistics Solutions: Advances in logistics technology are improving the
efficiency of distribution channels in agriculture. Companies are utilizing real-time
tracking systems and automated inventory management solutions to streamline
operations and reduce waste.

Lesson Summary

Marketing and retailing in agricultural commodity systems are essential processes that
facilitate the movement of agricultural products from farms to consumers, ensuring that food
reaches the market efficiently and profitably. Agricultural marketing encompasses a wide range
of activities, including production planning, transportation, storage, and sales, all aimed at
maximizing the value of farm products while meeting consumer demands. It serves as a critical
link between producers and consumers, influencing pricing, availability, and the overall
economic viability of farming operations. Effective marketing strategies can enhance farmers'
incomes by reducing reliance on intermediaries and expanding market access.

Retailing in agriculture involves various channels through which products are sold,
including supermarkets, local markets, and direct-to-consumer models like Community
Supported Agriculture (CSA). The evolution of these retail channels is influenced by emerging

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54 UNIT 2 – AGRICULTURAL COMMODITY SYSTEM ANALYSIS D. O. LIM

consumer trends such as sustainability and health consciousness, which drive demand for
locally sourced and organic products. As technology continues to advance, agricultural
marketing is increasingly leveraging data analytics and digital platforms to optimize
distribution and improve consumer engagement. Together, these elements create a dynamic
framework that supports agricultural development and addresses the challenges of a rapidly
changing market landscape.

Application

Market Mastery
n
Select an agricultural product that you want to market. Conduct a brief research on your
selected product , focusing on:
1. Target consumer demographics
2. Current market trends related to the product
3. Competitors in the market
Using the information gathered, students will create a marketing strategy that includes:
1. Branding elements (name, logo concept, unique selling proposition)
2. Pricing strategy (cost-based, value-based, etc.)
3. Distribution channels (supermarkets, online sales, farmers’ markets)
4. Promotional tactics (social media campaigns, local events, partnerships)
Prepare a written report and a 10-15 minutes presentation summarizing your report.
Rubric for the Activity: Market Mastery
Criteria Exemplary Proficient Developing Beginning

Scoring 22-25 points 18-21 points 14-17 points 10-13 points


Reflection Highly original ideas and Some original ideas with Basic ideas with limited Lacks originality and
Quality innovative approach; a good approach; mostly creativity; limited creativity; unrealistic
realistic and practical realistic with some feasibility and unclear and poorly defined plan;
implementation plan; practical steps; good steps; some awareness lacks understanding of
deep understanding of understanding of of consumer needs; and consumer needs; and
consumer needs and consumer needs; and unclear and poorly
trends; and engaging, clear presentation with disorganized
clear, and well-organized some organization. presentation.
presentation.

References
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Agricultural Marketin, 35(1), 1-10.
FAO. (2019). Agricultural marketing and food systems in developing countries: Insights from
the field. Food and Agriculture Organization of the United Nations.

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Tiwari, R., & Gupta, N. (2021). Strategies for effective agricultural marketing in the era of
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AG.ECON. 2 INTRODUCTION TO AGRICULTURAL COMMODITY SYSTEM BS AGRICULTURE

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