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Chapter 3

Chapter 3. The Role of Marketing. The Role of Marketing in the Economy. The Mission of Marketing. Bridge the gap between the conflicting needs of producers and consumers by completing the production process. The use of central markets. The use of money. The use of middlemen.

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Chapter 3

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  1. Chapter 3 The Role of Marketing

  2. The Role of Marketingin the Economy

  3. The Mission of Marketing • Bridge the gap between the conflicting needs of producers and consumers by completing the production process

  4. The use of central markets The use of money The use of middlemen How theMarketing System Evolved The advantages of specialization and trade

  5. The Role of Marketing in the Economy The five barriers to consumer satisfaction: • Ownership separation • Time separation • Value separation • Space separation • Information separation

  6. The Role of Marketingin the Economy The nine marketing functions: • The buying function • The selling function • The storage function • The transportation function • The processing function • The grades and standards function • The financing function • The risk-taking function • Market information function

  7. The Role of Marketingin the Economy Marketing provides four utilities: • Form utility • Place utility • Time utility • Possession utility

  8. Need the efforts of marketing management Marketing can help agribusiness firms compete successfully in the global competitive marketplace and assure the future of success of the agri-food system The Role of Marketing in the Future of Agribusiness American agribusinesses face increased competition

  9. The Marketing Approach Based on the premise that a firm’s success does not come from producing a technically superior product, but from profitably satisfying consumers’ needs

  10. The Prerequisites to an Efficient Economic System • A free market economy • Prices reflect the full value of resources • A high degree of interaction between consumer and producers

  11. The Criteria Used to Evaluate Market Performance • Efficiency: How efficiently goods and services flow from producers to consumers • Fairness: How well the marketing systems meet the needs of consumers

  12. The Structure-Conduct-Performance Model The model is based on the notion that the way firms are organized in a market (their structure) tells a great deal about how they make decisions (their conduct), which in turn influences the level of efficiency and fairness present in a market (their performance) Structure Conduct Performance

  13. Structure • Sufficient number of firms in the market; firms are large enough to have low operating costs per unit of output • Few barriers to entry or exit from the market • Firms differentiate and improve products over time

  14. Conduct • Enough firms in the market to create some uncertainty in the minds of firms’ managers as to whether their price changes will be followed by their competitors • No unjustified price discrimination by firms • No collusion among firms • No unfair trade practices • Product claims are truthful

  15. Performance • The optimum level of output is being produced at the minimum cost per unit • Profits are reasonable • Product and process innovations are encouraged • The levels of investment, reinvestment of profits, and research and development are reasonable

  16. Discussion Questions • Describe marketing in your own words. Explain why you think marketing is not well understood. Explain why you feel it is important for people to understand marketing. • Describe the forces that lead to the development of the marketing system.

  17. Discussion Questions • Explain how completing the production process resolves the conflicting needs of producers and consumers, and leads to greater consumer satisfaction. • Define the five barriers to consumer satisfaction, the nine marketing functions, and four utilities of marketing. Explain how they combine to raise the level of economic efficiency in the economy.

  18. Discussion Questions • The goal of the U.S. marketing system is to dispose of what farmers have produced as quickly and efficiently as possible. Do you agree or disagree? Explain the reasons for your answer. • Define the marketing approach. Discuss its relevance to the agri-food system.

  19. Discussion Questions • Explain why a society should spend time evaluating the performance of its marketing system. • Define the prerequisites to an efficient economic system. Explain why they are important. • What criteria should be used to evaluate the performance of a marketing system? How do these criteria relate to the structure, conduct, and performance of a market?

  20. Discussion Questions • Explain why an agribusiness manager should be interested in understanding market performance. • Explain the role of government in keeping markets fair and efficient. Give examples of when this occurred and describe why it worked or not.

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