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Download Organic Rice Marketing Concepts and Issues (Dr Nerlie Manalili)
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Organic Rice Marketing Concepts and Issues Nerlie M. Manalili AsiaDHRRA –LSFM Project Advisory Committee Member Presentation Outline •Objectives •Overview of Regions Organic Industry • Marketing Opportunities of & Challenges Confronting the organic sector •Some regional insights Objectives • Gain enhanced understanding and appreciation of Marketing Organic Rice (concepts and issues) within context of sustainable agricultural chains • Find association between concepts learned/ issues revisited & current challenges in organic marketing • Be able to Identify entry points for applying newly enhanced knowledge on tasks on hand & their anticipated outcomes Southeast Asia Economic Development A region Of contrast Home to tiger economies (Malaysia, Thailand) and emerging economy (Vietnam) and yet home to least developed economies (Laos, Myanmar) Food Production & Availability Accounts for 45% of the World’s Agricultural production and 30% of agricultural inputs and yet home to most food insecure (1$ a day households) Home to the world’s two largest rice exporters, Thailand & Vietnam as well the biggest importer, the Philippines Though having the biggest rice producing areas, organic area only about 1% of total production area Organic Industry Situationer • The organic market though still limited is increasing • Organic & natural products’ global sale =US$B 100 (2008) • Growth in organic product demand and supply is due to: o increasing food safety awareness o desire to lower input costs o decrease reliance on nonrenewable resources o participate in high value markets & obtain premium prices o advocacy to promote healthy lifestyle • With the limited players in organic farming, supply will not meet the demand • Organic farming endorsed mostly by NGOs worldwide Organic Product Defined Those grown without the use of chemical fertilizers/pesticides and with the use of organic fertilizers and botanical sprays extracted from plants Adopted from Pequaria,Phils Types of organic producers Certified organic farms producing for a premium price market Recognizes both ecological & economic benefits Primarily sales oriented (export) Non certified organic farms producing for their own households and/or local markets Basic reason for going organic is intrinsic local benefits ( improved soil, less external input, nature friendly) Challenges Sustainable marketing of organic products (Social vs economic) promoting healthy and environmentally lifestyle through organic may be the aim but you cannot do it sustainably without gains or profit Thus the need to better understand your market The need to know more about marketing and marketing plans While marketing plan alone is no guarantee for success, at least you have considered all factors affecting profitability Importance of Marketing to Enterprise Ventures • Relates the enterprise to outside world •Sells and delivers products / services to customers •Brings investment back to the enterprise Some Concerns • Marketing ones product is the hardest part of being a farmer •Most farmers: * lack the skills and are not familiar with marketing if they need technical assistance in production which they have been doing all their productive lives, then more so in marketing which is new to them * not use to dealing with market participants * neither know how to identify who will buy their product nor determine where to sell their products with profits The usual questions when trying to market produce Lots of people Buying vegetables in the market near me Surely I have a I am producing vegetables Why despite increasing demand for organic products most cannot find a market for their organic produce ready market No assurance of ready Markets Most of the time find themselves taking the same price as those of non organic produce Common Questions on Marketing Organic Products Producers: Why can’t we easily market? Market not yet that developed Consumers unable to differentiate organic from non organic Target market may be erroneously identified Consumers: Why I should pay more? Low supply, high demand Yield may be low: losses diseases, pest, wider plant spacing More organic inputs Labor intensive Shifting trend Produce first Then sell Know market Then Produce to Specifications Requires farmers’ awareness of • who their end consumers are • in what agricultural chain they are in Whether existing market or market still to be developed (as in the case of organic products) You have to know your market ! A Simple Marketing System Information/ communication Industry (sellers) Goods / services money Action / decision Market (Buyers) Value Creation Information/ communication Producers (sellers) Market (Buyers) Goods / services Value creation (cost) •Core competencies •Resources • partners/networks trader processor Payments/revenues Action/ decision Wholesalers/ retailers •End consumers preferences satisfaction levels • consumer relations All Products passes through a value chain to get to a market then and now The only difference is that currently there are proliferations of efficiency driven chains an offshoot of enhanced dynamics in the market place changing mix of players (old and new entrants) changing mix of commodities changing rules of the games These leads to dynamic markets Smallholder producers are ill equipped to compete in these ever increasing dynamic markets (excluded) need to be brokered in to be able to cope/be integrated in dynamic markets (included) Market Analysis Describes current market who the buyers are in terms of: • Market size (volume &value of products) • Buying motives & behavior • Current marketing strategies of key players Cambodia Philippines Indonesia Area (ha) .2%(5,000) 1%(4,000) 9%(40,000) value Targeting export market 250M pesos 40% domestic 60% imports Targeting export market Expansion 10% 10-20% 10% Level infancy Infancy Developing Market Health conscious Health conscious & environment advocates Health conscious Distribution Supermarkets Other buyers (Institutional Supermarkets Other buyers (Institutional ) Specialty stores Demand increasing as well as supply Demand will outpace production Demand increasing as well as supply Farmer groups, NGO assisted Cooperatives, farmer groups Big agribusiness producers •Past /current supply & demand as well as Projected demand • Market shares - key players Primary producers Marketing Core Concepts • Segmentation • Target market • Positioning Market Segmentation Process subdividing a big heterogeneous market into more homogeneous groupings Considerations Market size, accessibility, measurability Product Map Helps determine: Business boundaries Who are your competitors? Which are your products’ substitutes? Sample Organic Rice market Map Rice Consumers Non Rice Consumers Consumption pattern rice as staple Occasional consumers lifestyle Health conscious Non health conscious Income purchasing power High Low Who makes decision Adult decision Kids decision Buying where Specialty shops, supermarkets Wet market Middle Target Market Set of clients which an organization would like to serve or is currently serving identified from different market segments • Creation of an image on the clients’ mind Primary Market Secondary Market Tertiary Market Product Positioning Positioning For Organic Products (current positioning) Creation of an image on the clients’ mind High Quality High Price High quality medium price Marketing Strategies Broad approaches implemented to meet marketing objectives Components: • Product strategies Branding Packaging Labeling • Price strategies • Place strategies - giving a product a name - total presentation of the product - providing information about the product - primarily communicate value of the product in monetary terms - making the right product available at the right place & at the right time thru distribution channels • Promotion Strategies- communicating the strategies (promo mix) sales, advertizing,publicity, personal selling Product Strategies Entails decision : Product line – related products as to function, client needs being satisfied, marketing and marketing channels • width - number of products in the line (short or long) • strategy - to extend product position downward, upward or both Pricing Strategies PRICE value of products expressed in monetary terms Steps in Pricing 1. 2. 3. 4. Set pricing objectives Determine demand Determine costs Determine competitors’ prices and pricing strategies 5. Evaluate different pricing methods 6. Set the price Pricing Methods Cost + % Margin Full cost + Fixed cost + On going Market Price Competitive Pricing Distribution Strategies • Making the right products available at the right place and at the right time; done through distribution channels • Choice of channels dependent on: a. Nature of product b. Capability of the producers to produce c. Willingness of the middlemen to carry organizations products Promotion Strategies • Done to communicate part of the marketing strategies • The promotion mix includes: a. b. c. d. Sales promotion Advertising Publicity Personal selling Marketing Mix by Sample Strategies Price Product Price Product Product Strategy Place Price Strategy Market Study Preparation 1. Define the market objectives 4. Describe the target market Market groupings Market size Market location 3. Conduct further market Estimated market share research Target study population and 5. Forecast demand and sales Survey of buyers’ sample intentions Data gathering methods Sales force composite Instruments to be used Experts’ opinions Market researches and time Quantitative methods of actual conduct of 6. Formulate Marketing Strategies interviews Data analysis and report writing 2. Analyze the market for the products Rapid Market Appraisal Tips Ask key market players perceived constraints market behavior trends (quality and prices) shipping lines, airlines have data on goods transported and transport prices as well Review Secondary Information import statistics prices and origins gaps & opportunities know taxes and fees to pay regulations to follow Usual Challenges within organic rice Value Chain Information/ communication Value creation (cost) Producers (sellers) trader •Core competencies •Resources • partners/networks Limited volume, non sustained trading (high transaction cost - of assembly) •Seeds (source/price) •Lacking in technological knowhow •High certification cost/ Competition with non certified •No Premium price •Needs to be brokered in , cannot do it alone initially Some manipulate prices (increasing prices of NO to O ) • processor Wholesalers/ Market (Buyers) retailers Same milling facilities (O & NO) Volume not big enough to warrant separate milling Side by side display of O & NO rice easily creates confusion (NO taken as O) Point of rice quality reduction (mixed with NO rice) Pass on the cost to suppliers (shelf maintenance, promo) Know your chain, who the participants & end consumers are • enhance coordination (act as one, no longer competitors) • strengthen chain position, participate in decision process • Key is becoming better producers /value adders/ effective marketers •End consumers preferences satisfaction levels • consumer relations •Consumers still unable to differentiate (O & NO) •If able not willing to pay the price differential •Lacking in environmental consciousness Thank You !