* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Learner Guide Apply Marketing Principles in Agriculture
Service parts pricing wikipedia , lookup
Affiliate marketing wikipedia , lookup
Market segmentation wikipedia , lookup
Market analysis wikipedia , lookup
Darknet market wikipedia , lookup
Grey market wikipedia , lookup
Pricing strategies wikipedia , lookup
Perfect competition wikipedia , lookup
Food marketing wikipedia , lookup
Marketing communications wikipedia , lookup
Dumping (pricing policy) wikipedia , lookup
Bayesian inference in marketing wikipedia , lookup
First-mover advantage wikipedia , lookup
Ambush marketing wikipedia , lookup
Multi-level marketing wikipedia , lookup
Digital marketing wikipedia , lookup
Sports marketing wikipedia , lookup
Market penetration wikipedia , lookup
Guerrilla marketing wikipedia , lookup
Viral marketing wikipedia , lookup
Youth marketing wikipedia , lookup
Neuromarketing wikipedia , lookup
Direct marketing wikipedia , lookup
Marketing research wikipedia , lookup
Target audience wikipedia , lookup
Integrated marketing communications wikipedia , lookup
Sensory branding wikipedia , lookup
Marketing mix modeling wikipedia , lookup
Marketing plan wikipedia , lookup
Street marketing wikipedia , lookup
Segmenting-targeting-positioning wikipedia , lookup
Advertising campaign wikipedia , lookup
Multicultural marketing wikipedia , lookup
Product planning wikipedia , lookup
Target market wikipedia , lookup
Marketing channel wikipedia , lookup
Green marketing wikipedia , lookup
NQF Level: 2 US No:116126 Learner Guide Primary Agriculture Appl y M a r k e t i ng Pr i nc i pl e s i n Ag r i c u l t u r e My name: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Company: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commodity: . . . . . . . . . . . . . . . . . . . . Date: . . . . . . . . . . . . . . . The availability of this product is due to the financial support of the National Department of Agriculture and the AgriSETA. Terms and conditions apply. Apply marketing principles in agriculture Primary Agriculture NQF Level 2 2 Unit Standard No: 116126 Before we start… Dear Learner - This Learner Guide contains all the information to acquire all the knowledge and skills leading to the unit standard: Title: US No: Apply Marketing Principles in Agriculture 116126 NQF Level: 2 Credits: 2 The full unit standard will be handed to you by your facilitator. Please read the unit standard at your own time. Whilst reading the unit standard, make a note of your questions and aspects that you do not understand, and discuss it with your facilitator. This unit standard is one of the building blocks in the qualifications listed below. Please mark the qualification you are currently doing: Title ID Number NQF Level Credits National Certificate in Animal Production 48976 2 120 National Certificate in Mixed Farming Systems 48977 2 120 National Certificate in Plant Production 48975 2 120 Are you enrolled in a: Please mark the learning program you are enrolled in: Learnership? Your facilitator should explain the above concepts to you. Short Course? Y Mark N Skills Program? This Learner Guide contains all the information, and more, as well as the activities that you will be expected to do during the course of your study. Please keep the activities that you have completed and include it in your Portfolio of Evidence. Your PoE will be required during your final assessment. This Learner Guide contains all the information, and more, as well as the activities that you will be expected to do during the course of your study. Please keep the activities that you have completed and include it in your Portfolio of Evidence. Your PoE will be required during your final assessment. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 3 What is assessment all about? You will be assessed during the course of your study. This is called formative assessment. You will also be assessed on completion of this unit standard. This is called summative assessment. Before your assessment, your assessor will discuss the unit standard with you. Assessment takes place at different intervals of the learning process and includes various activities. Some activities will be done before the commencement of the program whilst others will be done during programme delivery and other after completion of the program. The assessment experience should be user friendly, transparent and fair. Should you feel that you have been treated unfairly, you have the right to appeal. Please ask your facilitator about the appeals process and make your own notes. How to use the activity sheets… Your activities must be handed in from time to time on request of the facilitator for the following purposes: The activities that follow are designed to help you gain the skills, knowledge and attitudes that you need in order to become competent in this learning module. It is important that you complete all the activities and worksheets, as directed in the learner guide and at the time indicated by the facilitator. It is important that you ask questions and participate as much as possible in order to play an active roll in reaching competence. When you have completed all the activities and worksheets, hand this workbook in to the assessor who will mark it and guide you in areas where additional learning might be required. You should not move on to the next step in the assessment process until this step is completed, marked and you have received feedback from the assessor. Sources of information to complete these activities should be identified by your facilitator. Please note that all completed activities, tasks and other items on which you were assessed must be kept in good order as it becomes part of your Portfolio of Evidence for final assessment. Enjoy this learning experience! Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 4 How to use this guide … Throughout this guide, you will come across certain re-occurring “boxes”. These boxes each represent a certain aspect of the learning process, containing information, which would help you with the identification and understanding of these aspects. The following is a list of these boxes and what they represent: What does it mean? Each learning field is characterized by unique terms and definitions – it is important to know and use these terms and definitions correctly. These terms and definitions are highlighted throughout the guide in this manner. You will be requested to complete activities, which could be group activities, or individual activities. Please remember to complete the activities, as the facilitator will assess it and these will become part of your portfolio of evidence. Activities, whether group or individual activities, will be described in this box. Examples of certain concepts or principles to help you contextualise them easier, will be shown in this box. The following box indicates a summary of concepts that we have covered, and offers you an opportunity to ask questions to your facilitator if you are still feeling unsure of the concepts listed. My Notes … You can use this box to jot down questions you might have, words that you do not understand, instructions given by the facilitator or explanations given by the facilitator or any other remarks that will help you to understand the work better. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .................................................................................. .................................................................................. .................................................................................. .................................................................................. .................................................................................. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 5 What are we going to learn? What will I be able to do? .....................................................……………………… 6 Learning outcomes …………………………………………………………………………… 6 What do I need to know? .................................................…..……………………… 6 Session 1 Market research ..............................……………………………….. 7 Session 2 The marketing mix ............................................……………… 16 Session 3 Marketing budgets ...........................................………………… 26 Session 4 Effective distribution of farm produce ...............……………… 33 Am I ready for my test? ........................................................... 41 Checklist for Practical assessment .......................................... 43 Paperwork to be done .............................................................. 44 Bibliography ............................................................................. 45 Terms and conditions ………………………………………………….. 45 Acknowledgements .................................................................. 46 SAQA Unit standard Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 6 What will I be able to do? When you have achieved this unit standard, you will be able to: Apply knowledge of the marketing principles within agriculture for a specific product or service. Specific knowledge on the value of marketing research and the marketing mix will enable learners to understand the marketing process. Understand the importance of the application of business principles in agricultural production with specific reference to marketing. Operate farming practices as businesses and will gain the knowledge and skills to move from a subsistence orientation to an economic orientation in agriculture. Learning Outcomes At the end of this learning module, you must is able to demonstrate an understanding of: The application of the marketing mix to a selected agricultural commodity. The identification of target groups. The monitoring of budgets allocated to the marketing process. Awareness of the value of monitoring time frames and budgets of marketing components. The importance of productivity within marketing channels. What do I need to know? It is expected of the learner attempting this unit standard to demonstrate competence against the unit standard: (ABET 4) Literacy and Numeracy NQF 1,116164 Demonstrate an understanding of the importance of marketing. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture Session 1 NQF Level 2 Unit Standard No: 116126 7 Ma r k e t r e s e a r c h After completing this session, you should be able to: SO 1: Understand the value of marketing research. In this session we explore the following concepts: The process of market research. Resources required for market research. Managing market research. 1.1 Introduction Far too few farmers and agricultural enterprises give detailed thought to exactly what they are trying to achieve through marketing. Clear marketing objectives are needed to aid operational decisions. Marketing objectives should be set with keeping the following in mind: Marketing objective should fit in with broader company objectives. They should be realistic, taking into account internal resources and external opportunities, threats and constraints. Everyone in the company should be aware of the marketing objectives so that everyone can relate these to his or her own work. They need to be flexible, since many business decisions are made under conditions of partial ignorance. They should be reviewed and adapted from time to time to take changing conditions into account. Efficient marketing is essential to the success of a farming enterprise. Producing the best quality produce is of no use if it does not meet the requirements of the market. When considering the establishment of a farming enterprise, it is critical to ask the following questions: What can I produce that the market will want? Is there a market opportunity for the range of crops and cultivars that I can produce in the area of my farm? Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 8 Very simply, when considering whether to embark on a new agricultural enterprise or diversify to new crops on an existing farm, the very first step is to carry out market research. Market research may also be required for adapting existing production processes to be able to service a different, possibly more stable or more lucrative market. Market Research Market research is the process of gathering, analysing and interpreting information about a market, or about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service. The simple questions asked above are not that easy to answer and different people have different answers to those questions. On top of this, crops produced in South Africa are marketed in many countries around the globe and today's global agricultural trade environment is one of over-supply and extensive diversity of produce. Due to the dismantling of tariffs, over-supply and wide product diversity the primary trade regulatory issues are concentrated around technical, sanitary, phytosanitary, environmental and social considerations. The grower’s ability to deal with these considerations will determine his access to world markets. In South Africa, Growers’ Associations have been established by their farming members to research and develop the technical expertise in an attempt to improve access for Southern African crops to international markets. These growers associations are aimed at opening new markets for South African produce as well as ensuring that existing markets are retained. It must also be borne in mind that each of the many export markets that are accessible to South Africa are further segmented into wholesale and retail sectors and the performance of these many different markets varies from year to year depending on such factors as the type and volume of competitive products. The situation is further complicated by the fact that it is not always possible to produce high quality produce of the kind the export market requires in the specific climatic area in which the farm is located. Market opportunities for fresh produce especially are highly dependent on the quality and timing of delivery. From a business point of view it is advisable for a grower to spread risk of his operation, by securing a range of markets. This can be achieved by producing a variety of crops and cultivars because: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 9 No produce producing area can produce the ideal quality fruit at the ideal time for all crops and cultivars; and Fresh fruit markets may change over the course of a season and are not always accessible to all fruit types. Selecting crops and cultivars that are suited to specific markets given the particular geographical and climatic constraints is the critical challenge. For this, high quality market research is vital. 1.2 The process of market research The market research process involves a number of key steps: Consumer Analysis – Since all marketing plans should begin with a look at the all-important consumer, the first step is to conduct a consumer analysis. Consumer analyses identify segments or groups of consumers that have similar needs so that marketing efforts can be directly targeted at them. Market Analysis – The second step is to carry out a market analysis. A market analyses looks at the broader view of potential consumers that could be included in the market location, size and trends. Competition analyses – is conducted to ascertain your position as a supplier, relative to that of your competition. Distribution Channels – Once you know where you stand in the market, you need to analyse available distribution channels and networks. The efficacy of the distribution network influences the price you can charge, whilst still making a profit. This aspect is further discussed under place in the section on the Marketing Mix below and also in session 4 of this learning material. Marketing Mix – This is followed by the development of the marketing mix that includes the well-documented five P’s of marketing, being: • • • • • Product Place Price Promotion People Financial Analysis – Lastly the financial analysis of the marketing plan is compiled. These six steps have been developed by marketing practitioners over time, and are summarised in Steven Silberger’s the 10-Day MBA. They form the basis of any really comprehensive marketing process. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture Please complete Activity 1 at the end of this session. 1.3 NQF Level 2 Unit Standard No: 116126 10 My Notes … .......................................... .......................................... .......................................... . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................................... ................ Resources required for market research Market research is expensive because is requires the services of dedicated specialists. It is too expensive and impractical for every farmer to do his own market research. In the case of fresh fruit exports, the budget for carrying out such a full market analysis can run into hundreds of thousands of Rands. Farmers can for farmer groups together with exporters and jointly fund such analyses or decide to carry out only parts of the total process. This would depend on the specific objectives of the research program. Where a growers association exists, the farmer can join such association and reap the benefits of market research and access services provided by the association. Normally the Growers association and its activities are funded through a levy that is charged on the produce sold or exported. In most cases where an individual farmer is faced with planting decisions based on marketing prospects he will consult colleagues, technical experts, exporting companies and market agents. In this way he is able to build up enough general information to guide his decision without incurring the cost of hiring marketing professionals. Where investment in the opening of new production areas or the launch of a new cultivar is contemplated, the market research process, whether it involves a group effort or even a relatively small-scale investigation, may requires the services of specialists, either as those within an established grower association or as consultants. Please complete Activity 2 at the end of this session. My Notes … . . . . . .......................................... ......................................... ......................................... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................... ............... Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 1.4 NQF Level 2 Unit Standard No: 116126 11 Managing market research Market research has to be managed, meaning that each stage has to be carefully planned, with appropriate target dates and milestones put in place. Out-sourced services can be costly and careful budgeting must be applied to every phase of the marketing plan. It must also be carefully decided which aspects to include and which to leave out of the process. Once market research has been completed and a marketing plan has been developed the recommendations of the plan must be followed. Implementation does not only refer to basing decisions for new plantings on the results of the market research, but also implies the adjustment of ongoing production practices to agree with the requirements of the market. For example, from market research the grower may very well determine that the export market requires fruit of a specific size and external quality. The production practices on the farm and decisions taken regarding fruit manipulation can then be adjusted to ensure that the majority of fruit produced complies with these requirements. In tree crops if a new cultivar of fruit is required, the production process is such that the first harvest may only be available 3 to 5 years or longer after establishment commences. This will bring on high costs associated with the development. If the market research is not done properly and in sufficient depth, the establishment costs may be lost. Marketing objectives that are in line with broader company objectives, realistic, and flexible should be in place and known to all company employees to assist with decision-making. Market research is about establishing what the market wants and whether there is a market for the products that can be produced on the farm. Market research involves consumer analysis, market analysis, and assessment of competition, an assessment of distribution channels, the development of a marketing mix (product, place, price, promotion and people), and the development of a financial analysis. Market research is expensive and is normally conducted together with export agents or is conducted only in part. Managing market research requires careful planning, scheduling, budgeting and implementation. Please complete Activity 3 at the end of this session. My Notes … .......................................... .......................................... .......................................... . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture Concept (SO 1) NQF Level 2 I understand this concept An understanding of the research process with specific emphasis on the value of managerial information is demonstrated. An awareness of the allocation of funds to the marketing research process is demonstrated. An ability to allocate time frames to selected research outcomes is demonstrated. An understanding of the need for access to people with specific marketing skills is demonstrated. An ability to identify target groups is demonstrated. An ability to apply generated managerial information within production processes is demonstrated. Version: 01 Version Date: July 2006 Unit Standard No: 116126 12 Questions that I still would like to ask Apply marketing principles in agriculture Primary Agriculture 1 NQF Level 2 Group Activity: Discuss and draw a Flowchart of your discussions Unit Standard No: 116126 13 My Name: .................. My Workplace: .................. My ID Number: SO 1 AC 1-6 ................... Draw a flow chart detailing the market research process, including who is responsible for each step, and what kind of management report is generated at each step. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 2 NQF Level 2 Individual Activity: Complete the questions below. Unit Standard No: 116126 14 My Name: .................. My Workplace: .................. My ID Number: SO 1 AC 1-6 ................... Explain in your own words why it is important to budget for market research specifically. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 3 NQF Level 2 Group Activity: Discuss in your group and draw an Action Plan Unit Standard No: 116126 15 My Name: .................. My Workplace: .................. My ID Number: SO 1 AC 1-6 ................... Use the flow chart that you drafted in Activity 1. Draw up a detailed action plan with specific timeframes for everyone involved in the market research. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture Session 2 NQF Level 2 Unit Standard No: 116126 16 T h e ma r k e t i n g mi x After completing this session, you should be able to: SO 2: Apply the marketing mix (product, promotion, place, price and people) to the selected enterprise. In this session we explore the following concepts: Marketing mix. Selection of enterprise. 2 .1 Introduction A marketing plan attempts to clarify and characterise the market, the customer and the environment in which the business is being conducted. The marketing mix can be viewed as the controllable part of the marketing plan. It is the grower’s responsibility to control these factors. Often referred to as the four principles of marketing, product, place, price and promotion, as proposed in the well known book by E. Jerome McCarthy entitled Basic Marketing, these four principles can be expanded to include a fifth P, being people. These five principles are referred to as the marketing mix. This section explores the application of these principles to the marketing of fresh farm products. My Notes … ................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . ................................................................................. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................................. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................................. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 17 Figure 2.1: The Marketing Mix Product The critical question that must be asked with regard to the product is: “What is the product and its characteristics that my target market wants?” In order for a farmer to succeed, the product must offer clear and distinct value to the buyer. The product characteristics must also meet those expectations of the target market. Supply and demand is the ultimate judge and jury of success. There may seem to be little opportunity for differentiating traditional crop or staple foods: after all, maize is maize. But on closer examination it is evident that there is ample scope for product differentiation using knowledge of market opportunities as revealed by market research. For example, there are many different maize cultivars. Even the traditional maize crop comprises many different cultivars with different properties, each with their own features and characteristics of grain size, cooking time, colour, internal quality, general appearance, taste and nutritional value. Markets differ in their preference for different maize cultivars and specifications, and these preferences change with time. Market differentiation can also be achieved through techniques such as organic production, distinctive packaging, and by establishing a recognisable brand for the Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 18 product. A product can further differentiate itself through building up a brand reputation of good quality. Consumers will come to associate a particular brand name with the product and with good quality and therefore seek this in their purchases. The way in which the product is presented is also critical. For example, where direct delivery to the retailer occurs, such as packing for Woolworths, the product and packaging specifications are prescribed in detail by the retailer, and have to be strictly adhered to. If you are for example targeting the local processing industry, what is it that makes you an indispensable supplier to them? If it is the bakkie trader or roadside hawker who is important to you, why would they buy your produce rather than that of your neighbour up the road? Is your customer the impossibly difficult buyer at Pick ‘n Pay or Woolworths, who in turn is trying to meet the needs of the buyers in his fresh produce section? Or is it the buyer in Tesco’s or Sainsbury’s in the UK (two overseas retail groups similar to Pick ‘n Pay and Spar) who is insisting on traceability, food safety standards etc, on meeting the needs of their own unique accreditation code, and in receiving product that meets the most stringent standard the world has ever known? Each of these markets has such radically different needs and requirements, and each requires a completely different mix of product and marketing tools to successfully penetrate and maintain it. You may be supplying all of these markets, but have you: Segmented them into the discrete entities? Established what comprises each one? Identified their individual special product needs? Place The critical question that must be asked with regard to place is: “Where does my target market want this product?” or more critically, “How am I going to get my product to the target market?” Place therefore has to do with the distribution networks for getting the product to the customer. It is important to analyse the distribution options, because the choice of channel influences the price you can charge, and consequently the profit you make. Two questions should be asked to provide a basis for a decision on distribution: How can and should my product reach the consumer? How much do the players in each distribution channel profit? Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 19 By working through the answers to these questions it will become clearer how your product should be directed to the market. The commonly used channel intermediaries to the consumer are wholesalers, distributors, sales representatives and retailers. For export fruit, distribution channels are highly specialised and the competitive environment enables the producer to select the appropriate inland transport provider and logistics service provider at the port terminals. Very often decisions relating to transport and logistics are the result of negotiations with the company whom the grower has chosen to export and market his product. Joint decisions are taken for instance on whether product will be shipped in containers or in reefer vessels. Moving fresh fruit by air is expensive and seldom a financially viable option. Road transport of fruit into Africa is exposed to pilferage and border delays that compromise fruit quality. This leaves sea freight as the most viable transport option into Africa. Shipping lines have increased their ports of call and improved transit times to African destinations. An important issue remains placing the maximum number of cartons per pallet (payload) in order to provide the importer with optimal economic benefit on freight costs. Placing fruit into local market destinations involves a trade chain of transporters and local wholesale market agents. The choice of service providers and markets depends on the outcome of the market research. Price The critical question that must be asked with regard to price is: At what price can I sell my product to the customer to ensure the optimum sales but also the best possible profit margin? The price at which the product is sold is critical. This is because a high proportion of the costs involved in producing and packing fresh fruit for a particular market are fixed. Distribution costs vary depending on who does it and where the market is located. Profit is highly dependant on the price earned in the market. It has been said that the market price is the market price – take it or leave it. This is indeed the case in well-supplied markets where large volumes of product are moved at discount prices. In this case the retailer is able to exercise pressure on the supplier. In other cases, where the supplier or grower, has a product that is generally in short supply or is particularly desired by the market, he has more bargaining power and is in a position to more easily influence the selling price in his favour. When produce of a particular variety or specification is in abundance, it is more difficult for the grower to negotiate any form of advanced payment or minimum guaranteed price with the buyer or his export agent. Under such circumstances, the grower may be forced to send his fruit to the market and hope for the best. This is called selling on consignment. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 20 Before deciding what price to ask, the grower should have in mind some kind of pricing strategy. For example, he might decide to work on a cost-plus basis, whereby he simply calculates his costs and adds a desired profit margin. The grower might otherwise decide to try to penetrate a particular market by going in at a specifically low price. On the other hand, he may go in at a high price and skim the market for a short period while competitive product is absent. Whatever pricing strategy is followed, price is a critical aspect of the marketing mix. Promotion The critical question that must be asked with regard to promotion is: How can I promote my product so that my target market knows what a wonderful product I have available? Promotion refers in essence to communication with the customer. In its simplest form, it means message sent, message received and message acted upon. If the product has been produced with the needs and desires of the customers in mind, the communication necessary for getting customers to buy it is through the message used to reach them. Promotion includes all the advertising and selling efforts of the marketing plan. Goal setting is important in developing a promotional campaign. The ultimate goal is to influence buyer behaviour, and therefore the desired behaviour must be well defined. Different products require different promotional efforts to achieve different objectives. For example, if the intention is merely to make the market aware of your product, the promotional mission will be to inform the market about the product and to communicate a ‘need’ message. If the intention is to generate interest in the product, a compelling message is required with the idea of solving a need. If the intention is to generate loyalty, the message should reinforce the brand or image with special promotions. Whether the idea is to pull buyers to a sales outlet or to push a retailer to stock and sell, there are five general categories of promotional effort, being: • • • • • • Advertising; Personal selling; Sales promotion; Public relations; Publicity; and Direct selling There are many techniques for implementing promotional efforts. In the case of promoting the sale of fresh fruit, much depends on the specific market and market segment, and on whether the promotional campaign is generic to a fruit type and grower community, or highly specific and applicable only to fruit of a particular cultivar from a particular grower at a particular time. Promotions may also take the form of general media messages, or so-called above-the-line promotions, or price discounts and in-store promotions, referred to as below-the-line. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 21 Promotions are communication tools. Which, how and when these tools are used depend on specific circumstances. People The critical question that must be asked with regard to people is: Who do I need and how do I need to manage my workforce to achieve the requirements of the market? Neither efficient production nor any of the above components of the marketing mix can be achieved without a productive and motivated workforce. True motivation only comes from the job itself. What is important is the level of empowerment and responsibility delegated with the job, the challenge and recognition associated with the job, and the potential to grow and learn in the job. These are the things that make employees go the extra mile, and the way in which these elements are managed is the key to unlocking the real potential of your people. The marketing mix is the controllable part of a marketing plan. The marketing mix refers to the five P’s of marketing, being: • • • • • Product Place Price Promotion People Product: What is the product that my target market wants? Product is differentiated not only by the characteristics of the product itself, such as external and internal quality, shelf-life, seediness, size and maturity time, but also by factors such as production practices and packaging. Place: Where does my target market want this product? / How am I going to get my product to the target market? Price: At what price can I sell my product to the customer to ensure the optimum sales but also the best possible profit margin? The price at which a product is sold is the most essential factor in profitability. Price is generally determined by the market, except where the specific product is in short supply and high demand. Promotion: How can I promote my product so that my target market knows what a wonderful product I have available? Promotion is in essence communication with the customer. There are five categories of promotional effort, being advertising, personal selling, sales promotion, public relations, publicity, and direct selling. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 22 People: Who do I need and how do I need to manage my workforce to achieve the requirements of the market? Please complete Activity 4, 5 and 6 at the end of this session. My Notes … . . . . . .......................................... ......................................... ......................................... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................... ............... Concept (SO 2) I understand this concept An understanding of the market requirements for a specific product on the farm in terms of its appearance (size[s], packaging, etc) is demonstrated. An understanding of the market requirements for a specific product on the farm is demonstrated in terms of the distribution channels needed to get the product to the markets. An understanding of the market requirements for a specific product on the farm is demonstrated in terms of its pricing in relation to the various size(s) and packaging formats offered. The ability to differentiate between the various promotional actions available to the farm for each product format is demonstrated. An understanding of need for productive and motivated human resources within the production and marketing processes is demonstrated. Version: 01 Version Date: July 2006 Questions that I still would like to ask Apply marketing principles in agriculture Primary Agriculture 4 NQF Level 2 Research and Discover Unit Standard No: 116126 23 My Name: .................. My Workplace: .................. My ID Number: SO 2 AC 1-5 ................... What is meant by “target group”? Research and give the typical profile of at least three different target groups that might emerge as part of your market research for selling farm products. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 5 NQF Level 2 Group Activity. Unit Standard No: 116126 24 My Name: .................. My Workplace: .................. My ID Number: SO 2 AC 1-5 ................... In your group, draw a diagram of the marketing mix. Outline the most important considerations for each of the four original P’s of the marketing mix as applied to crop production. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 6 NQF Level 2 Worksheet Unit Standard No: 116126 25 My Name: .................. My Workplace: .................. My ID Number: SO 2 AC 1-5 ................... Explain in your own words how you think a motivated staff member, like yourself, can actively contribute and play a role in the success of the following points related to marketing mix: Product: Place: Price: Promotion: Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture Session 3 NQF Level 2 Unit Standard No: 116126 26 Ma r k e t i n g Bu d ge t s After completing this session, you should be able to: SO 3: Take limited and shared responsibility for the marketing budget. 3.1 Introduction Effective marketing of any farm product starts with: Identifying a marketing objective, such as to generate a specific targeted income from sales of fruit into certain markets; and A plan of how this will be achieved through, for example, promotion of the product, advertising and public relations. Marketing objectives should not be set until all relevant information on the product, the market and the consumer is available. Consumer behaviour and motivation must be thoroughly assessed, particularly that of the company’s target customers. Once marketing objectives has been set, an implementation plan is developed. The marketing plan should have promotion of the product as an integral part. It must then be decided what basic message is to be delivered, to the target audience and what the intended effects may be. Factors to be taken into account when determining how to go about implementing a promotional action plan includes: • • • • • • The The The The The The content and presentation of a media campaign most appropriate media frequency of display of promotional material type and extent of in-store promotions best methods of evaluating the effects of the promotion estimated cost of the campaign Once the decision has been taken on what needs to be done and how, a marketing budget can be developed. A marketing budget tells us the funds that will be required to finance the marketing plan. Furthermore the budget will also determine how and when the money will be spent. The marketing budget indicates the affordability of the plan and how its execution will impact on monthly cash-flow. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 27 The marketing budget can therefore indicate how the marketing plan measures up to selected benchmarks and whether the plan can be carried out as designed, or whether is has to be modified or trimmed in some way. The marketing budget provides vital information for decision-making regarding the wisdom of committing funds to such issues as promotion, advertising and public relations. Components of a Marketing Budget The marketing budget is a resource cost centre, meaning that it generates no income directly and its costs are covered by the company as one of its overheads. The marketing communications mix is made up of personal selling, a range of conventional advertising media, and a range of non-media communication tools. The conventional media tools, which include renting space on television, in newspapers, on posters, and on radio, are referred to as above-the-line promotional techniques. Other marketing communications techniques, such as sales promotions, in-store discounts, promotional sponsorship, and exhibitions do not involve buying space or airtime in conventional media. These techniques are referred to as below-the-line techniques. It is common to talk about marketing costs as being either above-the-line or below-the-line. Marketing communications, in the form of above- and below-theline promotions, lies at the very heart of any marketing plan and budget. Marketing budget include items such as: Above-the-Line Promotions – Outsourced media contracts, sub-divided into various components such as written media, radio and television Below-the-Line Promotions – The costs of in-store discounts, taste panels, display counters, barker cards, other in-store printed material, etc. In addition, costs related to marketing also include: • • • • • Market research; Communication costs, subdivided into printing, telephone, fax, internet, etc.; Travel costs, including local and overseas travel, vehicle and flight costs; Personnel costs, for staff-time dedicated to marketing; and A host of smaller cost allocations if necessary Please complete Activity 7 at the end of this session. My Notes … . . . . .......................................... ......................................... ......................................... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................... Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 28 Short-, Medium- and Long-Term Budgets Creating awareness of and loyalty to a brand or trade name takes time. Confidence in a product is normally built-up over a period of several years, and provision has to be made in the marketing campaign and budget for ongoing activities. When an investment has been made in entering a product into the market, it is unwise not to continue bringing its unique attributes to the notice of potential buyers. The ongoing promotion of the Coca-Cola brand is a good example of this. It is necessary therefore to make provision in marketing planning and budgeting for marketing activities and costs of a long-term nature. Other costs and activities are of a medium- and short-term nature. Most often such plans and the resultant costs will be governed by the current state of the market and its perceived response to below-the-line promotional activities. Monitoring the Budget Budgets are only as good as the management support they are given. It is no use having a budget unless there is an ongoing comparison of actual expenditure against the budget. It is common practice for budget reviews to be conducted quarterly, particularly for those items with recurring and relatively small-scale costs, such as communication and travelling expenses. The commissioning of activities that involve large-scale once-off costs, such as using out-sourced advertising contractors, usually requires special approval where it is confirmed that provision has in fact been made for that level of expenditure. Monitoring of budget is usually the responsibility of the marketing manager or, in a smaller concern, that of the owner of the business. Keeping Abreast of the Needs of the Market Consumer analysis is the first step of the marketing process. It needs to answer such questions as: Who needs us and our farm product today? Who is buying and who is using the product? What is the buying process? The market is constantly changing and adapting. Consumer preference and buying patterns change in synch with changes in disposable income, the introduction of new products, and so on. It is therefore important to regularly monitor consumer and general market preferences. This is done through desk research and, if necessary, through consumer surveys. An integral part of the marketing plan is promotion of the product. Once the marketing plan has been developed, the marketing budget for promotional activities can be developed. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 29 The marketing budget indicates the impact that promotional activities will have on the monthly cash-flow, and whether the promotional plan can be implemented as it is or whether it needs to be changed because it is too expensive. The marketing budget is a cost centre, meaning that it does not generate income. Above-the-line marketing techniques refer to the use of conventional massmedia tools. Below-the-line marketing techniques refer to more direct, personal marketing, such as in-store promotions and sponsorships. Above-the-line and below-the-line marketing forms the integral part of the marketing budget, which also includes the cost of market research, communication, travel, and personnel. The marketing budget includes short-, medium- and long-term costs that allows for the ongoing promotion of the product. Budgeted marketing expenditure must be compared to actual expenditure on an ongoing basis. Changes in the preferences and buying patterns of consumers must be monitored on an ongoing basis. Please complete Activity 8 and 9 at the end of this session. My Notes … .......................................... .......................................... .......................................... . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Concept (SO 3) I understand this concept An understanding for the need of a marketing budget is demonstrated. An understanding of the components of a marketing budget is demonstrated. The ability to differentiate between short, medium and long term budget needs is demonstrated. The ability to have a shared responsibility for the limited monitoring of the marketing budget is demonstrated. An understanding of the importance of the adherence to the needs of market place and the identified target groups is demonstrated. Version: 01 Version Date: July 2006 Questions that I still would like to ask Apply marketing principles in agriculture Primary Agriculture 7 NQF Level 2 Group Discussion Unit Standard No: 116126 30 My Name: .................. My Workplace: .................. My ID Number: SO 3 AC 1-5 ................... Have a group discussion on why the importance of a marketing budget. Write key notes on the discussion. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 8 NQF Level 2 Group Project Unit Standard No: 116126 31 My Name: .................. My Workplace: .................. My ID Number: SO 3 AC 1-5 ................... You have a total of R10,000 this year to spend towards a marketing budget for a fruit farm. Draw up a marketing budget and allocate the R10,000, detailing all the different components of the budget Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 9 NQF Level 2 Individual Activity: Complete the Worksheet Unit Standard No: 116126 32 My Name: .................. My Workplace: .................. My ID Number: SO 3 AC 1-5 ................... Name one short-term, one medium-term and one long-term marketing cost that should be included in the marketing budget. Suggests three ways that you can think of in which you and your team can contribute to the success of the marketing budget through monitoring and active participation. Why do you think it is important to adhere to the needs and desires of the market and your target consumer in the drafting and implementation of your marketing plan. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture Session 4 NQF Level 2 Unit Standard No: 116126 33 E f f e c t i v e d i s t r i b u t i on of f a r m pr od u c e After completing this session, you should be able to: SO 4: Have an awareness and understanding of the importance of effective distribution channels for a specific agricultural commodity. In this session we explore the following concepts: Selection of distribution channels. Transport modes. Co-operative marketing and distribution. 4.1 Selecting a distribution channel For fresh produce in particular, the distribution channel refers to the way and means by which the farm product is moved from the farm to the market. The mechanisms used vary depending on where the market is located in relation to the farm, and on the requirements of the market. Commonly used distribution channels include wholesalers, distributors, sales representatives and retailers. The preferred packaging required by the target market for fresh farm products is an important role in the choice of distribution channel. Fruit destined for the local wholesale market is usually packed either into jute or plastic pockets, usually in 10kg or 5kg units, or into 15kg cartons. Cartons are stacked onto wooden palletised, and transported by road or rail. Pockets are either stacked directly into trucks or palletised for the journey to the market. Informal traders who collect fruit directly from the pack house in their own vehicles may load fruit loose into their vehicles. Fruit for export is packed into specified cartons, most commonly 15kg, with dimensions that are configured for palletisation. Stacked pallets are either loaded onto vehicles or rail trucks, or into shipping containers at the pack house. We can now see that there are many different forms and ways in which fresh farm products leave the farm for their journey to the market. Some products are transported following a cold chain. In the case of lettuce, the harvested lettuce is Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 34 transported from the field to a packing shed that is refrigerated. The lettuces are packed using specific packaging, under refrigeration, store in cold rooms and transported to the retailer in refrigerated trucks by road. The grower or pack house decide which markets to serve, ensure that the packaging form is aligned with market requirements and is cost effectively utilised. The grower or pack house then decide, alone or in consultation with the market agent or exporting company, how the product will be transported to the market or port terminal. In the case of exports, decisions also have to be taken about which logistics service provider and shipping company to use. The cost of transporting the product to the markets of choice in good condition depends on the efficiency and capability of the agencies used. Deciding on which logistics service provider in the distribution channel to use depends on: • • • The ability to provide the desired service The reputation of the service The cost of the service 4.2 Transport Modes The choice of distribution mode has cost implications and therefore has an influence on the distribution budget. The farmer or pack house has to decide which mode of transport to use to convey the packed product to the market. Cost is the main consideration in making this decision, but not the only one. Other factors include the practicality, reliability, reputation, and general standard of service delivery associated with the different modes of transport and transport contractors. Export fruit has to be transported from the pack house to a local depot or port, from there to an overseas port, and from the overseas port to an overseas depot or market. Different modes of transport are in most cases used for the different sectors of this journey. The inland part of the transport leg can be completed by road or rail, or a combination of the two, depending largely on where the pack house is located. Almost all cooperative pack houses and some independently run pack houses are located on rail sidings, in which case rail transport is the logical option. However, in many instances, poor rail services, as a result of unreliable capacity, time delays and uncompetitive tariffs, have resulted in road transport being more attractive. Ultimately, market forces will determine what mode of transport is used. Before the 1980’s, a high proportion of farm products were transported from the interior of the country by rail. Today the situation is very different, with a much Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 35 higher proportion being transported by road, simply as a result of competitive rates and service delivery requirements driving producer decisions. Sea freight accounts for virtually 100% of the transport mode used to convey farm products from South Africa to its various export markets. This is even the case with African markets other than those with borders close to South Africa. On rare occasions air freight is used for exports, but this is usually early in the season of a popular cultivar, when a producer and his export agent decide to be the first on a poorly supplied market. Speciality crops that are placed into niche markets are often transported by air. An example of this is airfreighting of blueberries from South Africa to the UK. South African Blueberry exports occur in the months where blueberry is not harvested in Europe. The consumers are then willing to pay a “levy”’ on the produce. In some instances market prices may, for a short period of time (days), justify the high cost of airfreight. On arrival at overseas ports, the palletised farm product is conveyed most often by road transport to depots or directly to retailers in the case of supermarkets. In the case of locally marketed fresh farm products, depending on the quantities of produce involved, the proximity of rail stations, the location and nature of the market to which the products are being sent, and the price quoted, either road or rail is used. Since relatively small volumes of product are sent by any single producer to any specific market, road is the most commonly used transport mode. 4.3 Cooperative marketing and distribution A cooperative is an organisation comprising a number of individual growers as its members. A cooperative is formed to benefit from the economies of scale that their collective supply and marketing of product can achieve. This benefit can take various forms, most of which relate to the increased bargaining power that large volumes of products can achieve over smaller, fragmented volumes. In terms of the marketing and distribution of fresh farm products, the cooperative has certain features that make it either attractive or unsuitable as a structure for individual growers to use. The members of the cooperative usually comprise a number of individual growers located within a radius of some 50 kilometres of the central pack house or pack houses. These growers will often have between them a spread of crops or cultivars grown under different conditions in different microclimates. As a group the producers can offer the market-sustained volumes of a range of products or cultivars over an extended period. The cooperative bears the brand name of the fruit it packs and markets. To some individual producers, especially larger producers, this arrangement may not be ideal, Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 36 as the individuality of the producer and the quality of his specific fruit can be lost in the larger volumes of the cooperative. The management of the cooperative negotiates with distribution service providers and evaluates market segment options on behalf of its members. Armed with the supply volumes of its members, the cooperative is able to negotiate from a position of strength and is usually able to conclude favourable contracts with export agents and importers. One factor that can weaken the cooperative’s bargaining power is the potential variability of the quality of fruit emanating from its range of producers. All cooperatives have strict quality management systems in place, but quality variation is an inherent risk in a system where fresh farm products are supplied from many individual producers. Distribution Channel Budget Most costs associated with the production and packing of fresh farm products are fixed. Variable costs that growers and pack houses do have some control over include agro-chemicals, communications, labour, and product distribution costs. Since there are various distribution options and logistics service providers from which to choose, costs can be saved in this area. It is therefore important to compare prices for the various stages of the distribution chain and use this information to create a distribution channel budget. The distribution budget serves as the financial expression of the distribution plan and in its formative stages is a useful tool for comparing different options. Monitoring Distribution Channels It is important for the grower or pack house to enter into a contract or service-level agreement with the chosen transport and logistics service provider. In this agreement, the required service delivery standards should be clearly described. The actual service delivery is measured and monitored against this agreement, and payments are made accordingly. To ensure ongoing compliance by the service provider, it is important to maintain short interval control so that service delivery problems can immediately be brought to the attention of the service provider and appropriate action taken. Monitoring the Productivity of Transport Providers and Distributors The most obvious way of measuring the efficiency of transport and distribution contactors involved in the fresh farm product supply chain relates to the final condition and quality of the product they have been responsible for conveying. Fresh farm products are by nature, perishable products with a limited shelf life. Once the product has been produced, harvested and packed, time and temperature become the crucial parameters determining its quality and condition during and after the transport and distribution process. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 37 In citrus, for example, the retention of internal quality and the development of fungal diseases that lead to waste are strongly influenced by post-harvest time and temperature regimes. It therefore follows that the standard of service provided by transport contractors can have a significant effect on the quality and condition of fruit reaching the market. Their efficiency can as a result be measured by their ability to meet the prescribed time and temperature protocols for the consignments of fruit they convey. The time it takes to transport fresh farm products from the furthest production areas to their natural point of distribution is usually not more than three days. When fresh farm products are transported during the cooler autumn and winter months, it are generally not refrigerated while being transported from the production areas of the country by rail or road, because of the high cost of refrigerated transport. Other fresh farm products may require refrigerated transport regardless of the time of year that they are transported because of the inherited product quality requirements. The key requirement for contractors is therefore to meet the time protocol. It is also important that the palletised load is properly positioned and secured, and that the rail truck or road vehicle be fit to be used for this purpose. The latter requirements are laid down in formal contract documents. Once at the port or depot, fresh products destined for export, is held under refrigeration until it is loaded on board a vessel for shipment by sea to the export market. Shipping service providers are required to meet the protocol requirements as stipulated in the contracts. Digital time and temperature monitors located in the port cold stores and vessel decks store all the relevant information required to determine adherence to protocols. These can be read at any time during the voyage and are used as a basis for claiming losses arising from protocol deviations. Monitoring the efficiency of transport and distribution service providers is essential. There are costs associated with the monitoring process and there are costs involved in losses due to protocol deviations. The performance of the service providers impacts on the bottom line and therefore must be budgeted for. Typical budget items for this would be Losses Due To Protocol Deviation and Payments Received for Losses Claimed. Distribution channels refer to how farm products are moved from the farm or pack house to the market. The choice of distribution channel depends on the market location and the requirements of the market, particularly with regard to packaging. Logistics service providers and shipping agents are used to distribute export fruit. The choice of service and service provider depends on the ability to deliver the desired service, the reputation of the service and provider, and the cost of the service. The choice of transport mode are made mainly on the grounds of cost, but also on the grounds of practicality, reliability, reputation, and the general standard of service delivery. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 38 Various modes of transport are used for different legs of the distribution channel, such as road transport, rail transport and shipping. A cooperative is an organisation that comprises a number of individual growers. The advantages of cooperative marketing and distribution include an increased bargaining power because of larger volumes and the ability to supply the market with a wider range of cultivars over an extended period. A factor that makes cooperatives unattractive to certain growers are the loss of individual branding, while the variability in quality from different growers may weaken the cooperative’s bargaining power with regard to marketing. Growers and pack houses have more control over distribution costs. A distribution budget is useful for comparing the costs of various distribution options. The performance of service providers is measured against service-level agreements. The efficiency of transport and distribution contractors can be measured against the condition of the product that they conveyed when it arrives at its destination, and whether the product was delivered within the agreed timeframe. Losses that are incurred as a result of protocol deviations are claimed back from the contractor. Please complete Activity 10 at the end of this session. My Notes … . . . . .......................................... ......................................... ......................................... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................... Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture Concept (SO 4) NQF Level 2 I understand this concept Unit Standard No: 116126 39 Questions that I still would like to ask Co-participation in selecting the best distribution channel for a specific agricultural commodity taking alternative target markets and distribution channels into account is demonstrated. An understanding of the need for the allocation of a budget for each distribution channel and the monitoring thereof is demonstrated. An understanding for the need for monitoring the productivity of the resources involved with the transport of the specific agricultural commodity to its market place is demonstrated. My Notes … ................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .......................................... ........................................ .................................................................................. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture 10 NQF Level 2 Group Activity: Have a group discussion and design a poster Unit Standard No: 116126 40 My Name: .................. My Workplace: .................. My ID Number: SO 4 AC 1-3 ................... Design a poster in your group showing your first choice of distribution channel. Show on the poster how this channel will ensure that your product is distributed effectively and who else will be involved in the distribution process. Make keynotes below on how the efficiency of your distribution channel will be monitored at strategic points, and why this is important. Facilitator comments: Assessment: Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 41 Am I ready for my test? Check your plan carefully to make sure that you prepare in good time. You have to be found competent by a qualified assessor to be declared competent. Inform the assessor if you have any special needs or requirements before the agreed date for the test to be completed. You might, for example, require an interpreter to translate the questions to your mother tongue, or you might need to take this test orally. Use this worksheet to help you prepare for the test. These are examples of possible questions that might appear in the test. All the information you need was taught in the classroom and can be found in the learner guide that you received. 1. 2. I am sure of this and understand it well I am unsure of this and need to ask the Facilitator or Assessor to explain what it means Questions 1. I am sure 1. Explain in your own words why market research would be of value to a farmer. 2. Do you think it is necessary to allocate specific budget, personnel, and time to do market research? Motivate your answer. 3. Who do you think would be the parties involved in doing market research? 4. Do you think it is important to use people with specific marketing skills to do market research? 5. What you think is a target group? 6. List management information and reports that you might know of that would be generated by market research. 7. There are five important components to the market mix. Name them and discuss how each of these would be applicable to the marketing plan of a farm. 8. Do you think that the specific characteristics of a product from a farm, such as quality and size, packaging, etc., is in any way related to specific market requirements? If so, explain how and why. 9. Do you think that the distribution channel of a product from a farm is in any way related to specific market requirements? If so, explain how and why. Version: 01 Version Date: July 2006 2. I am unsure Apply marketing principles in agriculture Primary Agriculture NQF Level 2 10. Do you think that the price of a product from a farm is in any way related to specific market requirements? If so, explain how and why. 11. Give three examples of possible promotional actions that you might engage in when marketing your product. 12. Explain in your own words how productive and motivated people can play a role in the marketing processes of a farm. 13. Give an example of at least one short-term, one medium-term and one long-term responsibility in terms of the marketing plan and explain how this relates to the marketing budget. 14. Make a list of the different components related to the marketing budget. 15. Explain how you would differentiate between shortterm, medium-term and long-term budget needs. 16. Explain in your won words why you think it is necessary to monitor the marketing budget. 17. Discuss with a practical example why you think an effective distribution channel is important for a farm. 18. Give three examples of different transportation modes that can be applied in the distribution of your product. 19. Explain in your own words what you understand by cooperative participation in selecting a distribution channel. 20. Explain in your own words why you think it is important to monitor the budget and productivity of the distribution channel. Version: 01 Version Date: July 2006 Unit Standard No: 116126 42 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 43 Checklist for practical assessment … Use the checklist below to help you prepare for the part of the practical assessment when you are observed on the attitudes and attributes that you need to have to be found competent for this learning module. Answer Yes or No Observations Motivate your Answer (Give examples, reasons, etc.) Can you identify problems and deficiencies correctly? Are you able to work well in a team? Do you work in an organised and systematic way while performing all tasks and tests? Are you able to collect the correct and appropriate information and / or samples as per the instructions and procedures that you were taught? Are you able to communicate your knowledge orally and in writing, in such a way that you show what knowledge you have gained? Can you base your tasks and answers on scientific knowledge that you have learnt? Are you able to show and perform the tasks required correctly? Are you able to link the knowledge, skills and attitudes that you have learnt in this module of learning to specific duties in your job or in the community where you live? The assessor will complete a checklist that gives details of the points that are checked and assessed by the assessor. The assessor will write commentary and feedback on that checklist. They will discuss all commentary and feedback with you. You will be asked to give your own feedback and to sign this document. It will be placed together with this completed guide in a file as part of you portfolio of evidence. The assessor will give you feedback on the test and guide you if there are areas in which you still need further development. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 44 Paperwork to be done … Please assist the assessor by filling in this form and then sign as instructed. Learner Information Form Unit Standard 116126 Program Date(s) Assessment Date(s) Surname First Name Learner ID / SETA Registration Number Job / Role Title Home Language Gender: Male: Female: Race: African: Employment: Permanent: Non-permanent: Disabled Yes: No: Coloured: Indian/Asian: Date of Birth ID Number Contact Telephone Numbers Email Address Signature: Postal Address Version: 01 Version Date: July 2006 White: Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Unit Standard No: 116126 45 Bibliography Books: The 10-Day MBA, Revised Edition, Steven Silbiger, Piatkus Books Limited, 2004 Basic Marketing, E. Jerome McCarthy Farmers’ Weekly Columns, J. P. Hughes, 2005 The Trade Chain of the South African Citrus Industry, Fresh Produce Exporters’ Forum, 2003 Terms & Conditions This material was developed with public funding and for that reason this material is available at no charge from the AgriSETA website (www.agriseta.co.za). Users are free to produce and adapt this material to the maximum benefit of the learner. No user is allowed to sell this material whatsoever. Version: 01 Version Date: July 2006 Apply marketing principles in agriculture Primary Agriculture NQF Level 2 Acknowledgements Project Management: M H Chalken Consulting IMPETUS Consulting and Skills Development Donors: Citrus Academy Authenticator: Le Toit Management Consultants cc Technical Editing: Mr R H Meinhardt OBE Formatting: Ms B Enslin Design: Didacsa Design SA (Pty) Ltd Layout: Ms A du Plessis Ms N Matloa Version: 01 Version Date: July 2006 Unit Standard No: 116126 46 All qualifications and unit standards registered on the National Qualifications Framework are public property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the source. SOUTH AFRICAN QUALIFICATIONS AUTHORITY REGISTERED UNIT STANDARD: Apply marketing principles in agriculture SAQA US ID UNIT STANDARD TITLE 116126 Apply marketing principles in agriculture SGB NAME REGISTERING PROVIDER SGB Primary Agriculture FIELD SUBFIELD Field 01 - Agriculture and Nature Conservation Primary Agriculture ABET BAND UNIT STANDARD TYPE NQF LEVEL CREDITS Undefined Regular Level 2 2 REGISTRATION STATUS REGISTRATION START DATE REGISTRATION END DATE SAQA DECISION NUMBER Registered 2004-10-13 2007-10-13 SAQA 0156/04 PURPOSE OF THE UNIT STANDARD A learner achieving this unit standard will be able to apply knowledge of the marketing principles within agriculture for a specific product or service. Specific knowledge on the value of marketing research and the marketing mix will enable learners to understand the marketing process. Learners will understand the importance of the application of business principles in agricultural production with specific reference to marketing. They will be able to operate farming practices as businesses and will gain the knowledge and skills to move from a subsistence orientation to an economic orientation in agriculture. Knowledge and skills to access mainstream agriculture through a business-orientated approach to agriculture will be gained by farmers. Competent learners will be fully conversant with agricultural business practices and aspects of financial analysis as to provide the environment for the application of quality practices and thus strengthen agricultural practices in general. LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING It is assumed that a learner attempting this unit standard will demonstrate competence against the unit standard or equivalent: • NQF 1: Demonstrate an understanding of the importance of marketing. UNIT STANDARD RANGE Whilst range statements have been defined generically to include as wide a set of alternatives as possible, all range statements should be interpreted within the specific context of application. Range statements are neither comprehensive nor necessarily appropriate to all contexts. Alternatives must however be comparable in scope and complexity. These are only as a general guide to scope and complexity of what is required. UNIT STANDARD OUTCOME HEADER N/A Specific Outcomes and Assessment Criteria: SPECIFIC OUTCOME 1 Understand the value of marketing research. OUTCOME RANGE The research process, budget allocation, personnel allocation, and time allocation should receive the necessary attention. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 An understanding of the research process with specific emphasis on the value of managerial information is demonstrated. ASSESSMENT CRITERION 2 An awareness of the allocation of funds to the marketing research process is demonstrated. ASSESSMENT CRITERION 3 An ability to allocate time frames to selected research outcomes is demonstrated. ASSESSMENT CRITERION 4 An understanding of the need for access to people with specific marketing skills is demonstrated. ASSESSMENT CRITERION 5 An ability to identify target groups is demonstrated. ASSESSMENT CRITERION 6 An ability to apply generated managerial information within production processes is demonstrated. SPECIFIC OUTCOME 2 Apply the marketing mix (product, promotion, place, price and people) to a selected enterprise. OUTCOME RANGE Application of the marketing mix`s components - product and packaging, price, place, promotion and people. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 An understanding of the market requirements for a specific product on the farm in terms of its appearance (size[s], packaging, etc) is demonstrated. ASSESSMENT CRITERION 2 An understanding of the market requirements for a specific product on the farm is demonstrated in terms of the distribution channels needed to get the product to the markets. ASSESSMENT CRITERION 3 An understanding of the market requirements for a specific product on the farm is demonstrated in terms of its pricing in relation to the various size(s) and packaging formats offered. ASSESSMENT CRITERION 4 The ability to differentiate between the various promotional actions available to the farm for each product format is demonstrated. ASSESSMENT CRITERION 5 An understanding of need for productive and motivated human resources within the production and marketing processes is demonstrated. SPECIFIC OUTCOME 3 Take limited and shared responsibility for the marketing budget. OUTCOME RANGE Short term, medium term and long term - personnel, outsourcing, shows, media. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 An understanding for the need of a marketing budget is demonstrated. ASSESSMENT CRITERION 2 An understanding of the components of a marketing budget is demonstrated. ASSESSMENT CRITERION 3 The ability to differentiate between short, medium and long term budget needs is demonstrated. ASSESSMENT CRITERION 4 The ability to have a shared responsibility for the limited monitoring of the marketing budget is demonstrated. ASSESSMENT CRITERION 5 An understanding of the importance of the adherence to the needs of market place and the identified target groups is demonstrated. SPECIFIC OUTCOME 4 Have an awareness and understanding of the importance of effective distribution channels for a specific agricultural commodity. OUTCOME RANGE Allocation of budget, people, transport modes. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 Co-participation in selecting the best distribution channel for a specific agricultural commodity taking alternative target markets and distribution channels into account is demonstrated. ASSESSMENT CRITERION 2 An understanding of the need for the allocation of a budget for each distribution channel and the monitoring thereof is demonstrated. ASSESSMENT CRITERION 3 An understanding for the need for monitoring the productivity of the resources involved with the transport of the specific agricultural commodity to its market place is demonstrated. UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS The assessment of qualifying learners against this standard should meet the requirements of established assessment principles. It will be necessary to develop assessment activities and tools, which are appropriate to the contexts in which the qualifying learners are working. These activities and tools may include an appropriate combination of self-assessment and peer assessment, formative and summative assessment, portfolios and observations etc. The assessment should ensure that all the specific outcomes; critical cross-field outcomes and essential embedded knowledge are assessed. The specific outcomes must be assessed through observation of performance. Supporting evidence should be used to prove competence of specific outcomes only when they are not clearly seen in the actual performance. Essential embedded knowledge must be assessed in its own right, through oral or written evidence and cannot be assessed only by being observed. The specific outcomes and essential embedded knowledge must be assessed in relation to each other. If a qualifying learner is able to explain the essential embedded knowledge but is unable to perform the specific outcomes, they should not be assessed as competent. Similarly, if a qualifying learner is able to perform the specific outcomes but is unable to explain or justify their performance in terms of the essential embedded knowledge, then they should not be assessed as competent. Evidence of the specified critical cross-field outcomes should be found both in performance and in the essential embedded knowledge. Performance of specific outcomes must actively affirm target groups of qualifying learners, not unfairly discriminate against them. Qualifying learners should be able to justify their performance in terms of these values. • Anyone assessing a learner against this unit standard must be registered as an assessor with the relevant ETQA. • Any institution offering learning that will enable achievement of this unit standard or assessing this unit standard must be accredited as a provider with the relevant ETQA. • Moderation of assessment will be overseen by the relevant ETQA according to the moderation guidelines in the relevant qualification and the agreed ETQA procedures. UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE The person is able to demonstrate a basic knowledge of: • • • • • The application of the marketing mix to a selected agricultural commodity. The identification of target groups. The monitoring of budgets allocated to the marketing process. Awareness of the value of monitoring time frames and budgets of marketing components. The importance of productivity within marketing channels. UNIT STANDARD DEVELOPMENTAL OUTCOME N/A UNIT STANDARD LINKAGES N/A Critical Cross-field Outcomes (CCFO): UNIT STANDARD CCFO IDENTIFYING Problem Solving: relates to specific outcomes: • Understand the value of marketing research. • Apply the marketing mix (product, promotion, place, price and people) to a selected enterprise. • Have an awareness and understanding of the importance of effective distribution channels for a specific agricultural commodity. UNIT STANDARD CCFO WORKING Teamwork: relates to all specific outcomes. UNIT STANDARD CCFO ORGANIZING Self-management: relates to all specific outcomes. UNIT STANDARD CCFO COLLECTING Interpreting Information: relates to specific outcomes: • Apply the marketing mix (product, promotion, place, price and people) to a selected enterprise. • Have an awareness and understanding of the importance of effective distribution channels for a specific agricultural commodity. UNIT STANDARD CCFO COMMUNICATING Communication: relates to all specific outcomes. UNIT STANDARD CCFO SCIENCE Use Science and Technology: relates to specific outcomes: • Understand the value of marketing research. • Take limited and shared responsibility for the marketing budget. • Have an awareness and understanding of the importance of effective distribution channels for a specific agricultural commodity. UNIT STANDARD CCFO DEMONSTRATING The world as a set of related systems: relates to specific outcome • Apply the marketing mix (product, promotion, place, price and people) to a selected enterprise. UNIT STANDARD CCFO CONTRIBUTING Self-development: relates to all specific outcomes. UNIT STANDARD ASSESSOR CRITERIA N/A UNIT STANDARD NOTES N/A All qualifications and unit standards registered on the National Qualifications Framework are public property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the source.