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WELCOME

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MARKET STRUCTURE OF AGRI-PRODUCTS

PRESENTERS :SREELAKSHMI B.S.(2009-31-113)VISHNU V.KUMAR.(2009-31-114)

SONIYA K.MENON.(2009-31-115)

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AGRICULTURAL MARKETING

Services involved in moving a product from

the point of production to the point of

consumption.

Involves planning, production, growing,

harvesting, grading, processing, packing,

storage, transport, distribution, sale

Must be customer oriented.

Must provide the farmer, transporter, trader,

processora profit.

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Market

A structure that allows buyers and sellers to

exchange any type of goods, services and

information.

Two roles: Buyers & Sellers.

Vary in size, range, geographic scale,

location

eg: local farmers market, shopping centers,

commodity markets

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Basic Market Structure

Perfect competition & Imperfect competition.

Imperfect competition comprises of

Monopoly. Oligopoly.

Monopolistic competition.

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Characteristics of Perfect

competition

Infinite buyers or infinite sellers.

Zero entry/exit barriers.

Perfect information. Transactions are costless.

Firms aim is to maximize profit.

Homogenous products.

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Imperfect competition

A market structure that does not meet theconditions of perfect competition.

Different forms include

Monopoly

Oligopoly

Monopolistic competition

Monopsony

Oligopsony

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Monopoly

A single supplier produces and sells good.

Lack of economic competition.

Lack of viable substitute goods.

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Characteristics of Monopoly

Single seller.

Market power.

High barriers to entry and competition.

Economic barriers which include Economies of scale.

Capital requirements.

Technological superiority. No substitute goods.

Control of natural resources.

Legal barriers.

Deliberate actions.

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Oligopoly

Market dominated by small number of sellers

(oligopolists).

Decision of one firm influences other.

Competition can be greater when there are

more firms in an industry.

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Characteristics of Oligopoly

Profit maximization.

Ability to set price.

Entry and exit.

Number of firms.

Long run profits.

Product differentiation

Perfect knowledge.

Interdependence.

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Monopolistic competition

A market in which there are many sellers

producing highly differentiated goods.

Common examples include markets for

restaurants, cereals, clothing

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Characteristics of Monopolistic

competition

Many producers and consumers.

No business has total control over the market

price.

Consumers perceive that there are non-price

differences among the competitors products.

Few barriers to entry and exit. Producers have a degree of control over price.

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Monopsony

A market form in which only one buyer faces

many sellers.

eg: single-payer health care system.

Buyer is termed as Monopsonist.

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Oligopsony

A market form in which the number of buyers

is small while number of sellers is large.

eg: cocoa market, tobacco market

Buyers have a major advantage over the

sellers.

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Duopoly

A type of oligopoly where only two producers

exist in one market

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Market Integration

It refers to the expansion of firms by

consolidating additional marketing functions

and activities under a single management.

A measure of pricing efficiency.

Has an effect of shortening and closing the

marketing chain.

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Varieties of Integration

Vertical integration.

Horizontal integration.

Conglomeration.

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Vertical Integration

Involves the tying together of two or moresuccessive functions in the marketing chain fora commodity.

Decision making becoming more centralizedand increasingly oriented towards theconsumer market.

Market influence depends on the extent towhich products are differentiated or on controlof the supply of a strategic input.

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Advantages of vertical integration

Lower transaction cost.

High certainty of quality.

Ability to monopolize the market.

Disadvantages

Higher monetary & organizational costs.

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Horizontal Integration

Combination of firms that perform similar

functions.

Occurs when a firm gains control over other

firms performing similar activities at the same

level in the marketing sequence.

eg:merger of two meat packing firms.

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Advantages of horizontal

integration

Economies of sale.

Economies of scope.

Economies of stocks. Increases market concentration.

Enhance market power.

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Conglomeration

Branching out of business firms in to other lines ofactivity.

Three types: Product extension, Market extension,Pure conglomerate.

Product extension: two or more different but relatedproducts are produced. eg: poultry processing andmeat packing.

Market extension: a given product is sold in two

different market areas. eg: selling milk in two cities. Pure conglomerate: engaged in unrelated activities.

eg: tele communication and bread baking.

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Advantages of Conglomeration

Reduce investment risk.

Disadvantages

Culture clashes can destroy values.

Affects innovation.

Lack of focus and inability to manage unrelated

business

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Marketing Efficiency

Kohl & Ulvs definition: ratio of market output

to market input

Market outputs: time, place, form, consumer

satisfaction

Market inputs: labor, machinery, packaging,

energy

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Types of Marketing Efficiency

Operational (technological) efficiency: cost of

marketing are reduced without necessarily

affecting the marketing output.

Pricing (economic) efficiency: ability of

market system to efficiently allocate resources

and coordinate the entire production and

marketing process in accordance withconsumer directives.

Goal: efficient resource allocation &

maximum economic output.

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Marketing Costs & Price spread

Every functions or service in market involves cost.

Price spread (Marketing margin) : difference between

price paid by the consumer and price received by the

producer. Total margin includes :

Cost involved in moving the product from the point

of production to the point of consumption. Profit involved in moving the produce from the point

of production to consumption.

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Marketing Channels

Chain of intermediaries, each passing theproduct down the chain to the next

organization, before it reaches the consumer

Wholesaler

FarmerFarmer

Consumer

Retailer

Consumer

Farmer

Retailer

Consumer

Agent

Farmer

Manufacturer

Wholesaler

Retailer

Consumer

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