Quality by Consumer Value

Tariq Qamar BalochDirector PMI

Email: tariqqamarb@gmail.com

Consumer ValueThe Consumer Values and will pay for

CleanlinessFreshnessEven size (grading)Ethical productionTasteColourTextureToneShelf lifeArea / farmUse of fertilizers / chemicals

Consumer SurveyFactors influence on purchase of products

How I expect the product to tasteHow easy it is to prepare or cookThe mix of ingredientsPackage size & What is the PriceWhich area it comes from

Consumer Value Consumer Value

The difference between the values the consumer gains from owning and using a product and the costs of obtaining the product.

Often times consumers perceive value differently than the product’s actual monetary value.

Marketing is about influencing consumers’ perceptions of value!

Dr Simon Somogyi, University of Queensland

Marketing Value Chain

Inputs

Producer

First Handler

ProcessorWholesalerRetailerConsumer

Researcher

What is Value Addition Marketing?

Agricultural Marketing involves:creating or refining the form, time, place and possession of commodity into a product and increasing its value to the consumer

Bringing buyers and sellers together Establishing prices Making products more desirable Moving products VALUE ADDING

Dr Simon Somogyi, University of Queensland

ProductsNeeds, wants,and demands

Exchange, transactions,and relationships

Markets

CoreMarketingConcept

Value, satisfaction,and quality

Core Marketing Concept

Dr Simon Somogyi, University of Queensland

Hierarchy of Consumer Food Preferences

Tastes Good VarietyNutritious, Safe, Affordable

Convenient

Promotes HealthLiving Well

Status/

Causes

Incom

e

Dr Simon Somogyi, University of Queensland

Commodities vs. Products Commodity

Generic, little differentiation Many competitors, Supply driven Marketing decisions are primarily related to timing and location

Products Differentiated by something that affects value

Processing, quality characteristics, branding

Less Competitors Demand Driven

Dr Simon Somogyi, University of Queensland

Value MethodsInnovation Excellence

Commodities versus productsQuality managementService ExcellenceOperational Excellence

Technology etc.

Dr Simon Somogyi, University of Queensland

1. The Selling Concept

2. The Marketing Concept

Pull-through systemNotion of customerlifetime value

Factory Existingproducts

Sellingand

promoting Profits throughsales volume

Market Customerneeds

Integratedmarketing

Profits throughcustomer

satisfaction

StartingPoint Focus Means Ends

Marketing and Sales Concepts

Dr Simon Somogyi, University of Queensland

InputSuppliers

Primary producer Trader Wholesaler

Consumers

Retailer

EXAMPLE: Where and how value is created in a chain?

24

For one carton containing one Kg fruit, retailed at Rs.2 each, consumers pay a total of Rs.40. This is the total value created and available to be distributed within the chain.

Freight company

Collector

4

4024

21

21

17

12

140

Chain members

Professor Ray Collins,The University of Queensland

Who gets the value in the chain?Consumers

InputSuppliers

Primary producer Trader Wholesaler Retaile

rChain members

Freight company

CollectorRetailer Rs.16 40%

Wholesaler Rs.3 7.5%Trader Rs.4 10%Collector Rs.1 2.5%Freight company Rs.4 10%Primary producer Rs.12 30%

Professor Ray Collins,The University of Queensland

What did each firm do for the value it received?

Retailer Rs.16 ……………………………………………………………………………..?Wholesaler Rs.3 ………………………………………………………………………………..?Trader Rs.4 ………………………………………………………………………….…….?Collector Rs.1 ………………………………………………………………………….…….?Freight Rs.4 …………………………………………………………………………….….?Producer Rs.12 ………………………………………………………………………………?

What created the value in the chain?

Professor Ray Collins,The University of Queensland

Retailer 40%

Producer 30%

Wholesaler 7.5%

Trader 10%

Collector 2.5%

Freight 10%

Chain members’ shares of the consumer dollar

How does each chain member traditionally maximise their share?

Is there another way to increase members’ shares?GROW THE PIE

Sharing the consumer dollar

One tray of one Kg fruit retailed for Rs.40Pro-poor market development

Professor Ray Collins,The University of Queensland

How can the size of the pie be increased?

61

23 4 5

Increasing the size of the pie means CREATING MORE VALUE

1. Increase revenue2. Decrease costs

There are only two ways to create more value, as measured in dollars:

By Quality assurance at all levels / actors from farm to consumer

Professor Ray Collins,The University of Queensland

How to raise the quality and value addition standards?

How to minimize the Prize? How to balance the profitable financial share of the chain members?

How to grow the overall production in all products to meet the demand of the growing population?

What should we do to satisfy the

consumer

Trust

Commitment

Quality

Thank you for your attentionAny Questions