The Role of Marketing

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Chapter 3

• The Role of Marketing

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The Role of Marketingin the Economy
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The Mission of Marketing

• Bridge the gap between the conflicting needs of
  producers and consumers by completing the
  production process

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How theMarketing System Evolved
The advantages of specialization and trade
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The Role of Marketing in the Economy

• The five barriers to consumer satisfaction
• Ownership separation
• Time separation
• Value separation
• Space separation
• Information separation

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The Role of Marketingin the Economy

• The nine marketing functions
• The buying function
• The selling function
• The storage function
• The transportation function
• The processing function
• The grades and standards function
• The financing function
• The risk-taking function
• Market information function

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The Role of Marketingin the Economy

• Marketing provides four utilities
• Form utility
• Place utility
• Time utility
• Possession utility

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The Role of Marketing in the Future of
Agribusiness
American agribusinesses face increased competition
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The Marketing Approach

• Based on the premise that a firms success does
  not come from producing a technically superior
  product, but from profitably satisfying
  consumers needs

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The Prerequisites to an Efficient Economic System

• A free market economy
• Prices reflect the full value of resources
• A high degree of interaction between consumer and
  producers

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The Criteria Used to Evaluate Market Performance

• Efficiency How efficiently goods and services
  flow from producers to consumers
• Fairness How well the marketing systems meet the
  needs of consumers

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

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

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Conduct

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

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Performance

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

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Discussion Questions

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

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Discussion Questions

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

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Discussion Questions

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

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Discussion Questions

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

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Discussion Questions

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