THE 4 Ps OF MARKETING
The major marketing management decisions can be classified in one of the following four categories: Promotion, produce, price and place. These variables are known as the marketing mix or the 4 P's of marketing. They are the variables that marketing managers can control in order to best satisfy customers in the target market. The marketing mix is portrayed in the following diagram:
The Marketing Mix
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The firm attempts to generate a positive response in the target market by blending these four marketing mix variables in an optimal manner.
PRICING Emphasis will therefore be placed on the market mechanisms that contribute to the pricing of agricultural products and on the way that producers can obtain acceptable prices for their crops.
Understanding the pricing mechanism according to the law of demand and supply. When - as is often the case in Kenya - a multitude of small farmers are faced with a limited number of buyers, it is hard for them to influence prices and they often just accept the price that is offered to them. Nevertheless, the situation has greatly evolved in Kenya.
In Kenya, for several decades, it was the State that set the price of agricultural products, especially cereal and export products. With the withdrawal of State funding and privatization, farmers have become increasingly exposed to the market and need guidance in their marketing activities.
Agricultural prices depend upon various factors which depend upon the conditions of demand and supply. Supply depends upon the total available amounts of a given product and can include - depending on the product - local production, the production of neighboring countries as well as world production in the case of export products. It also depends upon the needs of producers for ready cash: the more they need cash at harvest-time, the more they will be inclined to accept low prices. On the contrary, if they decide to stockpile instead of to sell immediately, market prices will go up. Demand originates from the end users or consumers and is supplied by dealers or intermediaries. End user demand is influenced by product quality and price. Consumers will buy more if the price is low, but they may be willing to pay a higher price (depending on their income) if product quality is good.
The dealer, who acts as intermediaries between the producer and the consumer, make their profit from the difference between the price at which they purchase the product from producers and that at which they sell it to consumers. To do this, they tend to seek out production areas that are easy to access and which require lower transport costs, and those where crops are abundant. If crops are more abundant in neighboring countries, traders he will go there to collect the available products at a lower cost. Distant production area combined with poor road and railway infrastructure are factors that drive producer prices down. If infrastructure is bad, part of the money that the dealer could pay to the producer will be used to pay for transport; therefore, the dealer will tend to bring down the price offered to the producer in order to make up for the high costs of transport.
Another factor that influences prices is competition among dealers. If there are many dealers who want to buy the available products, producer prices will tend to rise. On the contrary, if there is only one dealer and many producers or abundant production, a modest price will be offered.
Lastly, prices vary depending on the seasons. During harvest time, prices are low, while they rise as sowing time draws near. The ability...