Marketing of Agricultural Products

   

One of the functions of marketing is advertising. In the marketing of agricultural products there are some problems that may arise in the advertising of agricultural products including:

1. The influence of advertising was not so apparent to the product being advertised. This is due to the average properties of the product that is not elastic and the substitution with other goods. So that sometimes the ads are not only enjoy by the farmers who became the advertiser but other farmers who have products similar to those in the ads. This can happen because of agricultural products produced by many farmers and spread in different regions, and it is very difficult to give a special label on the product that generated a lot of these farmers.

2. Many agricultural products must be processed first, so the identity of the product is missing. This will complicate the advertising for the product origin that is not recognized anymore by the consumer.

3. Product quality is not uniform; advertising can only be carried out on a good quality product only.

4. The product is generally a perishable goods and durable, so advertising is difficult to do if it approach the period expired.

5. It's hard to label on agricultural products. Agricultural products are generally not branded, and have a similar appearance and produced by many farmers.

6. Agricultural products have less emotional appeal, which can be used in advertising.

7. Difficulty obtaining funding for a lot of ad creation.

To address the problem advertising the agricultural products, there are some things we can do include:

1. Perform specific product advertising, and local identification.

2. Advertising and marketing is done in farmer groups together so that more can arrange the supply of products on the market
3. Program advertising is done in coordination with other marketing activities.
4. Maintaining the quality / freshness of the product in accordance with the advertised so as to stay fresh when it reached the consumer.
5. Counting the effectiveness of advertising for a product carefully so that ads will remain a profitable thing to do.

 

Business Strategy

       Business strategy can be used to reduce business risks. Some of it is the diversification and integration strategy.

• The strategy of diversification:
Diversification strategy is a growth strategy where the company expanded its operations by moving to different industries or different products / variable. Diversification strategy can be performed on a related business field (related diversification / concentric) or unrelated business (Diversification unrelated / conglomerate)

• The integration strategy:
The strategy of integration is performed by expanding the company's operations by combining the company with other companies in the same industry and do the same thing. Integration can be done through a merger between companies in the same industry.

Repurchase agreement (Repo) and Banker's acceptance (BA).

    

In addition to Treasury Bill (T-Bills) and Commercial Paper (CP), an instrument commonly used in financial markets is the Repurchase Agreement (Repo) and Banker's Acceptance (BA).Repurchase Agreement (Repo) is the buying and selling securities with the agreement that the seller will repurchase the securities sold on the date and at a price set in advance.

Banker's Acceptance (BA), is one of money market instruments that can be transferable. In principle, the BA provides an alternative to credit, especially when goods are shipped to be sent abroad.

a.BA provides an alternative to credit
b.Acceptance period usually ranges from 30 to 270 days, a period of 90 days where the most common
c.BA is a money market instruments are high quality and can be cashed
d.Used in export-import trade

COMMERCIAL PAPER (CP)

    

In addition to Treasury bill (T-Bills), one of the instruments commonly used in financial markets is the Commercial Paper (CP). Commercial paper (CP) is:
• promissory note that is not accompanied by guarantees (unsecured promissory notes) issued by the company to obtain short-term funds and sold to investors in financial markets.
• Promissory Notes in which the issuer promises to pay a certain amount of money at maturity, the maturity period of CP ranged from several days to 270 days.
Issuance of CP can be done directly (direct placement) to the investor or indirectly (indirect placement) by using the services of intermediaries.

Excess Commercial Paper for the publisher:
a. CP interest rate lower than the prime rate (loan interest rate charged to customers primarily banks, so the cost of funds would be cheaper).
b. No need to provide assurance
c. Issuance relatively cheaper because it only involves the issuer and investors
d. More flexible maturity period can be extended with the approval of investors.

For the investor:
a. CP offers a higher income than Certificates of Deposit, Time Deposit or Treasury Bills.
b. Can be resold (discounted) without having to wait for maturity.
c. Relatively have high level of safety due to CP issuers are generally companies with high ratings.

CP weaknesses in terms of investors and issuers are:
a. CP is an instrument for investors who are not accompanied by guarantees (unsecured promissory notes)
b. There is a possibility of doing engineering issuers financial statements to show the state of liquidity and the ability to gain profits.
c. For the publishing company, CP is a short-term funding source so that the company is less flexibility to be used as investment capital.

 

TREASURY BILL (T-Bills)

 T-Bills is a debt instrument issued by a government or central bank with a certain amount to be paid to the holder at a predetermined date.
Characteristics of T-Bills:
a. T-Bills generally have maturities of one year or less
b. T-Bills are considered very safe instruments
c. T-Bills are very easy to be traded
d. T-Bills used as secondary liquidity reserves by financial institutions and corporations
e. T-Bills do not provide direct interest but are sold on the basis of discount, the discount amount determined through the tender process

T-Bills can be used as a means of investment, as this money market instruments are:
a. at no risk
b. have a secondary market
c. risk of loss is very small