Ag Marketing System Exam 3

Agribusiness
Business or industry of farming or agriculture
Fallacy of composition
error of assuming that what holds true for one member of the group will necessarily hold true for the entire group
Flow commodities
Commodities that are produced daily rather than seasonal harvest
Consumer sovereignty
situation in an economy where wants and needs of consumers controls producers
Marketing channel
set of practices or activities necessary to transfer the ownership of goods from point of production to point of consumption
Micro Marketing
marketing strategy in which advertising efforts are focused on a small group of highly targeted consumers
Micro procurement
performance of businesses activities that direct the flow of ag commodities to a firm to satisfy objectives
Functional Approach
Study of marketing organized around a classification of activities (buying, selling)
Behavioral systems approach
Study of marketing that focuses on the interdependence and coordination of all key participants and their marketing activities
Law of Demand
Change in price causes an opposite response in the quantity demanded
Law of supply
Change in price causes similar response in quantity supplied
Market
All possible buyers and sellers of a product or commodity
Monopolistic competition
When a market contains many firms, each competing to sell a product or service that is somewhat different
Oligopoly
Marketing competition among a few firms of fairly similar size
Price maker
entity that has some control over setting price
Product differentiation
Characterization of a market in which buyers perceive significant differences among the products or services by various sellers
Cobweb model
Theoretical description of how prices of a commodity could cycle even if its demand and supply curves are stable
Biological lag
Time period between production decision and delivery of a product
Commodity
Economic good that can be legally produced and sold by almost anyone
Commodity handling
Marketing of commodities like fresh meat and vegetables
Concentration ratio
percentage of industry sales of purchases made by its four largest firms
Convenience yield
Value that motivates a processor to store or offer incentives for input suppliers to store or market a product
Market intelligence
Data about current volume of sales, current and future prices, and events that may influence upcoming prices and sales
Perishability
process of a food losing its desirable characteristics and value over time
Farm-to-retail price spread
difference between prices farmers received and those that consumers pay
Food marketing bill
USDA measure of the total consumer food dollars going to agribusinesses rather than farmers
Market basket
Representative group of domestically produced foods that are sold in food stores
Price cycle
long term repetitive movement of prices
Seasonal price pattern
Set of prices within a year that varies somewhat regularly as a result of the regular influence of the seasons on production, marketing, and demand
Utility
measure of usefulness that the consumer gets from any good
Diminishing marginal utility
as a person increases consumption of a product, while keeping consumption of other products constant, there is a decline in the marginal utility that person derives from consuming each additional unit of that product
Own-price elasticity
Measures responsiveness to price changes by comparing the percentage change in the quantity sold of an item to the percentage change in the price of that item
Income elasticity
Relationship between a percentage change in quantity demanded of a commodity or specific product to a change in the income of the people demanding that product
Engel’s Law
Observation that the percentage of a family’s income spent on food declines as its income rises
Price determination
interaction between supply and demand in market that is used to determine cost for goods and services
Price discovery
process of buyers and sellers arriving at prices for a commodity when market conditions to not permit either group to set prices
Hedgers
taking opposite of ownership positions in cash and futures markets
Speculators
taking ownership position for the purpose of profiting from market price changes
Agricultural marketing system process
All parts of the process that add value to a product including
-farming
-storage
-transportation
-processing
-wholesaling
-marketing
-retailing
How value is added through the marketing channel
-time
-place
-form
Pricing system
A market mechanism or process by which market participants, discover, negotiate, or fix prices
Transaction costs
costs incurred by buyer and seller as they search for market opportunities and make and complete business deals
Pricing systems
-price discovery systems
-price-setting systems
Vertical integration
ownership of contiguous stages in the marketing channel
Vertical coordination
firms share information to improve efficiencies
Quality
Sum of the attributes of a commodity that influence its acceptability and value to buyers and thus the price they are willing to pay for it
Grading
Dividing a commodity into classes according to a set of criteria called grade standards; resulting in classes or groups called grades
Homogeneous demand
Buyers agree on the ordinal relationships of the various qualities of a commodity
Heterogeneous demand
two or more groups of buyers give different rankings to various qualities
Merchants
Take title to goods and take financial and physical risks
Brokers
Intermediaries who arrange transactions but do not take ownership or finance customers
Assemblers
Collect small shipments from producers into larger volume units for sale and shipment to processors and wholesalers
Branding
identification by brand names, trademarks, and so on of products or services by a seller