Agriculture Reference
In-Depth Information
Marketing management
Marketing
, in a broad sense, is focused on the process by which products fl ow through the
U.S. food system from producer to fi nal consumer. It involves the physical and economic
activities performed in moving products from the initial producer through intermediaries to
the fi nal consumer.
Marketing management
involves understanding customer needs and
effectively positioning and selling products and services in the marketplace. In agribusiness,
marketing management is a key function within each of the sectors of agribusiness: the
food sector, the production agriculture sector, and the input supply sector. Marketing man-
agement represents an integration of several different activities: selling, advertising, web
page design, promotions, marketing research, new-product development, customer service,
and pricing—all focused on customer needs, wants, and, ultimately, the quest for customer
satisfaction.
It is this function of management that is most closely focused on the end-user, or the
consumer/customer of the product or service produced. It is often argued that without
satisfi ed customers effectively reached through marketing and sales, no business could
successfully operate. Thus, marketing management plays a fundamentally important role in
most food and agribusiness fi rms. Marketing management is focused on careful and planned
execution of how, why, where, when and who sells a product or service and to whom it is
sold. Decisions here include what products to produce, what services to offer, what informa-
tion to provide, what price to charge, how to promote the product, and how to distribute
the product.
This management function is closely tied to the customer's decision processes, and buyers
differ widely in the food production marketing system—from teenagers for a food manufac-
turing fi rm, to a soybean processor for a farmer, to a large integrated swine business for an
animal health fi rm. The ways in which agribusiness buyers—all of the buyers just mentioned
and many more—make a purchase decision continues to evolve and change.
Financial management
Profi t
is the driver for agribusinesses as they work to generate the greatest possible returns
from their resources. Successful achievement of this objective means making good
decisions, and it means carefully managing the fi nancial resources of the fi rm.
Financial
management
is involved in these areas and includes generating the data needed to make
good decisions, using the tools of fi nance to make effective decisions, and managing the
assets, liabilities, and owner's investment in the fi rm.
Financial information allows managers to understand the current “health” of the fi rm as
well as to determine what actions the business might take to improve or grow.
Balance
sheets
and
income statements
can provide a wealth of information useful in making deci-
sions. Financial analysis provides agribusiness managers with insights by which to better
base decisions. The tools of fi nance such as budgeting, ratio analysis, fi nancial forecasting,
and breakeven analysis can be used by agribusiness managers to develop long-range plans
and make short-run operating decisions.
Another way in which the fi nancial agribusiness scene continues to change is in the
sourcing of funds. Agribusiness fi rms are increasingly accessing larger amounts of funds
or money from national and international capital and fi nancial markets. To be competitive
in those markets, fi rms must generate rates of return comparable to other industries. In the
past, small agribusiness companies may have been allowed by local lenders to exhibit only
