Session 4: Marketing Concepts Strategies and Intermediation Models

Market Positioning/Marketing Strategies
By Dr. Wen-chi Huang, Associate Professor and Chair, Department of Agribusiness Management, National Pingtung University of Science and Technology

Dr. Huang shared many marketing concepts to the group as a way of leveling off on definitions that would later serve as a good foundation for understanding marketing intermediation models.

“Marketing is about making your product identifiable from others. It is not about what you can produce (your capacity) but what the market needs.” There are also different types of marketing: consumer marketing (supplying branded products), industrial marketing (supplying differentiated ingredients to processors and manufacturers) and commodity marketing (supplying undifferentiated raw materials). Another related concept to understand in marketing is quality, or the attributes of the product (usually defined by a set of standards) that will convince consumers to buy it. It is also important to look at the quality of the “total” product, which includes the product, package, and service. In terms of tools, a marketing plan can be developed (for branded products only) to target a select market for a specific product. The key here is to “select your market and not let the market select you”.

We are all aware of the importance of organizing small farmers because of economies of scale. This is also true in applying marketing strategies where organized farmers can work as a team to meet the needs of the markets/different consumers.

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Session 4: Marketing Concepts, Strategies and Intermediation Models

UMFI Experience - Linking Community-Based Enterprises with the Mainstream Markets (Phil.)
By Mr. Rene Guarin, Executive Officer, Upland Marketing Foundation, Inc. (UMFI)

A marketing program established in 1989, UMFI’s current mandate is to provide market access to Community Based Enterprises (CBEs) with support services on access to technology and finance.

UMFI has been successful in helping CBEs get access to the markets because it has the right mix of staff. While it is organized as a foundation with a board of trustees, management is composed of professionals from the industry with expertise, experience, contacts, and the right attitudes. UMFI also knows the market and so it knows what kind of product to sell.

But once CBEs are able to access the market, they require further support to stay competitive in the market. UMFI has helped CBEs survive in the market by positioning community-based products as “healthy” products (i.e. muscovado sugar labeled as healthy sugar), consolidating products in order to recover marketing and distribution costs, and by creating a common brand for sustainability. This means maintaining a shared standard of quality regardless of source or variety (i.e. organic rice). It also protects CBE market shares by erecting market barriers. Creating a strong brand, setting high standards, and getting certifications all make it difficult for new entrants to “copy” the product.

Some results to date include an 89% increase in CBE farmers’ gross income, as well as recognition as the no. 1 brand for organic rice in a 2007 consumer survey.

In terms of lessons learned, it is important to:

Establish partnerships, trust and transparency. UMFI does not have contracts with its suppliers. It counts on the long-term standing relationships that it has with the farmers that they will deliver when they say they will. It continues to strengthen relationships, have regular meetings and provides services. UMFI is transparent about price setting and makes use of the value chain to determine the margins. Profits are directly built in the price and so the distribution of returns is direct (on a per transaction basis). “Trust is important when you start talking business”.

Ensure quality and quantity. At the farmer level, there is an internal control system that looks after this. At the national level, standards are set. However, there are still some outstanding issues: 1) some products do not meet the standards and have to be returned (one strategy to address this is to require smaller deliveries for new suppliers); 2) suppliers that are growing two varieties (of rice) in one field sometimes compromise the quality of their product; 3) there is not enough supply of organic rice to meet local demands, let alone export (looking at converting regular rice fields to organic ones instead of looking for new land).

Focus on core businesses and roles. It is important to know what and when to outsource other tasks. In looking at the role of farmers (are they producers or entrepreneurs?), it is better to look at what business opportunities the farmer can get into. If farmers are in a good value chain, it may not be necessary to “convert” them to entrepreneurs.

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Session 4: Marketing Concepts, Strategies and Intermediation Models

JKCA Experience - Growing Strategy and Activities in the Field (Korea)
Presented by Mr. Chang Hyo Kim, Chairperson, Jeju Kiwi Cooperative Association (JKCA)

Kiwi production has a bright future in Korea. Through JKCA, kiwi farmers are organized and become stockholders of the association. JKCA buys the kiwi from their members and sell to the retailers, only charging a 1% commission. With one hectare per farmer, kiwi farming has been very profitable earning the farmer a net income of US$50,000/ha. Because of better technology and farming techniques, the quality of the kiwi fruit has also improved.

With local kiwi demand and prices increasing, there is now not enough fruit to export. JKCA would like to adopt an export strategy and for kiwi, part of which will entail producing some of the fruit exclusively for export. This will involve tasks such as improving quality and distribution, training farmers, and pursuing new initiatives such as establishing a kiwi-packaging center and a tourist farm. However, the problem right now is that there is no clear government policy for exporting kiwi (exporters just follow regular business regulations).

As it ventures into trade-related activities, JKCA also needs to ensure that it implements measures to safeguard the market for local kiwi producers. Another area for improvement is strengthening its link to agricultural extension services.

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Session 4: Marketing Concepts, Strategies and Intermediation Models

CRS Experience - Support to Agro-Enterprise Development in Nghe An Province (Vietnam)
Ms. Chu Thi Mai Anh, Agricultural & Rural Enterprise Development Project Officer, Catholic Relief Services (CRS)

The CRS has partnered with the Province of Nghe An to promote a territory approach to agro-enterprise development. This means that the project needs to 1) be implemented through the Government administration structure; 2) improve the skills and knowledge of government staff in promoting market oriented production; 3) promote ownership and sustainability; and 4) aim for policy improvement for poverty alleviation through agro-enterprise development.

Following the 5 processes/steps for agro-enterprise development, the project has strengthened the ability of government agencies in promoting agro-enterprise development and project management. It has also contributed to more diversified agricultural products and improved the lives of target communities (through more jobs, value-added, increase incomes and reduced environmental and health issues)

It is important to note the role that the mass organization of farmers play: they are directly involved as members of the project committee and they are instrumental in helping change the mindset of farmers (i.e. in building relationships with the farmers and informing them about the benefits of collective farming). As a collective group, farmers plan together, establish their own regulations and penalties for violations, and develop contracts that specify quality, quantity, time of delivery, etc. This needs to be sustained.


The support to promote agro-enterprises needs to continue beyond the project. This can be done through transfer of knowledge to government staff and encouraging learning-by-doing. While NGOs are taking on a more forward role becoming entrepreneurs, there is a need to enable farmers to respond to the market and make their own decisions (be entrepreneurs as well).

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