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Ag Marketing Quiz 5

QuestionAnswer
One extreme of the marketing channel (simple and short channel) Direct Marketing
Other extreme of the marketing channel (longest/least understood) Marketing to foreign consumers
Farmers, processors, and retailers are _____. Independent
Assemblers and wholesalers tend to be ___ ___. Vertically Integrated
Changes in the marketing channel are due to: Growing size of farms; concentration in processing and retailing
Collect small shipments from producers into larger units for processors and wholesalers Assemblers
Prepare fresh products for market, manufacture prepared foods Processors
Distribution centers, storage, transportation, logistics Wholesalers
Supermarkets, restaurants, fast food, bakeries and cafes Retailers
Includes marketing cooperatives, example: dairy Assemblers
Other options for processors to sell to larger-volume retailers: Independent wholesalers; integrated wholesalers; agents/brokers; processors may organize a warehousing/wholesaling operation
Examples of function elimination: farmer's markets; vertically integrated farms; farmer's cooperatives
Firms that perform that function (assembling, wholesaling) are increasingly OWNED or CONTROLLED by farmers, processors, or retailers but they can also be INDEPENDENT Intermediaries
If an intermediary is independent they can be: Merchants or brokers
_____ ____ and oligopoly structures are the main structures in most M-P Channels Monopolistic Competition
Arrange transactions for a commission but do not take ownership or finance customers Brokers
Do take ownership and consequently bear the risk of price and product deterioration but also benefit for any price increases Merchants
____ is essential to improving productivity. Leadership
The firm in a marketing channel that initiates changes in products, procedures, practices, promotion, and prices. Motivates others in the channel to go along. Channel Leader
Who are typically channel leaders? Processors and Retailers
Wholesaler is trying to sell at ___ price. Highest
Retailer is trying to buy for ___ price. Lowest
Behavior can be both ___ and ___. Competitive and Cooperative
Events outside the channel can shift the control out of the channel. Example: home freezers External Event
Events within the channel such as form and packaging can also shift the leadership roles. Example: boxed beef Internal Event
How do packers benefit from the economies of scale? Reduced shipping costs, larger salvage volume of bone and fat, better matching supply and demand, use of the lower wages at the packer versus retail.
3 packers control ___ of meat packing. 80%
Three means of obtaining channel leadership: Branding; Financial strength; firm size
Conditions for brand success: Must obtain homogeneous quality over timer to build trust and reputation, should be easily identified, usually backed by an aggressive and expensive promotional campaign
Manufacturer brands are also called: National brands
Store brands are also called: Private labels
A highly regulated institution where contracts for future purchases and/or sale of commodities are exchanged Futures Market
A ____ is undifferentiated, standardized, and unbranded. Commodity
Four functions of a futures market: Pricing, risk-shifting, provision of financing, market information
Futures market provides a mechanism by which users (farmers, processors, retailers, elevators) can establish prices for commodities at some point in the future Pricing
Users can transfer the price risk on commodities they are carrying or are needing that they cannot sell or buy until some point in the future Risk-shifting
Futures markets are used to reduce price risk- lenders often require some hedging program before they will lend you money Provision of financing
Futures markets are the largest source of price expectations in existence- and speculators are an important part of the price discovery process Market Information
A ___ can be traded in futures markets Commodity
A commitment to make or take ownership of a specific quantity and quality of a given commodity at a predetermined place and time in the future Commodity Futures Contract
Uncertainty due to volatile price swings Price Risk
A futures contract specifies: Commodity type; grade or quality; contract size, where delivery/purchase is to be made; date delivery/purchase is to be made
A hedge is meant to___. Protect
What does a hedge protect? The value of cash market inventory
Who is a futures hedger? Someone holding both cash and futures market positions
How is futures hedging implemented? By establishing a futures position that is "equal and opposite" to the current cash market position
Why hedge? To transfer cash price risk to someone else
Created by: ellenc6