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Ag Marketing Quiz 5
| Question | Answer |
|---|---|
| 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
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