Ag Marketing Quiz 5
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| One extreme of the marketing channel (simple and short channel) | Direct Marketing
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| Other extreme of the marketing channel (longest/least understood) | Marketing to foreign consumers
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| Farmers, processors, and retailers are _____. | Independent
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| Assemblers and wholesalers tend to be ___ ___. | Vertically Integrated
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| Changes in the marketing channel are due to: | Growing size of farms; concentration in processing and retailing
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| Collect small shipments from producers into larger units for processors and wholesalers | Assemblers
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| Prepare fresh products for market, manufacture prepared foods | Processors
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| Distribution centers, storage, transportation, logistics | Wholesalers
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| Supermarkets, restaurants, fast food, bakeries and cafes | Retailers
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| Includes marketing cooperatives, example: dairy | Assemblers
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| Other options for processors to sell to larger-volume retailers: | Independent wholesalers; integrated wholesalers; agents/brokers; processors may organize a warehousing/wholesaling operation
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| Examples of function elimination: | farmer's markets; vertically integrated farms; farmer's cooperatives
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| Firms that perform that function (assembling, wholesaling) are increasingly OWNED or CONTROLLED by farmers, processors, or retailers but they can also be INDEPENDENT | Intermediaries
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| If an intermediary is independent they can be: | Merchants or brokers
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| _____ ____ and oligopoly structures are the main structures in most M-P Channels | Monopolistic Competition
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| Arrange transactions for a commission but do not take ownership or finance customers | Brokers
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| Do take ownership and consequently bear the risk of price and product deterioration but also benefit for any price increases | Merchants
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| ____ is essential to improving productivity. | Leadership
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| 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
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| Who are typically channel leaders? | Processors and Retailers
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| Wholesaler is trying to sell at ___ price. | Highest
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| Retailer is trying to buy for ___ price. | Lowest
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| Behavior can be both ___ and ___. | Competitive and Cooperative
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| Events outside the channel can shift the control out of the channel. Example: home freezers | External Event
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| Events within the channel such as form and packaging can also shift the leadership roles. Example: boxed beef | Internal Event
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| 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.
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| 3 packers control ___ of meat packing. | 80%
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| Three means of obtaining channel leadership: | Branding; Financial strength; firm size
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| 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
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| Manufacturer brands are also called: | National brands
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| Store brands are also called: | Private labels
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| A highly regulated institution where contracts for future purchases and/or sale of commodities are exchanged | Futures Market
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| A ____ is undifferentiated, standardized, and unbranded. | Commodity
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| Four functions of a futures market: | Pricing, risk-shifting, provision of financing, market information
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| Futures market provides a mechanism by which users (farmers, processors, retailers, elevators) can establish prices for commodities at some point in the future | Pricing
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| 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
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| Futures markets are used to reduce price risk- lenders often require some hedging program before they will lend you money | Provision of financing
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| Futures markets are the largest source of price expectations in existence- and speculators are an important part of the price discovery process | Market Information
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| A ___ can be traded in futures markets | Commodity
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| 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
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| Uncertainty due to volatile price swings | Price Risk
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| 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
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| A hedge is meant to___. | Protect
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| What does a hedge protect? | The value of cash market inventory
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| Who is a futures hedger? | Someone holding both cash and futures market positions
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| How is futures hedging implemented? | By establishing a futures position that is "equal and opposite" to the current cash market position
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| Why hedge? | To transfer cash price risk to someone else
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Created by:
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