Agroindustrial project analysi

THE MARKETING FACTOR 49the government would then more closely inspect the flows of production.Alternatively, governments operate stores that sell staplerations at subsidized prices to low-income consumers. Examples ofthese government controls are ration shops in Pakistan, "fair priceshops" in India, and food stamp programs in Colombia and Mexico.MARKET PRICES. The forces of supply and demand in the marketset prices for most agroindustrial commodities. Predictably, mostdeveloping countries are pricetakers, and leading export countriesare pricemakers. For example, the price of rice in Bangkok-orwheat or corn on the Chicago Board of Trade-serve as referencepoints for the industry. There are multiple prices, however, toaccount for the numerous grades, shipment points, and destinationsof agroindustrial products. To reduce some of the uncertainty ofmarket-price variability, some firms have initiated contracts eitherfixed or tied to futures-market prices. 9A firm's pricing strategy should be flexible enough to be able tomeet changing market conditions. One response is for a firm tomove down the price curve first by skimming, and then by graduallyreducing the price to expand the market, thus achieving economiesof scale and meeting the competition of new firms.PromotionAlmost all products are promoted to some extent in that consumersare provided with product information (price, quality, andso on) to use in the buying decision. Even a superior product willnot reach its sales potential unless consumers are aware of its advantages.The promotional needs of staples and international commoditiesare less than those of other products, but they still exist.The primary tasks in formulating the promotional strategy aredeciding whom to reach, what to say, and how to say it.AUDIENCE. The consumer analysis identifies the DMU that is thetarget of the firm's promotion and specifies differences amongmembers of the DMU (for example, parent, child, sex, age). Butbecause the end consumer is not always the decisionmaker, firms9. This procedure was used, for example, by one of the leading Japanesetrading firms in contracting for corn from Thailand. See "C. Itoh and Co.,Ltd.," Case Study 4-576-041 (Boston: Harvard University, Graduate School ofBusiness Administration, September 1975).