Regional Markets

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2 Inclusion of smallholder farmers Abbott and co-authors (1958, 1966, 1979) analysed marketing problems and improvement programmes in the tropics; Slater (1968) studied marketing processes in Latin America. Various authors—Bain (1959), Clodius and Mueller (1961), Scherer (1970), Cubbin (1988) and Baumol et al. (1988)—analysed market competition and market performance. Bucklin (1965, 1970, 1977) gave insight into the structure of vertical marketing systems and food retailing; Harriss (1979, 1981, 1982, 1983) published extensively about the roles of actors in food marketing in the semi-arid tropics. Colman and Young (1989) increased our understanding of the role of markets and prices in economic development; Van der Laan (1986, 1987, 1989) studied the functioning of marketing boards in Africa, and Meulenberg (1986) sketched the evolution of agricultural marketing theory. Early applications of marketing theory in developing countries included Geertz (1963) on social development and economic change in two towns in Java; Bijlmer (1987) on strategies of petty traders in Surabaya, Indonesia; Moser (1977) on upward migration of market sellers in Bogota, Colombia; Siamwalla (1978) on agricultural marketing in Thailand; and Bryceson (1985a, 1985b) on food marketing in Tanzania. Most of these publications included marketing as an entrepreneurial activity or governance of a supply or value chain as framework for the analysis. In the following table, the upper part summarises the themes and focus areas of marketing theory dealing with the entrepreneurial activities in the value chain. The lower part resumes themes, and areas of interest that are about governance issues in the value chain. A more detailed explanation of the table can be found underneath it. Table 2.1 Marketing and governance in the value chain as theoretical constructs Theory Theme Specification Marketing Marketing Schools of thought • Commodity approach • Functional approach • Institutional approach • Marketing management approach Organizational Economics Resource-based view • Access to unique resources? Governance Vertical coordination Marketing Organizational Economics Spot market coordination Organizational Economics Source: Van Tilburg (2010) Coordination in the value chain or distribution channel Coordination through transactions or contracts Industrial Organization: Market performance • Ownership • Contractual • Network • Contracts in a weak institutional environment Market structure analysis Market integration 25
<strong>Regional</strong> <strong>Markets</strong> for Local Development Marketing as an entrepreneurial activity in the value chain Originally, the marketing discipline dealt with the process of getting agricultural commodities from farmer to consumer (Bartels 1970). Before 1950, three schools that viewed marketing as a socio-economic process were developed and gradually integrated: (1) the commodity school, focusing on the nature of the product; (2) the functional school, focusing on the marketing functions needed, and (3) the institutional school, focusing on institutions or organisations facilitating the marketing process (see Hill and Ingersent 1982; Meulenberg 1986; Stoelhorst and Van Raaij 2004). The commodity school dealt with the terms necessary to bridge the gap in place, time and product between producers and consumers. It studied several sub-sectors in depth, such as cereals, coffee, tea, vegetables, fruit, meat or fish. Traders were seen as playing an important sorting function: they adjusted the discrepancy in supply and demand in the various stages of the value chain, from the initial producer sale all the way to retail (Bucklin 1965). This function includes sorting out, which implies breaking down of a heterogeneous supply in homogeneous lots; accumulation, which entails bringing similar stocks from a number of sources together; allocation, breaking down a homogeneous supply into smaller lots; and assorting, which stands for the build-up of an assortment for resa le by retailers. In a cooperative market (see the matrix in chapter 1) these functions can be taken up by the cooperative, while in a hierarchical market, they are usually done by the dominant company in the chain. The functional school focused on three functions: the exchange function, including buying and selling operations and negotiating a contract; the physical function, consisting of contracting for transport, storage or processing; and the facilitating function, comprising trade financing and market information. The institutional school took into account how institutions facilitate the flow of products from producer to consumer in terms of several services: governance, the rules, procedures and actions of a cooperative or a marketing board; standardisation of products and processes, by issuing common weights, measures, quality classes or contract forms; market information services about prices and volumes; finance institutions, which provide trade credit and insurance; and commodity exchanges providing tools to reduce price risk. From the 1950s onwards, the management approach was gradually being adopted in marketing analysis and decision-making (Kotler and Keller 2009). It focused on strategies and tactics of the entrepreneur to produce products or services that meet customer needs (see Meulenberg 1986; Stoelhorst and Van Raaij 2004). The related resourcebased view of entrepreneurship (e.g., Locket et al. 2009; Kraaijenbrink et al. 2010) concentrated on a firm’s unique resources, competences and opportunities to attain a competitive advantage in the market. The question became, can a firm obtain unique 26
Page 1 and 2: Editors: Fred Zaal, Jacqueline Slui
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Page 6 and 7: Acknowledgements Acknowledgements F
Page 8 and 9: Foreword Bart de Steenhuijsen Piter
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