Marketing Strategies for the Primary Sector: An Empirical Study

Abstract

1. Introduction Marketing channels are very important in the farming sector since it comprises a large number of small agricultural holdings, most of the agricultural products are undifferentiated, and the farming enterprises are isolated for the final consumer (Ritson 1997). Distribution channel choice is one in which an organization can achieve its marketing objectives within the framework of its marketing strategy (Fifield 1992; Kotler 1994). A marketing strategy that an organization follows aims to identify a competitive and consumer advantage and therefore can be viewed as an integral part of the business strategy (Wind and Robertson 1983). Porter (1980) identified three internally consistent generic strategies for creating a defendable position in the long run for competitors in an industry. The three generic strategies that a firm may adopt are: (a) overall cost leadership, (b) differentiation and (c) focus. Following on from this, four broad strategies based on the above generic strategies were suggested by Fearne and Bates (2000): (i) cost leadership strategy, (ii) differentiation strategy, (iii) diversification strategy and (iv) specialization strategy. Kohls and Uhl (1990) argued that in the food industry most firms mainly adopt the following two strategies: product differentiation and market segmentation. It can be difficult to use the typologies of business strategies presented above to describe adequately the way agricultural businesses behave, due to the nature of farm firms (especially their small scale and dependence on family labour and management) and the environment in which they operate. Generally, little is known about the decision making process of farmers regarding marketing strategy selection and particularly about the factors and the farmers' characteristics that influence them to choose a particular strategic alternative. Some studies have sought to cluster farmers according to their strategic behaviour.. McLeay et al. (1996) identified five strategic groups of crop farmers in New Zealand, while Ohlmer, et al. (1998) clustered Swedish farmers in relation to their decision making. Carter (2001) examined the role of farms in the creation of new business in rural areas. Three groups of farmers were identified by Carter (2001) based on their relative engagement in additional business ownership activities: monoactive farmers, structural diversifiers and portfolio business owners. Distinctive group differences found in their personal, farm business, managerial characteristics and in their perceptions of business opportunities and constrains. Vesala et. al. (2007) explored the concept of entrepreneurial capability of farmers to diversify. Their main focus was on the entrepreneurial identity of portfolio farmers in Finland and the extent to which the differences between portfolio farmers, other farmers and non farm rural businesses can be explained. They found that portfolio farmers have stronger entrepreneurial identity than conventional farmers as well as they have the perception that they are growth oriented, risk takers, innovative, optimistic and having more personal control upon their business activities. Other studies have attempted to identify the factors that influence farmers to adopt a particular marketing strategy. For example, distribution risk is one factor that influences marketing decision making in the agribusiness sector. Risks that agricultural producers face are linked with decisions about the prices, quantity, quality, and the timing of delivery (Royer, 1995). Transaction cost was identified as another factor, which has significant impact on marketing decision-making (Hobbs, 1996). Age, education and farm profit are also, according to Hobbs (1997), some factors that affect farmers using live auction markets: the type of cattle, quick payment and the price received were the most important reasons for selling cattle live-weight. Mishra et. al. (2009) investigated the factors such as farm, operator and household characteristics, farm type and regional location of the farm, that affect the financial performance of new and beginning farmers. …