Marketing Strategies for California's Agricultural Production
Document information
| Author | Hoy F. Carman |
| School | University of California, Davis |
| Major | Agricultural and Resource Economics |
| Year of publication | 2002 |
| Place | Davis |
| Document type | chapter |
| Language | English |
| Number of pages | 31 |
| Format | |
| Size | 1.04 MB |
- California agriculture
- food marketing
- horticultural production
Summary
I. Overview of California s Agricultural Production
California's agricultural production is characterized by its climatic advantages and diverse crop offerings. The state leads the U.S. in producing approximately 65 crop and livestock commodities, contributing significantly to the national agricultural economy. In 2002, California's agricultural sector generated $26.1 billion in farm gate sales, with fruits, vegetables, and nuts accounting for 55% of this value. The dominance of California in the U.S. horticultural sector is underscored by its substantial market share in key commodities. The technological and infrastructure advantages of California's agricultural sector enable it to maintain a competitive edge. The chapter emphasizes the importance of understanding these dynamics to develop effective marketing strategies that can leverage California's unique position in the agricultural market.
1.1 Challenges in Marketing
Marketing California's agricultural products presents unique challenges, particularly due to the perishability of many fruits and vegetables. Ensuring high quality and year-round availability is crucial for maintaining consumer demand. The maturity of the U.S. market poses additional challenges, as population growth and income elasticity for food are low. This results in intense competition among firms for market share. The introduction of new products and the availability of seasonal items year-round, often through imports, have increased the variety of substitute products. Consequently, demand for staple items like oranges and apples has been dampened. Understanding these challenges is essential for developing effective marketing strategies that can adapt to changing market conditions.
II. The Importance of Marketing in Agriculture
The U.S. food industry is the largest globally, with a total value of $485.2 billion in retail sales in 2002. Marketing plays a pivotal role in this sector, accounting for a significant portion of food costs. The farm share of the market basket has declined over the years, indicating a shift in the economic dynamics of food production and marketing. The U.S. Department of Agriculture provides measures of food costs, highlighting the importance of marketing in determining the welfare of consumers and farmers alike. The marketing bill, which reflects the difference between consumer spending and farmer earnings, has also shown a declining trend. This decline emphasizes the need for effective marketing strategies that can enhance profitability for producers while ensuring fair prices for consumers.
2.1 Trends in Food Marketing Costs
The marketing bill's decline from 41% in 1950 to 19% in 2001 illustrates the changing landscape of food marketing. The increasing proportion of the food dollar spent outside the home, which reached 46% in 2002, indicates a shift in consumer behavior and preferences. This trend necessitates a reevaluation of marketing strategies to align with evolving consumer habits. The chapter highlights the importance of adapting to these trends to ensure that marketing efforts are effective and resonate with target audiences. By understanding the dynamics of food marketing costs, stakeholders can develop strategies that enhance their competitive position in the market.
III. Key Trends in Marketing Strategies
The U.S. food market is experiencing slow growth, yet consumer eating habits are diversifying. Demographic changes and evolving attitudes towards food consumption necessitate a shift from mass marketing to targeted strategies. Food marketers must focus on specific consumer segments to effectively meet their needs. Retailers increasingly seek assistance from suppliers in understanding these segments, leading to the emergence of new marketing services such as consumer research and category management. These strategies aim to improve profitability through efficient product assortment and management. The chapter discusses three critical trends: buyer consolidation, changing procurement patterns, and the implications for suppliers. Understanding these trends is vital for developing effective marketing strategies that can adapt to the competitive landscape.
3.1 Buyer Consolidation and Supplier Implications
The dominance of chain stores in the U.S. retail industry has significant implications for suppliers. As retailers consolidate, they seek suppliers who can provide tailored solutions to meet the needs of diverse consumer segments. This shift requires suppliers to adapt their marketing strategies, focusing on building strong relationships with retailers and understanding their specific requirements. The chapter emphasizes the importance of these dynamics in shaping effective marketing strategies that can enhance supplier competitiveness in a rapidly changing market environment.
Document reference
- Marketing California’s Agricultural Production (Hoy F. Carman, Roberta Cook, Richard J. Sexton)
- Food Cost Review, 1995, Agricultural Economic Report No. 729 (U.S. Department of Agriculture, Economic Research Service)
- Fruit and Tree Nuts Situation and Outlook Yearbook, FTS-2002 (U.S. Department of Agriculture, Economic Research Service)
- Vegetables and Melons Situation and Outlook Yearbook, VGS-2002 (U.S. Department of Agriculture, Economic Research Service)
- The Food Institute, 2003