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Market Planning

Market Planning. Marketing Decision. A marketing plan answers the following questions When to price Where to price What form, grade, or quality What services to use How to price When to price and deliver. Steps in Market Planning. Specify goals Determine production schedule and volume

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Market Planning

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  1. Market Planning

  2. Marketing Decision A marketing plan answers the following questions • When to price • Where to price • What form, grade, or quality • What services to use • How to price • When to price and deliver

  3. Steps in Market Planning • Specify goals • Determine production schedule and volume • Estimate production costs • Project market prices • Make the marketing decisions

  4. Specify Goals • Sell at top price • Sell in top 1/3 of price range • Cover total costs plus growth requirements • Cover cash requirements

  5. Determine Production Schedule and Volume • Timing of production available • Harvest • Weaning • Date off pasture • Beginning Inventory + Production - Farm Use - Projected Ending Inventory = Marketable amount

  6. Estimate Production Costs • Enterprise and whole farm budget • Determine breakeven price to cover variable costs • Determine breakeven price to cover fixed costs • Determine breakeven price to cover profit and growth

  7. Projecting Price Factors that influence price • Demand • Supply • Demand and Supply Balance Systematic Price Variations • Trends • Cyclical movements (cattle cycle) • Seasonal price patterns Market information and Projections

  8. Factors that influence price • Demand • Supply • Demand and Supply Balance

  9. Systematic Price Variations • Trends • Cyclical movements (cattle cycle) • Seasonal price patterns

  10. Trends

  11. Trends

  12. Seasonality

  13. Seasonality

  14. Market information and Projections • USDA reports (weekly, monthly, annual) • Extension forecast reports • Commodity organizations • Newsletters (Pro Farmer, Doane, Kiplinger, others) • Private marketing firms

  15. When to Price • Pricing decision can be separated from delivery decision. • Pre-harvest (forward pricing) • At harvest • Post-harvest (storage decision)

  16. Where to Price • Considerations • Transportation costs • Fuel costs • Shrinkage (livestock) • Services provided • Additional marketing services • Hours of operation • Financial condition of market outlet

  17. What Services to Use • Especially applicable to input purchases • Hours of operation, variety of products available, repair services, etc. • Credit terms • Reputation of reliability • Patronage dividends of cooperatives

  18. What Form, Grade, or Quality • Input • Bulk or bag • Delivered or applied • Products • Livestock • Cattle – calves, yearlings, fed • Hogs – feeders, finished • Crops • Hay – Horse hay, cattle hay, ground or pelleted • Vegetables – fresh, frozen, juice • Grains – feed or food quality

  19. How to Price • Cash sales • Hedging • Futures market • Options market • Forward contracting • Cash forward contract • Delayed or deferred pricing contract

  20. Marketing Plans • Project the amount to be marketed • Beginning inventory + production – farm use – ending inventory = marketable amount • Determine possible marketing methods • Cash sales, futures/options, forward contract • Determine timing of sales • Triggers by month, by price targets, or other

  21. Marketing plan tools

  22. Summary • Marketing plan will answer when to price; where to price; what marketing alternatives to use. • Marketing plan process involves goals, production schedule, costs of production, price and timing targets, and a decision.

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