Question

2. Marketing functions add value and costs to food products. Provide a brief interpretation of this key characteristic of the marketing functions. How can farmers use this principle to decide whether or not to integrate vertically (ie., perform some marketing functions that have traditionally been performed by middlemen) (3 points) Give an example to support your argument. (2 points)

Answer 1

Marketing adds both cost and value to the food product.

Advertising Expenditure incurred is the addition to the production cost of the product, while the increased value in the minds of the consumer about the health benefits and other benefits of the product, which induces them to demand more of the product, adds up to the value of the product.

Farmers can very well use it to integrate vertically, by integrating with advertisement firms or advertisers to advertise about their product to increase sales and thus revenues.

For eg a farmer selling soyabean, which is known for its various health benefits can market its product as a health product in the market to attract sales.