Marketing Strategies Of Tomato Farmers
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 5414 words||✅ Published: 17th May 2017|
He got the Teachers Certificate at Mount Mary Training College; Somanya in 1998. He successfully earned a Diploma in French Studies Diplome Universitaire d’Etudes Françaises DUEF at, University of Abomey; Calavi, Bénin in 2007. He further studied at the Kwame Nkrumah University of Science and Technology (KNUST), Kumasi and attained B.A. (Honours), French and Sociology and Social Work in 2008. He enrolled again in the Kwame Nkrumah University of Science and Technology (KNUST) Business School and studied Master of Business Administration (MBA) Marketing 2011.
He has taught in many schools including Botokrom D/C JSS, Grace D/C JSS both in the Brong Ahafo Region, Infant Jesus at Ayeduase, Kumasi. He served as a Research and Teaching Assistant in the Department of Modern Languages of KNUST. He is currently teaching French and English at Jachie Pramso SHS.
Keywords: Marketing strategies, Tomato farmers, Liberalized economy.
This study was conducted in connection with the Master of Business Administration (MBA) dissertation at Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
Purpose: In the mist of intense trade liberalization and globalization when localization and protectionist policies are discouraged, this study sought to find out the role of formal marketing strategies and technology in sustaining increased profitability of tomato farmers in Ghana.
Methodology/Approach: Empirical research was conducted by collecting both primary and secondary information from a sample of 450 tomato farmers, traders and tomato factory personnel. The data from tomato farmers, traders and the tomato factory were accessed through questionnaires and an in-depth interview.
Findings: Formal marketing strategies and technology are complementary factors in the determination of the profitability level of tomato farmers. Farmers who well combine formal marketing strategies with technology are successful. Technology without formal marketing strategies or the vice versa negatively affect tomato farmers’ profitability. Tomato farmers should adopt formal marketing strategies and apply the latest technology.
There is a plethora of literature on marketing strategies that accentuates the imperativeness of marketing functions in organizations. As a result, marketing practices of Small and Medium-sized Enterprise (SMEs), Large and Multinational Companies as well as Not-for-profit Organizations have interested researchers in our recent era. In recent years there have been signs of substantial research interest in marketing practices of SMEs (Sengupta, 2006). Most of these studies have indicated the role of marketing to be critical in the sustainability of the small firms (Sengupta, 2006).
Marketing strategies are extremely vital to organisations’ corporate goals of achieving high revenue. Given that a firm’s survival depends on its capacity to create value, and value is defined by customers (Day, 1990), marketing makes a fundamental contribution to long-term business success. However, businesses that concern themselves with rigorous evaluation of marketing results are in the minority (Ambler, 2000).
Researchers widely agree that marketing in small firms differ from that of their larger counterparts (Fillis, 2002; Gilmore et al., 2001; Hill, 2001a; Coviello et al., 2000). Small firm marketing has been characterised as haphazard, informal, loose, unstructured, spontaneous, reactive, as well as conforming to industry norms (Gilmore et al., 2001). Stokes (2000) adds that in small firms, marketing is used for the needs of the moment and only little attention is paid to plans, strategies and analysis.
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However, this is in contrast of marketing in large firms, which is seen as formal, planned and well structured. One reason for this difference is that small firms have certain limitations. Compared to their larger counterparts, small enterprises have limited resources related to finance, time and marketing knowledge (Gilmore et al., 2001). Consequently, complex theories and sophisticated processes seem to be inappropriate in small enterprises (Hogarth-Scott et al., 1996).
Despite the differences, it has been noted that the basic marketing concepts, such as segmentation, customer orientation, targeting, positioning and seeking for competitive advantage apply to small as well as to large enterprises (Hogarth-Scott et al., 1996).
According to Rolle (2006), in the light of the incidence of huge post harvest losses in Africa and new challenges faced under trade liberalization and globalization, serious efforts are needed to reduce post harvest losses, especially of fruits and vegetables. This would include linking operations and actors involved more closely and systematically, modernizing marketing infrastructure and technologies, capacity building of individual actors, and strengthening the policy or institutional settings for better marketing.
Obviously, post harvest management determines food quality and safety, competitiveness in the market, and the profits earned by producers. The post harvest management of fruits and vegetables in most developing countries in the sub-region is however, far from satisfactory. The major constraints include inefficient handling and transportation; poor technologies for storage, processing, and packaging; involvement of too many diverse actors; and poor infrastructure (Rolle, 2006).
Most scholars on the theme of marketing strategy attempt defining it with broad encompassing concepts and statements. Baker (1978) considers it as being a broad means of achieving given aims. While Luck and Ferrell (1979) simply define it as being fundamental means and schemes. Kotler (1976) thinks it is the grand design to achieve objectives. Some of the definitions of marketing strategy by some scholars are based on marketing concepts such as the marketing mix, the product life cycle, market share and competition and positioning. Foxall (1981) defines marketing strategy as being an indication of how each element of the marketing mix will be used to achieve the marketing objectives. Chang and Campo-Flores (1980) proposed product strategy, the distribution strategy, sales promotion strategy and pricing strategy. While Jain (1981) agrees with them, Udell (1968) simplifies marketing strategy as price and non-price strategies. Kotler (1965) and Baker (1978) outline that; the marketing strategy for a particular product needs should be modified as the product moves through the various stages of its PLC. Bloom and Kotler (1975) explain the issues involved in marketing strategy to be linked to the market share base. They suggest that a company can identify its optimal market share given a particular set of conditions. Once identified, it needs a strategy to achieve the optimum. In line with Buzzell, Gale and Sultan (1979), they agree that a company can choose to build, maintain or even reduce market share alternatively labelled as building, holding and harvesting. Another approach from the literature in the explanation of marketing strategy is the utilisation of the concept of positioning. Wind and Claycamp (1976) explain a product’s position as its overall situation in the market relative to its sales, market share and profitability. Positioning is the selection of a marketing from a range of alternatives (Cravens, 1975 ).
Segmentation as a Marketing Strategy
Some researchers consider skilful segmentation as marketing strategies and as such convince marketers to apply them. The goal is to find several homogeneous groups that differ maximally across one another. They suggest segmentation options and techniques. Dickson and Ginter (1987) convincingly argue that the demand functions should be the theoretical basis for segment definition. They add that other bases for identifying or defining segments will be useful only to the extent that they correspond empirically to these demand functions and lead to identification of the true market segments. Thus, the choice of segmentation variables and the relationship of these variables to the differences in demand functions determine how successfully distinct segments are found.
Relationship Marketing as a Marketing Strategy
Grönroos (1983 and 1980) develops the customer relationship life-cycle model, originally called the “marketing circle”, to cover the long-term nature of the establishment and evolution of the relationship between a firm and its customers. According to Grönroos (1989 and1990), to establish, maintain, and enhance relationships with customers and other partners at a profit, so that the objectives of the parties involved are met is relationship marketing. This is achieved by a mutual exchange and fulfilment of promises. Such relationships are usually but not necessarily always long-term. Establishing a relationship, for example with a customer, can be divided into two parts: to attract the customer and to build the relationship with that customer so that the economic goals of that relationship are achieved.
Berry and Parasuraman (1991) propose that: Relationship marketing concerns attracting, developing, and retaining customer relationships. Gummesson (1994) proposes that: Relationship marketing (RM) is marketing seen as relationships, networks, and interaction. Sheth (1994) defines relationship marketing as: The understanding, explanation, and management of the ongoing collaborative business relationship between suppliers and customers. Sheth and Parvatiyar (1995) view relationship marketing as: Attempts to involve and integrate customers, suppliers, and other infrastructural partners into a firm’s developmental and marketing activities. An integral element of the relationship marketing approach is the promise concept which has been strongly emphasized by Calonius (1988). According to him, the responsibilities of marketing do not only, or predominantly, include giving promises and thus persuading customers as passive counterparts in the marketplace to act in a given way. A firm that is preoccupied with giving promises may attract new customers and initially build relationships. However, if promises are not kept, the evolving relationship cannot be maintained and enhanced. Fulfilling promises that have been given is equally important as a means of achieving customer satisfaction, retention of the customer base, and long-term profitability.
However, some of the scholars have a different perspective of marketing strategy extending its boundaries to affect departments and units of the business. For instance, marketing strategy is viewed as a mechanism that not only guides the SBU in its relationships with its environment, but also influences and shapes its internal structures, processes, and operations (Hambrick, 1980; Miles and Snow, 1978). The Business Dictionary defines marketing strategy as a written plan (usually a part of the overall corporate plan) which combines product development, promotion, distribution, and pricing approach, identifies the firm’s marketing goals, and explains how they will be achieved within a stated timeframe.
Various articles analyze marketing strategies of organisations (e.g. Shaw and Wong 1996; McBurnie and Clutterbuck 1987; Hooley and Lynch 1985; Lai et al. 1992; Siu 2000; and Siu and Liu 2005). Nonetheless, the majority of research concentrates on large firms and few on farmers especially tomato farmers. There are some pertinent questions that need further research. Our investigation sets out to analyze the marketing strategies of tomato farmers in the liberalized economy of Ghana.
The specific objectives of study of our study are to:
assess the marketing strategies of tomato farmers;
establish the viability of the tomato farming;
evaluate the impact of technology on profitability in tomato farming.
The research also attempts to seek answers to the following questions.
What marketing strategies are pursued by tomato farmers?
How viable and is tomato farming?
What is the impact of technology on profitability in tomato farming?
The article is grouped into four main parts. The first part contains introduction including background of the study, the problem statement, objectives of the study and research questions. The relevant literature review and hypotheses are shown in the next section. Method adopted for the study, data and hypotheses testing are found in the third portion of the article. The last segment of the article covers findings, conclusions, and implications for business marketing practice.
Literature and hypothesis
Formal Marketing strategies without technology
Formal Marketing strategies with technology
Informal marketing strategies and lack of Technology
Technology without formal marketing strategies
Figure 1 Conceptual framework ‘marketing strategy and technology diamond’
Figure 1 above describes a model of marketing skills with technology being complementary variables for the success of marketing tomatoes. Thus,
H1 Formal Marketing strategies with technology will positively affect tomato farmers’ profitability.
H2 Technology without formal marketing strategies will negatively affect tomato farmers’ profitability.
H3 Informal marketing strategies (head vending, open market display vocal announcement etc.) and lack of Technology will negatively affect tomato farmers’ profitability.
H4 Formal Marketing strategies without technology will negatively affect tomato farmers’ profitability.
In part as a consequence of structural adjustment, import quotas in Ghana were abolished in 1992 and tariffs for imported agricultural produce have been reduced to 20 percent. As a result, tomato paste imports into Ghana amounted to over 78,000 tons of paste per year of which 12,000 tons were exported after they were repackaged. This suggests domestic tomato paste consumption in Ghana of around 66,000 tons in 2007. Available figures indicate that from 1991 to 2002 the quantity of imported tomato paste rose from 3,600 tonnes to 24,077 tonnes. In addition the value of tomato paste imports also rose from US$5.3 million to US$17.5 million over the same period (Meenakshi, 2006). (Trusty Foods Limited) TFL has alleged that importers use under-invoicing to compete in the Ghanaian tomato paste market and this enables them to command a larger market share. Available evidence suggests that so dramatic has this rise been that Ghana currently ranks second as a destination for imported tomato paste (Meenakshi, 2006). The import surge has been such that trigger volumes were breached in 2000 and 2002. Major exporters of tomato paste to Ghana from 1999 to 2003 have been Italy (36%), China (16%), USA (8%), Spain (7%), Turkey (7%), Greece (6%), Portugal (5%) and Chile (5%). The quantity of imported tomato paste rose from 3,209 tonnes in 1998 to 24,077 tonnes in 2002. As a result, the potential growth of the domestic tomato sector has been hampered.
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Elizabeth and Shashi (2010) however think the local industry cannot satisfy the demand for tomatoes. At current market prices for tomato, domestically produced paste typically will not be competitive with imported paste from the EU and China (Elizabeth and Shashi 2010). They find out that Ghana has neither sufficient supply of fresh tomatoes, nor sufficient processing capacity even if production of fresh tomato increased, to supply the market at current demand. Ghana has a total processing capacity of 1200 tons of fresh tomato per day (500 tons at Trusty Foods and Northern Star, and 200 tons at Afrique Link Ltd in Wenchi). They conclude that Ghana would not be able to produce locally all the tomato paste that is currently imported for domestic consumption, using the three existing large processors.
Boateng (2011) finds that Ghana’s tomato industry has expressed concern about developments in the import of tomatoes and tomato paste. The National Tomato Traders Association (NTTA) has alleged tomato imports from neighbouring Burkina Faso in particular pose a threat to their livelihoods.
Morris and Brady (2004) found that many small farmers, increasing profitability may result from the development of non-traditional agricultural enterprises, non-traditional crops, markets, and/or adding value to products may be the key in today’s agriculture. Thus the production of different crops, and/or improving some foods, from simply marketing them raw to preparing them in different forms, and therefore adding value to them, appears to be a promising alternative for many growers. In the agricultural sector adding value can contribute to farmers’ maximisation of their produce, both in quantitative as well as in qualitative terms, while at the same time they benefit commercially.
Not agreeing entirely with earlier researchers, Born and Bachmann (2006), realise that adding value to farm produce, while not a panacea to “cure” existing food-related challenges, can provide some relief, either directly or indirectly to many farmers. In commercial terms, adding value can take place at farmers’ markets, where farm operators can avoid middlemen and maximise their sales (Kirwan, 2004 and Abel et al., 1999). In this regard, Brunori and Rossi (2000,) found that in some communities, selling directly to consumers allows farmers to employ more family labour and increase the value-added on the farm”. Along these lines, Born and Bachmann (2006) indicate that there has been a tremendous growth “in ‘adding value’ to raw agricultural products”, and that value-added products can “make a positive contribution to the community” (Born and Bachmann, 2006).
The process of adding-value to foods can be as simple as packaging lettuce or other foods, however, many other forms exist: food processing and marketing (Falk, 2002), distributing, cooking, combining, churning, culturing, grinding, or labelling (Born and Bachmann, 2006). Adding value to foods can increase food variety, as well as food availability, particularly when fruit, vegetables and other food leftovers that otherwise would be discarded are further processed into conserves, pickles, sauces and many other varieties of food products.
Fulton (2003) explains that increasingly, farmers are creating producer alliances with other growers and investing in value-added business activities as a marketing strategy.
In the study of Hee and Jae-Eun (2011) they found that organic food retailers develop effective marketing strategies emphasizing ecological beauty or product safety to satisfy the values of potential consumers. The study also suggests that these retailers try to change consumers’ perceptions of higher prices to affordable prices using marketing strategies (e.g. discount, advertisement, new product development), which make consumers believe that they are capable to buy organic personal care products. Organic personal care product retailers attract potential consumers by displaying their products near the organic food sections at a grocery store. Organic personal care product retailers develop combine management activities called co-marketing with organic food product retailers.
In addition, food networks is another strategy. Renting et al (2003), realise that some UK supermarkets buy and add value to fresh produce bought from farmers, including in the preparations of fresh salads and pies (Fearne and Hughes, 1999). In this process, consumers are introduced to local produce and presented with the product’s transformation into meals for their convenience and delight. Despite these proactive efforts by some supermarkets, such as in improving quality and safety standards, or in purchase integration and consolidation (Reardon et al., 2003; Weatherspoon and Reardon, 2003), large supermarkets have also contributed to major negative impacts among small, independent food growers. For example, in some cases supermarkets’ presence has resulted in the “exclusion” of small farms (Reardon et al., 2003; Weatherspoon and Reardon, 2003), squeezing and threatening the very existence of this group of food producers.
With regard to promotion, print media – like teen magazines – as well as magazines dealing with sports or animals, represent an appropriate communication channel for directly addressing juveniles (Angelika and Ulrich, 2011). In comparison to the communication channel; television, print media mainly have the advantage of being more affordable (Dammler et al., 2000) for producers of organic products as many of these are small- or medium-sized companies. In general, print media only reach smaller groups of people and their stimulus is less intensive. However, it can be applied efficiently to systematically address target groups with high involvement for particular topics (Dammler et al., 2000).
In order to enhance a positive image of organic products furthermore, testimonials, such as celebrities from music, movies, television or sports represent relevant persons of identification were utilized in ads (Blackwell et al., 2006). Communication measures should increasingly encompass those channels that attract customers: chat rooms, weblogs and podcasts. Communication with juveniles is seen as one of the most promising and challenging marketing measures of the future in order to increase their involvement in organic food (Niessen, 2010).
In countries with successful domestic tomato processing, the fresh and processed markets may be fully integrated or fully or partially separate. In the US, the fresh and processed markets are completely separate and so tomatoes for each can be considered as separate commodities (Allen 2008). Tomatoes for processing typically have a higher percentage of soluble solids and are grown under contract between growers and processors. This market can be characterised by extremely high yields and low prices. In contrast, fresh tomatoes are sold on the open market and prices are higher (USDA 2009). For example, in 2007, farmers in California were paid as little as 3 cents per pound of processing tomatoes, while nearby heirloom tomatoes were selling for $2.50 per pound at the farm gate (Allen 2008).
However, in most developed tomato sectors, tomatoes for processing and the fresh market are somewhat integrated (USDA 2009). For example, in Turkey, tomatoes for processing tend to be grown on small farms with 80% involving contracts between the farmer and the processor prior to planting. In Mexico, most of the country’s processing tomato production is in Sinaloa and so is spatially separated. However, product moves between fresh and processed markets according to relative prices (Cook and Calvin 2005).
According to Pitt et al. (1997) price management includes a large number of decisions. Firms make decisions regarding price objectives, overall price strategy, structural questions regarding product line and market segment price differentials, the employment of various types of price promotions and discounts, and the establishment of specific price levels for individual products and services. An observation of pricing decisions in many companies in markets and countries around the world suggests that a firm’s pricing actions have at least four key underlying dimensions.
The first of these is the extent to which pricing decisions are cost-based versus market-based. Cost-based pricing finds management placing far more emphasis on covering its own costs than on other determinants of price (e.g. demand conditions, competitive market structures, company marketing strategy, etc.). It typically involves a reliance on some sort of cost-plus, keystone, or target return formula. Market-based pricing is more customer-centred; wherein the principal purpose of price is to reflect the amount of value the customer is getting from the firm’s total product and/or service offering (Pitt et al, 1997).
The second component is concerned with whether pricing is more risk-averse or risk-assumptive. Risk-averse pricing represents a conservative approach. Prices are modified only when absolutely necessary, price levels are kept in close proximity to those of competitors, and the price structure is kept as simple as possible. The main characteristic of the pricing strategy is a reluctance to “rock the boat”. Risk-assumptive pricing finds managers employing pricing schemes that are more novel, untested, and that have the potential of producing losses in revenue to the firm. However, there is a calculable probability of greater payoff should they succeed (Pitt et al, 1997).
Again according to Pitt et al. (1997) the third component emphasizes whether a firm’s pricing is done in a more reactive or proactive manner. Reactive pricing involves mimicking the price moves of competitors, adjusting prices only after a change in regulations or a new technological breakthrough that radically affects costs, and so forth. Proactive pricing describes the firm that takes a leadership role not only in changing price, but in being the first to introduce new pricing structures and payment schemes. It also reflects more aggressiveness in pricing, as well as speed or quickness in adjusting prices to reflect new opportunities.
The fourth underlying component is the extent to which management emphasizes standardization versus flexibility in pricing. Standardization is reflected in a tendency to charge a universal price for one’s product or service regardless of the user, the buying situation, or environmental (including competitive) contingencies. Flexibility, alternatively, finds the company varying prices based on segment or user elasticity, time and place of purchase, as well as in response to opportunities for product or service unbundling or bundling, and anticipated or actual moves by competitors, among other factors (Pitt et al, 1997).
There may well be other underlying dimensions which characterize a firm’s pricing behaviour, (e.g. an ethical dimension, although ethics in pricing are not all that well-defined). These dimensions above clearly interact with each other. Thus, being more proactive with one’s pricing actions may entail greater risk. The success of firms in virtually all industries is increasingly dependent on their ability to engage in pricing that is market-based, risk-assumptive, proactive, and flexible. We refer to this combination of elements as entrepreneurial pricing (Pitt et al, 1997).
The descriptive study was adopted for the purpose of this research. Empirical data in the form of both quantitative and qualitative data was gathered.
Tomato farmers whether large scale or subsistence farmers were the target because they produce the tomatoes for consumers and supply the industry with the chief raw material, (tomatoes). Their marketing tactics and level of technology were assessed through questionnaires. Wholesale buyers and sellers (the market queens) form part of the tomato industry because they purchase from the farmers (production unit) and sell to retailers who are in contact with individual consumers. Data from them made the study complete.
The Northern Star Tomato Company Limited (NSTC) has a stake in the industry because it also buys tomatoes from the farmers to process them into paste. Information from them also made the findings of the study complete and unbiased.
Though very difficult to estimate as the 2010 population and housing census were inaccessible at the time of this research, according to the 2000 census, the region had a population of 920, 089 making it the ninth most populous region in Ghana (Ghana Statistical Service 2000).
The major occupations in the region were; agriculture and related workers (66.4%), production and transport equipment workers (14.7%), sales workers, (9.6%), service workers (4.0%) and professional, technical and related workers (3.8%). In all the districts, agriculture and related workers are the single largest occupation. Approximately 611,000 people were farmers. It was difficult to determine the number of tomato farmers from this population. The researchers sampled 260 tomato farmers, 60 tomato traders and 10 workers at the Northern Star Tomato Company Limited (NSTC).
Convenience sampling was appropriate for the tomato farmers, wholesale buyers and sellers (the market queens) and the retailers while both convenience and purposive sampling was adopted for the top management of Northern Star Tomato Company Limited (NSTC).
Purposive sampling provided us with in-dept information sought after. Thus the top management of the Northern Star Tomato Company Limited (NSTC) was targeted with purposive sampling while the workers sampled conveniently.
Apart from questionnaires that gathered data from the tomato farmers, wholesale buyers and seller (the market queens) and retailers, semi-structured in-depth interview was suitable for the workers of Northern Star Tomato Company Limited (NSTC). Literature review also deeply explored into the marketing strategies of the tomato industry in the Upper East Region of Ghana.
Both open and closed ended questions form the questionnaires. There were two different sets of questionnaires for the farmers, the wholesale buyers and sellers. The first part of the questions generally boarded on demographics of tomato farmers and traders. The last two sections sought to measure the marketing skills and level of technology of the farmers. These were interviewer administered because many of the respondents were illiterates. Questions were even interpreted in to the language understood by the respondents. On the other hand, those who were able to read and answer the questions were self-administered.
Likert scale was adapted to measure opinions on Marketing strategies and level of technology of tomato farmers. Thus opinions were measured with 5-point scales ranging from 1 (total disagreement) to 5 (total agreement).
For the management of the Northern Star Tomato Company Limited (NSTC), an in-depth interview was appropriate as this enabled the researchers to probe deep for rich data. With an interview guide and the 5-point scales ranging from 1 (total disagreement) to 5 (total agreement), data collected with this tool was effective and successful.
The target population was served with introductory letters from the Department marketing and Corporate Strategy Kwame Nkrumah University of Science and Technology (KNUST). This and the professional approach by the researchers, assured respondents of their confidentiality. Averagely, detail data was willingly given for the success of the study.
Marketing strategies- market research, segmentation, targeting, positioning, relationship marketing IMC tools: advertising, promotion, public relations, internet marketing etc. Technology- modern farming implements and practices (fertilizers, weed killers irrigation facilities etc), haulage, processing and storage.
Explanation of Measurement Item
MS1: Conducting marketing research periodically increases profitability.
MS2: Segmentation, targeting and positioning are successful marketing strategies.
MS3: Relationship marketing everlasting business relationship with customers.
MS4: International marketing strategies increase market share.
The four Ps in marketing:
4Ps 1: Enhanced product quality has preferential advantage.
4Ps 2: Pricing policies determine the purch
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