Introduction:
– A market system is the network of buyers, sellers and other actors that come together to trade in a given product or service.
The participants in a market system include:
- Direct market players – producers, buyers and consumers who perform economic activity in the market
- Suppliers of supporting goods and services such as finance, equipment and business consulting.
- Entities that influence the business environment such as regulatory agencies, infrastructure providers and business associations.
Example: a poultry market system
Direct Market Player:
- PRODUCERS: The farmers who grow chicken and eggs for sale. The market system may include small, medium and large-scale producers.
- BUYERS: In many market systems, the product will change hands before reaching the consumer. The poultry market system will likely have intermediaries who buy and sell before the chickens and eggs reach consumers.
- CONSUMERS: The people who eat the chickens and eggs after buying them from a retailer or restaurant.
- Suppliers of Supporting Goods and Services:
FEED PRODUCERS AND SUPPLIERS: Poultry feed— corn and soybeans. These feed grains have their own market systems, but they are also an important element of the poultry market system.
EQUIPMENT SUPPLIERS: Good poultry production requires specialized equipment for feeding, watering, nesting and housing the chicks.
HATCHERIES: Even small-scale chicken farmers often purchase commercially produced day-old chicks to grow, rather than raising chickens from their own eggs.
VETERINARY SERVICES: Chickens need to be vaccinated, and ill birds may be treatable. Producers may seek veterinary advice if their flocks fall ill.
BANKS: Poultry producers may benefit from loans in order to upgrade equipment or expand the size of business.
- Entities that Influence the Business Environment:
GOVERNMENT: Livestock regulations, trade rules, food safety laws and other government actions can affect the poultry industry.
INFRASTRUCTURE PROVIDERS: Roads, electricity, telephone service and mobile technologies all can facilitate transactions.
INDUSTRY ASSOCIATION: An association can work for the common benefit of the industry by advocating for favorable policies, finding investment support and promoting branding and collective advertising.
Agribusiness marketing system should consider following points:
- Production characteristics: small scale, scattered, seasonal, high risk of failure, inelastic supply.
- Product characteristics: Bulky and less value, difficulty in differentiation, perishable, uncertainty in quality and quantity.
- Consumption characteristics: Continuous, regular and small quantity, inelastic demand .