A C T A U N I V E R S I T A T I S L O D Z I E N S I S FOLIA OECONOMICA 182, 2004 Janusz Zrobek* M A R K E T IN G A S Л D E V IC E F O R S U P P O R T IN G C O M P E T IT IV E N E S S O F P O L IS H A G R IC U L T U R A L P R O D U C E R S IN T H E C O N T E X T O F IN T E G R A T IO N W IT H T H E E U 1. In trod u ction
A continuous increase in supply surplus on food m arkets is causing m ore rigorous com petition am ong businesses operating in food industry. A ccession to the EU will contribute to even greater com petition felt m ainly on m arkets of agricultural products. T herefore agricultural producers are facing very serious challenges that require them to take certain steps to strengthen their position on the com petitive market.
On the m icro scale it often means a need for m ore radical reaction to diverse and intensive im pact o f econom ic conditions that will still becom e greater after Poland jo in s the EU and Polish m arket becom es more open to the world com petition. One should add uncertainty of what new conditions will be, not only the situation o f the EU econom y or agriculture but also conditions o f limited range o f im pact, but o f greater frequency and diversity like m ovem ents o f com petitors.
Polish farm er is in a m uch m ore difficult position than his foreign counterpart, especially one from the EU. U nlike other W estern countries Poland cannot afford to support agriculture sector with various subsidies o r quotas. In addition there are som e basic differences betw een P olish and W estern agriculture. Polish agricultural sector generates higher em ploym ent, has more diversified agrarian structure, farm s have m ore loose connection w ith food industry and m arkets are not organised enough.
2. C o m p etitiv en ess o f a g ricu ltu re o f the EU co u n tries
The strength o f com petitiveness o f the EU econom y com es from m odernisation and rationalisation o f agriculture production processes that has been carried out for many years now. The EU countries favour so called horizontal approach in supporting dom estic producers. It involves actions on general and m icro scale that affect state econom y and individual industry sectors by elim inating barriers that prevent structural changes. T his allow s their econom ies to becom e more specialised.
Com m on agriculture policy is developing in such a way so as to m aintain agriculture revenues by direct paym ents payable to farm ers. It allow s to lower prices so that products exported from the EU can com pete with goods from other countries. As a result on official m arkets dow nw ard price trends prevail while agriculture revenues becom e stabilised.
T herefore we need to exam ine to what extent actions aim ed at supporting agriculture production undertaken so far correspond to present conditions of Polish agriculture in the context o f the integration with the EU and internal econom ic determ inants as well as the situation on the world agriculture markets. Foreign producers not only dom inate on their dom estic m arkets and have no difficulty in w inning our m arket at the cost o f Polish farm ers.
As a result, despite som e progress being made, Polish suppliers are less and less com petitive on our internal m arket when com pared with the EU farm ers who have been operating on very com petitive, strongly developed com m odity m arkets for many years and achieved a high level o f developm ent. They use the latest biotechnology solutions and possess huge capital resources that enable them to adjust to custom ers’ preferences contributing to their more and more favourable and well prom oted offer.
W hen jo in in g the EU we need to meet certain conditions o f com petition. The situation may im prove due to good effects o f political transform ation and better use o f m arket instrum ents mainly in the field o f m arketing that stim ulates effectiveness o f econom ic moves. If handled appropriately the position o f Polish farms may becom e m ore com petitive.
3. M ark etin g activ ity o f a g ricu ltu re producers
In these circum stances Polish farm ers should get involved in profitable activities m aking good use o f opportunities created by new and constantly developing econom ic reality that enables them to strengthen their position on
dom estic m arket and becom e more present on foreign m arkets. Problem s related to stronger co-operation with developed countries and consequently higher market requirem ents which are seen in more com m ercialised forms o f agricultural forms o f activities that intensify concentration and specialisation o f production clearly indicate a need to increase productivity, enhance abilities of effective farm ing and first and forem ost prom ote appropriate m arket behaviour. Farm ers should know how to make use o f it and how effectively sell their products, capabilities and abilities. Ability to sell is closely related to appropriate m arket undertaking and use o f the most efficien t m arketing concept.
It is im portant to take prom arket orientation and use prom arket farm ing techniques that suit a given econom ic situation. The situation may im prove due to good effects o f political transform ation and better use o f m arket instrum ents (m ainly o f m arketing nature) that stim ulate effectiveness o f econom ic moves. In the EU context, the future o f agriculture producers depends on m arketing and market. Follow ing this direction will stim ulate an increase o f product mix, developm ent o f com petition, change o f factors in farm environm ent. In the world econom y m arketing has become a basic tool for producers to adjust to grow th processes and m arket changes i.e. a way for running a business. T herefore we are trying to find out how to prom ote this m arketing concept and make farm ers adopt it as a prom arket farm ing and m anagem ent m ethod in agriculture (a m ethod that may be useful for the sector to adapt to changing conditions).
M arketing strategy is very hard to adopt for agriculture being a part o f econom y. A gricultural products exhibit specific characteristics that m ake them different from other products and require use o f specific m arketing instrum ents as we need to bear in m ind unequal, seasonal and serial output throughout a year, dependence on clim ate conditions, choice o f the right m om ent in biological cycle o f product developm ent. Besides, there is lim ited possibility to im plem ent changes in a m anufacturing process, little transport susceptibility, diversity in quality betw een individual batch o f products w hich all in all puts farm ing activity on high level o f risk (U rban 2000, p. 218). In practice a m arketing concept for certain products or group o f products m ight be considered. M arketing strategy for milk products will be different than for meat products, vegetables, fruit or com due to a different dem and for these products, different distribution channels, different pricing policy, sales or prom otion. Structural adjustm ent should be carried out within production and distribution chain o f a given group o f products. From the point o f view o f m arketing concept agriculture cannot be perceived as hom ogeneous since it includes diverse and heterogeneous com ponents.
W hen introducing m arketing orientation in agriculture in the first stage it is required that all links in the chain o f agricultural trade recognise the need for im plem enting m arketing idea. Am ong rural com m unities new ideas spread
m ainly by the process o f diffusion and the w hole process may take different route and pace. All trade participants need to undergo this m entality change including farm ers, producers, interm ediaries and final sellers. T his requires support o f special m arketing infrastructure that will allow m arket operations be put in the right order. In this area Poland needs to im plem ent w ell-thought out changes based on experience o f the EU countries.
A precondition for professional m arketing is to secure decision making backup with m arketing research. It is really crucial since now general negligence o f m arketing research as a source o f inform ation can be observed. M acroeconom ic research such as statistical estim ation o f food im port is not enough. M icroeconom ic inform ation is equally im portant and it can be provided only by analysis o f local markets. This is how basic data needed for successful business operation can be obtained. The most im portant research objective is business forecasting, especially sales forecast. It is necessary to establish and improve m arketing inform ation system that involves current inform ation on dem and, supply, prices and required outlay (Gaziiiski, R utkow ska-R ock 1999, p. 58). In the situation of excess o f agricultural products on the EU m arket there is a need for so called early warning inform ation system that would provide inform ation about direction and intensity o f possible changes which in turn would allow to shape m arketing activities accordingly.
T he key issue in putting m arketing concept into practice is m eans o f marketing strategy. They focus attention on profiled product policy and efficient consum ers’ dem and. W e alw ays bear in mind future purchasers o f our products when conducting business. T herefore we need to adjust agricultural products to market dem ands as for offer standards, introducing com plem entary products, m onitoring and adopting new products tested by com petitors. Such an approach is a basic advantage for launching goods successfully on the market. It is advisable for producers to offer the widest range o f products that would be future oriented. M ostly it is m anufacturing and processing businesses that are capable to do it. If they deal in various kinds o f crops it w ould be advantageous for them to have a rich product line so as they could offer their consum ers a wide range o f products, gain new consum ers and adapt to variable dem and.
You can define a num ber o f future-oriented products, especially in case o f large farms. Som e o f them will not manage to operate on the basis o f traditional production and will search for alternative solutions. C ultivation o f intensive, specialised cultures gives huge market opportunities. As for consum ption goods sm aller farm s will continue to play the m ajor part due to their flexibility and small scale production o f custom ised products as well as good m erchandising on local and regional level. Now it is regional specialities and healthy food that gives good m arket results.
N evertheless m anufacture o f agriculture products is not enough. They need to be augm ented w ith use o f values typical for given products that m ake them
distinct from com petitive goods. It is advisable to expand product range and develop processing o f produce so as to attract as m any potential receivers as possible. It is also required to im prove overall appearance o f the product including its packaging and perfect deliveries, especially quality guarantees.
All this should allow to distinguish the quality o f a given product by enhancing its use. T his can be done by guarantees, a trade mark i.e. non-standard features which are easy to identify. It also allow s for less risky and more favourable launching product on the market, though there is alw ays a high risk incorporated in launching new product, especially when there is a need to attract custom ers. Innovative products o f higher quality and use values are the basis of steady progress and precondition to enter new markets.
C reative activity is based on a product, m arketing actions reach far beyond though. Not only do they cover given goods or services, but also price, distribution channel, m arketing logistics, sales acceleration, prom otion and all innovation instrum ents.
In Polish conditions the main problem lies in the use o f price as a m arketing strategy. It is hard to agree with the opinion that consum er orientation on the food m arket is evolving tow ards less attention paid to price to the benefit of quality when m aking a decision on a purchase o f a product (U rban 2000, p. 135). It seem s that the price will continue to play a decisive role for consum ers in their choice (R adzim ińska 2002, p. 8), especially that less flexible m arket for agriculture products, their physical and econom ic sensitivity to transportation and short storage period, m ainly o f plant produce, contribute to the fact that the price level depends largely on the crops supply (Laguna, R udzew icz 2001, p. 223).
In m arket econom y prices should depend on prices o f co m p etitiv e goods and co n su m ers’ acceptance. In practice there is little scope left fo r m anoeuvre in price policy, especially when the m arket creates a dynam ic balance that tolerates only slight price changes that do not cause im m ediate “ self-co rrectin g ” reaction from com petitors (T hom as 1998, p. 324). Price flexibility o f dem and o f agricultural products is m ostly lim ited and prices are corrected due to m arket situation. A dditionally g reater com p etitio n also com plicates the situation.
A ctive price policy requires price diversification. T oday we can notice different price offer on the m arket but still on a very sm all scale. T herefore the main effort should be put on operating with price as a tool when offering goods o f various uses in different product groups. In the context o f accession to the EU price will play a m ore significant role in shaping com petitive potential of agricultural producers.
M ore and m ore attention is paid to distribution o f agricultural products and their access to consum ers. It is very dynam ic and diverse. The choice o f distribution channel is based on product specificity, its price, volum e and m arket
location as well as access to those distribution channels. A gricultural products can be sold via several possible distribution channels depending on their use for processing or consum ption. M ostly it is direct channels, but som etim es indirect channels are used m ainly on good m arkets because o f diversified supply and concentrated processing or a big producer offers products to various receivers (e.g. on a com m odity m arket) or small farm ers sell their articles to an interm ediary on a m arketplace.
Today the main distribution channel in agriculture trade (m anly food) is a short, rather wide channel, with low costs and fast flow o f products from m anufacturers to consum ers' that allow s for relatively many transactions (Urban 2000, p. 143).
In Poland it is infrastructure o f sales organisation that requires further im provem ent. It is im portant in case o f noticeable seasonal and long lasting fluctuations in supply o f agricultural produce. W eak distribution determ ines unfavourable turnover and production. Shortcom ings in distribution affecting agricultural producers require improvement by reconstruction and implementation o f new objects and m odern selling methods.
S olutions to the problem might be diverse. D evelopm ent o f additional services seems more and more significant, on com m odity m arket they could include loading or transport to custom ers and on consum ption m arket packaging and portioning. T rade in healthy food is a special area w here retail outlets need to be given adequate image.
Sales prom otion poses a separate problem. In the surplus econom y “even the best product does not sell its e lf ’. Therefore selling larger num ber o f products requires prom otion. It is natural that producers aim at becom ing better known and m aking their offer m ore popular am ong present and potential buyers. D ifferent product values and features can be prom oted including nutritious, taste and usability value, m anufacturer’s brand, special character o f products for instance their national or regional origin. The most appropriate prom otional means for agricultural producers are different form s o f outdoor advertising like placing outdoor inform ation notices about selling agricultural goods. A significant role o f advertising in local press is also stressed (C iechom ski 1997, p. 94).
H ow ever farm ers use prom otional tools to a small extent. Only big farm ow ners are interested in prom otion, but still on a lim ited scale. Small farm ow ners neglect it com pletely. The reasons behind this are w eak econom ic situation o f agriculture as well as lack o f prom otion skills and habits. Prom otional activities that can be observed include prim itive advertisem ent and
1 M ost o f them are sensitive to transport and require appropriate storage conditions which is not always possible to secure, for instance due to low level o f market infrastructure (both technical and organisational).
elem ents o f personal selling. However, this is prom otion on lim ited scale, aimed at standard target group and accidental in nature. Such prom otion stresses inform ative aspects and lacks elem ents that would encourage potential custom ers to purchase a product. Especially it lacks prom otional m aterial incentives (com plem entary prom otion). And very often it is m aterial incentives that are regarded as the only way to make a product distinct from a uniform range o f products usually offered by small farmers.
A gricultural producers find prom otion very problem atic especially that com m unication process with the m arket is getting m ore and m ore difficult. In case o f small farm ers it is advisable to form local m arketing groups that would aim at taking and realising prom otional initiatives to sell their produce. Likew ise others partners in agricultural trade, farm ers will have to m aster effective sales techniques in order to m eet requirem ents o f free trade com petition. D evelopm ent o f prom otion is needed due to grow ing bargaining pow er o f distribution channels, com petition as well as w ider and w ider product range.
5. C o n clu sio n s
C hanges in world m anufacture as well as in trade in agricultural products along with P o lan d’s accession to the EU create a new m arket situation. New structures and m echanism s are becom ing dom inant in a m arket econom y and they im pose certain requirem ents upon m anufacturers. In agriculture the changes will be noticed by increased supply and stronger com petition, m ainly relating to quality. It m eans that benefits Polish agriculture m ay get will depend on its com petition abilities that would allow to m aintain a part o f dom estic dem and and intensify export. It will largely depend on ability to use opportunities of econom ic links reaching now international scale and ability o f individual agricultural producers to gain com petitive advantage over others and consequently to m aintain and increase their position on a dom estic and foreign markets.
Im itation is a prevailing form o f m arketing activities. C onsidering Polish experience in this area or rather lack o f experience no w onder farm ers cannot propose their custom ers new solutions. H ow ever it is not the best idea to catch up with w estern com petitors by applying w estern m odels and consequently innovative strategy in its defence form.
The present situation cannot be regarded as satisfactory. W eakness o f producers and com panies operating on agricultural m arket can be seen in their m arketing activities and com petitiveness. N evertheless positive exam ples can be found, but level and scale o f changes is limited. It is becom ing a principal
problem since m arketing is now essential to ensure co m pan y’s continuous presence on the m arket and make it com petitive.
M arketing activities need to be intensified. T hey should be targeted at individual products with respect to their specificity and to launch novelties. They require specifying characteristic properties along with elem ents o f m arketing mix and considering specificity o f agricultural production. It becom es im portant to determ ine a size and boundaries of m arket sectors and to study desirable econom ic links. Prom otion support becomes a crucial elem ent as it is often a decisive factor w hether agents will take products and then sell them to the final custom er. A griculture production should aim at enhancing product line along with exhibiting more flexibility, improving quality, increasing supply flexibility, lim iting its seasonality. All this will allow to obtain more stability and meet m arket requirem ents.
M arketing orientation on agricultural market should bring positive results. They would im prove com petitiveness, enable farm ers to achieve set objectives, enhance profitability and further active developm ent. Im plem entation o f these guidelines will not autom atically solve structural and com petitive problem s Polish agriculture is facing. But follow ing these rules may help to overcom e various difficulties. M arket oriented activities may becom e a leading philosophy and m ethod behind farm operation in times o f econom ic transform ation. This may also contribute to production boom.
T hese changes can occur only if farmers change their attitude. High costs and risk pose certain lim itations. A pplication o f m arketing activities depends on ability to im prove so far achievem ents, mainly financial situation. T here is also a need to undertake long term efforts that will allow for achieving planned results in the context o f fierce com petition after P o land ’s integration with the EU.
R eferen ces
C i e c h o m s k i W. (1 9 9 7 ), R ola m arketingu w ag ro b izn esie, „Z eszyty Naukow e AE w Poznaniu”, nr 242.
G a z i ń s k i B., R u t k o w s k a - R o c k A. (1999), U czestnictw o P o lsk i w m iędzynarodow ym rynku rolnym , Olsztyn.
L a g u n a M., R a d z e w i c z A. (2002), M arketing i p o d a ż, Olsztyn.
R a d z i m i ń s k a T. (2002), Skutki rozszerzen ia UE dla biznesu , „ N o w e Ż ycie Gospodarcze”, nr 11.
T h o m a s M. J. (1 9 9 8 ), P odręczn ik marketingu, Warszawa. U r b a n S. (2 0 0 0 ), M arketing p ro d u k tó w spożyw czych , Wroclaw.
Janusz Zrobck
M A R K E T IN G O W E W S P A R C IE K O N K U R E N C Y JN O Ś C I P R O D U C E N T Ó W R O L N Y C H W W A R U N K A C H IN TE GRACJI Z UNIĄ E U R O P E J S K Ą
W artykule zawarto ocen ę m ożliw ości wykorzystania działań marketingowych dla poprawy pozycji konkurencyjnej rolników na rynku. Wymaga to radykalizacji reagowania na różnorodne i intensywne oddziaływ anie warunków otoczenia, które ulegną nasileniu po dołączeniu do Unii Europejskiej i szerszym otwarciu polskiego rynku na św iatow ą konkurencję. Z analiz porównawczych wynika, iż zagraniczni producenci osiągają przewagę nie tylko na sw oich rynkach, ale rów nież bez trudu zdobyw ają nasz rynek kosztem polskich rolników. P osłużen ie się instrumentami marketingowymi przyniesie zapewne pozytyw ne rezultaty wyrażające się w poprawie zyskow ności i dalszym aktywnym rozwoju. Pojawiają się jednak ograniczenia wynikające z w ysokich kosztów i ponoszonego ryzyka. M ożliw ości sięgania do działań marketingowych uwarunkowane są zdolnością do poprawy dotychczasow ych osiągnięć, zw łaszcza w sferze materialnej. N ależy rów nież być świadomym długotrwałości podejm ow anych w ysiłków , które p ozw olą uzyskać zam ierzone efekty w warunkach silnej konkurencji po przystąpieniu do Unii Europejskiej.
