RWENTANGA FARM INSTITUTE

NATIONAL CERTIFICATE IN AGRICULTURE PRODUCTION

(NCAP)

MODULE CODE: VCAP 207

NCAP II
MODULE NAME: VALUE ADDITION AND MARKETING OF FARM PRODUCTS

2022

PREPARED BY INSTRUCTOR: TUGABIRWE JOAN (DITTE)

0780372413/ 0752300276

[email protected]

[Date] 1
PREPARED BY TUGABIRWE JOAN O780372713 [email protected]
LEARNING OUTCOMES

the end of the module unit, the trainees should be able to:

❖ Add value to their yields or products while they are yet in the farm.
❖ Process and package the harvested crops.
❖ Preserve animal and fish products
❖ Market the products.

SUB MODULE 1: processing and value addition

Content

❖ Meaning of value addition

❖ Importance of value addition
❖ Processing methods
❖ Importance of processing
❖ Packaging
❖ Preservation of products
❖ Processing tools and equipment.
• Tomato sauce making
• Salads making,
• Crisps making
• Chips making.
• Making ground nut paste and other products.
• Processing millet into flour
• Processing rice into flour
• Processing coffee
• Processing ginger
• Soya bean processing,

SUBMODULE 2: marketing farm products

CONTENT

❖ Market survey
❖ Marketing mix (price, place, people, product- 4ps)

[Date] 2
PREPARED BY TUGABIRWE JOAN O780372713 [email protected]
 ❖ Marketing
o Market research
o Promotions
o Marketing functions
o Marketing channels
o Exhibitions
o Marketing agents

❖ Sales promotion
❖ Agribusiness and tourism
❖ Agribusiness and culture

SUB MODULE 3: handling and marketing of animal products

CONTENT

❖ Types of animal products

❖ Qualities of good animal products
❖ Preservation of animal products
❖ Storage of animal products
❖ Processing of animal products
❖ Marketing of animal products
❖ Factors affecting the quality of animal products
❖ Nutritive value of animal products
❖ Animal bi- products

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PROCESSING AND VALUE ADDITION

Meaning of value addition

Value addition refers to the changing of the produce from its primary form to a secondary
form that earns a higher net worth.

OR

Changing something from its original state to a high-quality state which enhances the overall
end product

Importance of value addition

❖ It raises the price of the product hence a higher net worth.

❖ It extends the usefulness life of the product.
❖ Moisture reduction or elimination prevents the growth of bacteria and fungi.
❖ It keeps the product in good physical condition and eliminates contact with external
environment especially by packaging.
❖ It makes the product better in terms of taste, smell, appearance and condition.

Processing

This refers to any method used to turn the agricultural produce into products to preserve them
for further use

Methods of processing agricultural produce.

The hammer mills

This is a machine used to process agricultural produce that are dry. The hammer mill is made
of hammer with a roller of pulleys. The blocks contain the hammers, as the hammer rotates,
the blocks rotate also then the product will be milled by pressure of the hammer.

It is used to mill crops whose moisture content is reduced eg rice.

Bore mill

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This has two plates: the rough and smooth plates, enclosed inside the structure, in the hopper.

The auger pushes the produce to the collecting point. It is used to process agricultural
produce that are wet, oily and dry.

Roller mill

This contains of two rollers that are cylindrical in shape connected to the pulleying between
the rollers

There is space in between two cylinders so that when they rotate they rotate in two directions
and merge the produce into small particles.

Reasons for processing agricultural produce

❖ Processing helps to make food available during the off season.

❖ It improves the taste and attractiveness of the product.
❖ Processing improves the durability of food crop products.
❖ Processing adds value to the agricultural produce.
❖ Processing provides employment to individuals that work in processing plants.
❖ It creates development in the area especially if the processing factory is set in the rural
area.
❖ Processing bi- products are used to formulate animal feeds.
❖ It provides income to individual and foreign exchange to the country.
❖ It reserves more food to aid in adaption and mitigation of climatic change.
❖ It creates room for commercial agriculture thereby promoting agricultural activities.

Packaging

This refers to putting the products in special containers before they are marketed.

Importance of packaging

❖ It reduces bulk by breaking of the commodity into smaller convenient quantities.

❖ Handling of commodities becomes easy when they are packaged.
❖ It facilitates quality identification by labeling.

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PREPARED BY TUGABIRWE JOAN O780372713 [email protected]
 ❖ It assists in advertisement of the commodity.
❖ Packaging reduces the chances of the product being adulterated by foreign objects or
their quantities being reduced by corrupt sellers are reduced.
❖ In some cases, it reduces marketing costs by promoting self-service retailing.
❖ Packaged commodities are likely to suffer less damage while in transit.
❖ Packaging commodities in attractive containers also promote marketing of such
products

Preservation of farm produce.

Preservation refers to the process of treating and handling of produce to stop or greatly slow
down spoilage accelerated by micro-organisms.

Maintaining quality, flavour, texture and nutritive value is important in preserving its value as
food.

Principles underlying farm produce preservation.

The art of produce preservation is based on the following reasons:

o Destruction of micro-organisms.
o Prevention of their entry into food.
o Prevention of purely chemical reactions.
o Prevention of action of food enzymes.

Reasons for farm produce preservation.

❖ To prevent spoilage.
❖ To avoid wastage especially in season of plenty
❖ To prolong its shelf life
❖ To allow the use of food in the off season
❖ To eliminate the purchase of food when they are most expensive.
❖ To introduce a variety in the family menu
❖ To be able to take care of emergency situations

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PREPARED BY TUGABIRWE JOAN O780372713 [email protected]
METHODS OF PRESERVING FARM PRODUCE.

People in different societies have various methods of preserving their farm produce.ie drying,
smoking, frying, salting, bagging, heating, fermentation and blanching.

➢ Drying

This is the process by which water is removed from the farm produce to a reasonable level to
avoid spoilage. Drying is one of the oldest methods of preservation.

Types of drying

❖ Sundry or solar drying e.g. cassava, maize, cereals, legumes etc.

❖ Oven drying e.g. melon and legumes
❖ Roller drying e.g. vegetables
❖ Vacuum drying e.g. milk.
❖ Spray drying e.g. milk, egg white, cocoa beverages
❖ Roasting on fire / hot oven e.g. meat and fish.
❖ Tunnel drying e.g. vegetables.
❖ Freeze drying e.g. vegetables, meat and fish

Advantages of drying farm produce

❖ It reduces water activity sufficiently to prevent or delay bacterial growth

❖ It is an inexpensive method since it relies more on the sun.
❖ It also reduces weighCt making the produce more portable
❖ Dried produce is easy to compact and store

Disadvantage of drying farm produce

❖ Loss of colour
❖ Loss of vitamins

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 ❖ Loss of flavour
These can be mitigated by not drying the produce for a long time.

Factors affecting the rate of drying of farm produce

❖ The amount of surface area of the produce exposed to the dry air or heat.
❖ The physical properties of the drying element.
❖ The efficiency of the equipment.
❖ The method of arrangement of the farm produce on the drying material e.g. tray, mat,
concrete floor in relation to heat source or medium.

➢ Smoking
Smoking is one of the ways of preserving farm produce. Smoking reduces water
activity gradually to prevent bacterial and fungi growth.
It works well for most produce such as fish, tobacco leaves etc. It reduces produce
weight making produce portable. the disadvantage of smoking include loss of
colour, loss of aroma and loss of quality.
These loses can be minimized by not smoking for too long.

➢ Salting
Salting is another ancient method of food preservation
Salt can be used as part of the drying process
Salt increases the storage time of some foods such as fish and it enhances the
flavour of dried food stuffs.
The use of salt, water and brine is another common method of preservation and it
has a benefit of stopping the growth of harmful micro-organism
Fish, meat, and ground pepper can be preserved by either mixing or rubbing them
with salt

➢ Fermentation
Fermentation is one of the oldest traditional method of food preservation
Food fermentation involves the use of micro-organisms and enzymes for the
production of foods with unique quality.

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 When food ferments, it produces acids that prevent micro-organism growth that
would cause spoilage.

Benefits of fermentation

• Reduction of my toxins e.g. aflatoxins

• It improves the flavour and texture of agricultural products
• It imparts a desirable sour taste to many foods and drink s e.g. wine.
• It leads to significant improvement in the nutritional quality of foods due
to presence of organic acids
• It increases digestibility of proteins through hydrolysis of proteins to
amino acids.

➢ Roasting
• Roasting I another method of preserving food.
• This impacts desirable sensory qualities,
• Enhances palatability
• Reduces nutritional factors.

➢ Canning or bottling.
This method requires a canning equipment and ability to use a heat source.
Foods preserved in this method are sealed in closed containers such as can, glass
or bottles.
Such foods can be stored up to a year period.
The price of canning can be expensive as in buying the cans and purchasing and
using of heating fuel and sterilization

➢ Refrigeration and freezing.

These methods are one of the commonly used processes commercially and
domestically for preserving a wide range of foods.
Naturally this requires access to electricity generated refrigeration systems and
once acquired, it is one of the easiest methods to store food.

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PREPARED BY TUGABIRWE JOAN O780372713 [email protected]
 There are many guidelines on how long food can be stores in the freezer without
going bad
Very low temperatures de-ccelarates the rate of microbial growth and action to
prevent food spoilage

Disadvantages of freezing

• The initial costs of purchasing the refrigeration equipment are high.

• It cannot be ran in areas without electricity
• It may lead to loss of food due to lack of dating knowledge.
• Maintenance costs are high

PROCESSING TOOLS AND EQUIPMENT

These tools and equipment are grouped into:

• Preparation tools, such as working tables, basins, sauce pans, cleaning towels
• Mechanical processing tools. Eg peelers, slicers, blenders, rollers,
• Heat processing tools.eg gas heaters, stoves, ovens etc.
• Preservation tools, deep freezers, refrigerators, incubatorsetc.
• Packaging tools eg packaging machine, packaging material eg glasses, bottles, tins,
sachets ect.

Food processing involves the use of a variety of tools and equipment as shown below.

➢ Blender
This is an electric appliance used to extract juice from fruits by crushing the
material finely for juice extraction.
➢ Gas heater
This is a heat producing equipment that is used for heating and boiling of food
substances.
➢ Knives

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PREPARED BY TUGABIRWE JOAN O780372713 [email protected]
 They cut the good substances and spices into small pieces that are easily worked
on.
➢ Weighing scale
This is used for taking correct measurements of amounts of food substances to be
used.
➢ Mills
These are special machines that are designed to crush the agricultural produce into
fine flour which is easily consumed than grains. They are used on crop produce
like millet. Maize, sorghum and rice.
➢ Sauce pans and cooking dishes
These are used to hold the substance to be processed for heating ang boiling.
They are normally stainless steel made of aluminium that makes them lighter to
carry depending on the size.
➢ Sieves/ strainers.
These are used to trap or separate the liquid material from the pulp, residue and
foreign material
There are two types of sieves on market such as plastic and stainless-steel
strainers depending on one’s choice.

➢ Refrigerators or freezers
This is an electric appliance used for cooling liquids, milk and other foods to
prolong their shelf life.
Cooling or freezing retards the rate of microbial growth and action to prevent
spoilage specially fish, milk, meat and fruit juice.
➢ Measuring cups.
This is used to take correct measurements of liquids such as milk, water, pulp,
juice etc.

➢ Driers
Especially solar driers that is used to dry vegetables and mushrooms or easy
processing.
➢ Oven
These are used for frying, baking and roasting the substance during processing
➢ Thermometer

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 This equipment is used to take the temperature of the processed material to
prevent over or under heating especially during pasteurization process
(incubation)

[Date] 12
PREPARED BY TUGABIRWE JOAN O780372713 [email protected]
SUB MODULE 2 MARKETING OF FARM PRODUCTS
Definition of terms
Market
This refers to the place where buyers and sellers meet and transact in certain commodities at
agreed prices.

price
price refers to the amount of money which is acceptable to both buyers and sellers of that
commodity. OR price refers to the monetary value of a commodity or service
At equilibrium price, the forces of demand and supply are exactly equal.
Any price above the equilibrium price discourages the buyers while any price below the
equilibrium point discourages the suppliers.
Marketing
This refers to all business activities that are concerned with the flow of the commodities from
the producer to the consumers.
The whole marketing process starts from making plans to produce a commodity for sale and
continues up to when commodities are presented to consumers.
OR
Marketing refers to the process of promoting and selling of goods and services
It comprises all the activities that are put in place to find out who the customers are , their
needs and how they can be satisfied.
Requirements for a market
• Presence of buyers and sellers
• Availability of the commodity to be transacted
• Contact between the buyers and sellers
• Price of the commodity
• Medium of exchange i.e. currency, batter trade etc.
Economic importance of marketing
➢ Marketing promotes economic growth and improves public welfare through
earning of income by the people involved in the process
➢ Sale of commodities in the international market such as coffee, hides, fish, rose
flowers etc enables the country to earn foreign exchange.
➢ Efficient marketing system, serves as an incentive that encourages the producers
to adopt new production techniques hence increased production.
➢ Efficient marketing systems leads to creation of social order in the country as it
becomes commercialized.

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 ➢ Marketing provides food and other services in areas hit by hazards such as bad
weather, that causes famine, insecurity etc.

Types of markets.

• Perfectly competitive markets.

This is a market where price of commodities is determined by the forces of demand and
supply.

• Imperfect markets.

This is a market where prices are influenced by other factors other than demand and
supply

They include: Monopoly, monopolistic competition and oligopoly.

Marketing agencies, institutions and organizations

Itinerant traders. These move from place to place buying a agricultural produce of various
types from farmers such as bananas, milk, coffee etc

Processors. These are individuals or organizations which undertake the task of processing
agricultural produce into usable forms of product to satisfy human needs.

Whole Salers. These buy in bulk from manufacturers and sell to small scale retailers.

Retailers. These buy from whole sellers and rarely from producers and sell to consumers

Brokers. These bring the sellers and buyers together without the broker handling the actual
good

Commission agents. these receive goods and sell them on behalf of their principles for a cost
(commission)

Co-operatives. farmers organize their themselves in registered groups to market their product

Marketing boards. These are public boards setup by the government to assist farmers in
production, processing and marketing of agricultural products such as coffee. Tea.

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Marketing mix.

This refers to the combination of various marketing elements used to achieve organizational
objectives and to meet target market.

These elements include:

• Price
• Product
• Promotion
• Place
• Positioning, commonly known as 5ps

1 PRODUCT

This is anything offered by the business to meet customers’ needs.

Agricultural produce include:

Animal produce such as milk, meat, eggs, hides and skins, wool, horns

Crop produce fruits, vegetables, coffee, bananas, beans, millet g.nuts and many others that
are commonly found on market.

Factors to consider when designing or developing a product

• Product attributes. These include shape, color, quality, brand name which are
appealing and attractive to the customers.
• Needs of the market. The producer should aim at satisfying the needs of the market
such as constant supply of milk and food to the customers.
• Availability of raw material. An agricultural producer should use the raw materials
that are readily available to avoid putting the process at a stand still e.g. improvising
by carrying milk in clean jerrycans in absence of the milk can.
• Nature of packaging material. A producer should process agricultural produce in
such a way that they can be packaged properly using available packaging material.
• Profitability. Agricultural products should be processed in such a way that they can
be sold at a profitable price e.g. properly packaging and labeling millet and rice flour

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THE PRODUCT LIFE CYCLE.

Product life cycle refers to the distinct changes that are noticed in a products sale’s history

Stages of product life cycle.

• Introduction stage.

features

❖ The product gets introduced to the market.

❖ The sales growth is slow.
❖ Profits are low or non-existent due to high expenses incurred.
❖ There is need for heavy advertisement and product promotion.
❖ Production efficiency has not been achieved.
❖ Products have not fully penetrated the potential market

• Growth stage
❖ The product records some market acceptance with a growth in sales
❖ Profits are realized.
❖ Price remains steady.
❖ Some competitors join market after realizing there is an opportunity.
❖ Promotion is maintained to control competition
❖ Sales raise much more rapidly and are able to cover promotional costs adequately
while generating profits. New product features are introducing to make it easy to
expand the market

• Maturity stage
❖ The product is well known in the market
❖ Product takes a lead in the market
❖ This lasts longer than the previous stages, profits are at the best while costs have
reduced
❖ There is no growth in sales hence sales are steady.

• Decline stage

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 ❖ This stage follows a prolonged maturity stage
❖ Sales decline due to various reasons ie consumer shift, similar product from
competitors, price reduction by competitors.
❖ Sales are on the steady decline
❖ Consumer interests shift to upcoming products.
❖ Business may exit the market with advent of declining profitability.

2 PRICE

Price refers to the monetary value of the product

A producer should sale his/ her products at a price that will attract customers in general.

The price at which products are sold should be low enough to attract customers and high
enough to enable the seller make profits.

Pricing. Refers to the activity that Involves attracting of the monetary value to goods and
services at which a seller is to sale his product.

Methods determining prices of agricultural products.

• Auctioning. This is where many buyers compete for one product through a bidding
process by offering alternative prices
• Bargaining. in this case the seller sets the price to the buyer and negotiations are
made between the two until the final price is reached
• Price leadership. This is where the key player in the market sets the price of the
commodity and is then taken up by the rest of the traders.
• Price legislation. The prices of agricultural commodities are set by the government in
this instance to reduce exploitation of buyers.
• Fixing by treaties or contracts. Here the buyer and the seller come together to fix
the price of the commodity. The price can be revised by amending the treaty.
• Forces of demand and supply. The two acts to form an equilibrium or market price
• International commodity agreements. Here the prices are set by international
producers

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 • Contract agreements. Here a supplier agrees with the consumer on the price before
commencement of the business. The price agreed cannot be changed unless the
contract is terminated or renewed upon revew

Importance of prices in agriculture.

• They indicate to the farmer what commodity to produce.

• They determine the level of out put
• They act as guide to economic activity and allocation of scarce resources prices
reward the factors of production
• Price allocate workers to the right jobs where they are more efficient they enhance
better and efficient methods of production eg when the price of coffee increases.
• They coordinate consumption levels to agricultural produce via forces of demand and
supply
• Price rewards other factors of production
• They enhance efficient and better methods of production especially when prices
increase

Factors that influence price of the commodity

• Forces of demand and supply

High demand leads to higher prices while high supplies lead to low prices.
• Costs of production
A higher cost of production implies a higher price whereas a low cost of production
implies a low price.
• Transport costs
The higher the transport costs, the higher the prices of agricultural commodities
especially the bulky ones e.g. bananas, sugar canes.
• Elasticity of supply and demand.
if the elasticity of supply and demand are low, the prices will be high and if the
elasticity of supply and demand are high, prices will be low.
• Storage costs.

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 Items that are very difficult to store at a higher cost are expensive than those ones that
are easy to store such as yoghurt, fresh milk and most processed products

• Quality of the product.

The higher the quality of an agricultural product, the higher the price and vice versa.
• Government policy.
This may regard stabilization and taxation hence: higher taxes lead to higher prices
and low taxes lead to low prices

Pricing strategies

Producers of agricultural products adopt a number of strategies when fixing prices.

a) Psychological pricing.

The sellers consider the price of the effect on the mind rather than the actual value of the
product i.e. physical appearance.

Others buy a product to satisfy their ego that they have bought an item of high value which
gives them a feeling of great satisfaction

b) Geographical pricing

The seller can fix his prices basing on geographical basis i.e. the costs of transportation and
distribution of products such as fuel prices and nearness to the port which is the entry point
for imported.

c) Penetration pricing

This is where a farm sets a low initial price in order to enter the market quickly and deeply,
attracting a large number of buyers and winning a large market share. It is ideal for new
products which have not gained popularity.

d) Market skimming pricing

This involves setting a high initial price and spending heavily on advertisement to obtain
sales. Then price gets lower with time as sales volume increase.

3 PLACE

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 This refers to various methods of making products available to consumers at a right
place and time
It involves making decisions regarding transportation of products from producers to
consumers (marketing channels)

FIG 1 DISTRIBUTION CHANNELS

producer consumer

producer Retailer consumer

producer Wholesale Retailer Consumer

r
Agent wholesaler Retailer Consumer
producer

Channels of distribution

1 producer to consumer.
This channel is very simple. it involves the manufacturer selling
agricultural products directly to the consumer
It is only applicable where the consumers live near the producers
2 producer to retailer to consumer
This is where the producer sells directly to the retail outlet then they
sell to the consumers
3 producer to whole seller to retailer to consumer
this channel of distribution involves the wholesalers who break the
bulk as many retailers do not buy large quantities because they can not
sell them very quickly and lack enough space for storage of large
quantities.
4 Producer to agent to wholesaler to retailer to consumer.
This applies when products are exported, the manufacturer
sometimes uses agent in another country, the agent sells the product on
behalf of the manufacturer or producers

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Factors to consider when choosing a channel of distribution

• Nature of the products. Bulky and heavy products like farm machinery are sold
directly to the final consumer however, durable products such as coffee can be sold
through middlemen due to long storage life e.g. dry hides and skins.
• Value of the products. High value products that do not require a lot of handling are
sold directly to the final consumers e.g. milk.
• Urgency of the product. Products needed urgently are sold directly to the final
consumers such as meat and milk to hotels.
• Nature and size of the market. For small market located in narrow area, direct
selling is preferable. On the other hand, in a market composed of many buyers, direct
selling is not commercial.
• Manufacturer of the product. Manufacturing and trading businesses use distribution
channels while in agribusiness, direct selling is preferred
• Level of competition. High levels of competition in the market require direct selling
while low levels provide space for middle men.
• Storage facilities. Entrepreneurs who lack storage facilities use middle men while
those with adequate storage facilities sell directly.

4 POSITIONING

This means targeting a small segment of customers for whom to sell the products eg sweet
bananas may be positioned on the entrance to attract customers. This is commonly termed as
product display.

Products that are properly displayed in the show room or shop attract buyers as they are able
to be seen without wasting time to ask for it from one market to another

5 PROMOTION

Sales promotion means informing and attracting customers to buy products either for the first
time or more of them.

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Methods /ways to promote sales (sales promotion methods)

• Giving free samples when introducing new product eg tomato sauce, fruit juice,
processed honey etc.
• Offering price reduction (discounts) to boost sales.
• Intensive advertisement in newspapers, sign posts, telvisions, bill boards eg new
nutria- bushera by coca cola, Numa kalo, supreme floor
• Organizing price winning competitions where awards can be given to lucky winners.
• Sponsoring different activities and games where most people get information about
your product especially TV episodes and radio programs
• Giving gifts to customers free of charge with the intention of creating awareness and
enticing them to buy the product
• Branding by giving a commodity an attractive trade mark and name.
• Offering credit facilities and installment selling to trust worthy customers by hire
purchase

MARKETING FUNCTIONS

These are essential activities which are performed in the marketing process. They include the
following:

➢ Buying. This involves purchasing from producers and bulking up by the seller. This
can be done by whole Salers, itinerant traders, retailers with the intention of selling
them to the final consumers. This is an initial stage of the marketing functions
➢ Assembling. This is where the commodities are pooled up in large quantities ready
for the next operations such as processing, grading and packaging.
➢ Transportation. It is the movement of goods from the place of production to the
centers or places of demand especially to to markets, processing plants or storage
places
➢ Storage. This involves storing the product in order to reduce loss in value as most of
agricultural products are perishable. They can be stored waiting for the prices to
increase or in preparation to the next operations.

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Advantages of storage.

• Provides security to the commodity

• Ensures constant supply of the commodity.
• Allows processing to spread more evenly throught the year.
• It gives time to the commodity to improve its qualities eg cheese and wine.
• It helps in assembling of the commodity.

➢ Processing. This is the changing of the product from its raw form to a more
acceptable form that is more acceptable to increase its value.

Advantages of processing.

• It adds value to the product by improving its quality.

• It prolongs the useful/ shelf life of a product.
• Reduces wastage of the product due to spoilage.
• It eases utilization of the final product eg maize.
• It enables consumption of a product in many forms
• It eases transportation of a product by reducing bulkiness.
• Helps to destroy toxins in the product eg heating soya bean destroys trypsin inhibitors
• It extends the availability of the product after harvesting

➢ Grading
This is the sorting up of the products in a uniform way especially quality wise.

Advantages of grading.

• It increases profits since it encourages production of quality products.

• It minimizes spoilage of commodities.
• Makes price fixing easy.
• Ensures consumer satisfaction since he or she gets exactly what she wants.

➢ Standardization

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 The identification and establishment of a set of qualities a commodity must possess in
order to belong to a certain grade.
➢ Packaging
This refers to putting of commodities in containers before they are marketed.

Advantages of packaging

• Reduces bulkiness of products.

• Facilitates easy handling of products.
• Controls leakages and spoilage of products.
• Enables easy quality identification.
• It protects products from bad weather.
• Facilitates labelling and putting instructions.
• Facilitates self-service especially in supermarkets.
• Products are easy to advertise.

➢ Financing. The process of turning raw materials into finished goods require money
resource to finance it.
➢ Risk bearing. In that long process of buying, storage, transportation, a number of
risks are encountered such as fire, theft and price fluctuation uncertainty which have
to be beared
➢ Collecting and analyzing market information. This is done to gather information
about market prices, taxes and risks in the current market.
➢ Advertisement. The creation of awareness about the existence of the product in the
market to the consumers.

MARKET RESEARCH.

This is a process of collecting and analyzing data related to the demand for a product or
service in a certain market.

Market research gathers information about consumers, competitors, distributors within a

target market.

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The need for market research

• It helps to reduce the risks associated with the new product from obtained data.
• It is used to assess the most favoured tastes and flavors.
• Collected data can be used as a basis for decision making.
• It helps the firm to identify its competitors
• It provides explanations for product success or failure in the market.
• It helps the firm to monitor their market position hence develops plans and strategies
for improving the quality.
• It helps to indicate opportunities for a product and market development.
• It helps the firms to improve their competitors’ advantages
• Helps to taste the effectiveness of the advertisement methods to be used.

Circumstances under which one can carry out market research

• When he or she wants to find out who the customers are.

• When there is need to establish customers need.
• When he wants to find out when and where the customers want the goods or service.
• When he wants to determine his market share.
• When there is need of finding of finding out the effectiveness of the sales promotional
used.
• When there is need to find out customers opinion regarding the new product.
• When he wants to assess the level of competition.
• When there is need to make decision whether to expand or improve the current
products.
• When he wants to determine the best channels of distribution for the business.
• When he wants find out the best location for the business.

Types of research.

The information gathered may be described as quantitative or qualitative in nature.

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Quantitative research

This is the type of research that is concerned with the number of customers who can buy the
product and in what quantities. Eg youth buy certain products like yorghut, fruit juice, apples
etc.

Qualitative research.

This finds out the opinions and preferences of customers but cannot be interpreted
statistically eg what do customers like about the product.

STEPS IN CARRYING OUT MARKET RESEARCH.

• Identify the product on which research is to be carried on.

• Chose the target area where research is to be done.
• Select the appropriate technique to use.
• Develop the data questions
• Go to the field and collect data.
• Analyze the data collected.
• Assess the product feasibility and viability according to the data collected.
• Identify the market strategy to deal with competitors.
• Draw a conclusion whether to start a business or not.

Factors to consider when carrying out market research of a certain business

• Demand of the product.

This is the quantity of the product and services that buyers are willing and able to buy at a
particular price and time. Consider the business whose products are highly demanded.

• Location of the business

The business which is strategically located stands a higher chance of getting customers
compared to the one which is poorly located.

• Levels of competitors

If the levels of competition are high it means that you must spend a lot in advertisement and
distribution hence increased costs of production.

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 • Income levels of target people.

If the income levels are low, the potential market will be low and there will be low buying
patterns.

• Price of the product.

If the price of the product is high, people may not buy it is it may end up becoming a threat to
the business.

• Population size.

an area with a high population may have a high potential market than a sparsely populated
one

• Availability of substitutes

If the product has a lot of close substitutes, its market will be limited but if there are no close
substitutes, then market potential will be high.

Challenges faced while carrying out market research.

• Resistance from people as they are not willing to give information.

• Some times the information given to the researcher is false.
• Choice of wrong sample who represent the target group
• Low levels of education make some people give irrelevant information.
• Poor infrastructure int terms of roads which make transport difficult.
• Lack of qualified and skilled personnel to carry out research.
• Political instabilities as researchers may not be able to go the area of their choices.

Guidelines for conducting market research on a business.

• Customers identity.
✓ Here one determines the categories of customers by looking at the following,
✓ Who your customers are interms of age and sex.
✓ Their occupation.
✓ Their residence, where do they live,

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 ✓ Their income levels.
✓ Their interests and hobbies.

• Customers’ needs/ wants.

The information you nee to find out include,

✓ What particular products do people want.

✓ What feature are they looking for in a product?
✓ Is the product need for limited time or continuous demand?
✓ Will the customers come frequently or not?

• competition

the information will answer the following questions.

✓ Who are the competitors in the market?

✓ What are their strength and their weaknesses?
✓ What is there market share?
✓ What is their sales volume?
✓ Where are they located?
✓ What attracts customers to them?
✓ What is the quality of their product compared to mine.

• Market trends

Find out whether there are,

✓ Population shifts (whether more people are leaving or joining the area)
✓ Changes in economic situations, are more people getting employed than before or
not?
✓ What is the life style of those people?
✓ Is the market expanding or reducing?

SOURCES OF INFORMATION

• Questionnaires
• Observation

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 • Media reports
• Research reports
• Internet
• Interviews
• Focus groups
• Sales records department.
• Telephone surveys.

MARKETING PROCESS

This is the plan that describes the activities that will be undertaken by the business to
accomplish a given marketing objectives.

The market process takes the following steps.

i. Situation analysis/ market research

This the analysis of the situation where the business is to operate from. It is the basis for
identifying opportunities to satisfy existing gaps. The analysis focusses on both internal and
external environment of the business. This can help to find out the strength, weakness and
threats of the venture (SWOT analysis) in order to satisfy the needs of the customers

ii. Marketing strategy.

Once the opportunity has been identified, a strategic plan for pursuing it should be developed.
Market research provides specific information that will enable the producer select the
relevant product to deal in.

Ways of collecting market data.

• Surveys. These are questionnaires that are administered to groups of people

representing the target markets, they can be carried out in person by emails, or on
telphones to provide firsthand information.
• Personal interviews. These can use structured or open-ended questions basing on the
data required, this provides best option for customers opinions or views about the
product.

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 • Focus group discussions. These are guided discussions and the people participating
can be divided into sub groups and the result from different sub groups compared.
• Observation. This can be achieved by observing the customer behavior in terms of
how often they buy the product, their buying patterns and preferences.
• Field trials. This involves placing a product in particular places like supermarkets
and other outlets on trial basis to test the customers responses, it helps to know what
to change before the final product is rolled out.

iii. Marketing mix decisions.

Once the marketing strategy has been developed, detailed marketing mix decisions are then
made which include

• Product development- specifying, designing, and producing the quality product.

• Pricing decisions
• Distribution channels and contracts
• Development of the promotion decisions.

iv. Implementation and control

At this point the product is launched into the market and monitored closely as the market
changes, the marketing mix can be adjusted to accommodate the changes.

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