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The Challenge of the Market

Article in Food Reviews International · August 2006

DOI: 10.1081/FRI-120018886

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FOOD REVIEWS INTERNATIONAL

Vol. 19, Nos. 1 & 2, pp. 203–219, 2003

The Challenge of the Market

G. J. Scott*

Center for Latin American Studies, Stanford University, Stanford,

California, USA

ABSTRACT

Identifying markets for new or improved products for minor crops threatened
with extinction is one critical component of any strategy intended to enhance
prospects for sustainable production and use. Typically, however, activities
linked to the sustainability of these commodities avoid addressing questions
associated with assessing their commercial potential. After a brief review of this
avoidance syndrome, this article presents a sample of practical, low-cost
procedures to help evaluate the market prospects and procedures for crops
like quinoa, while citing references to other methodological materials covering
similar topics.

Key Words: Marketing channels; Marketing procedures; Consumer demand; Initial

market assessment; Research methods.

INTRODUCTION

Much of the discussion and recent debate regarding the so-called “lost crops
of the Andes” have focused on their preservation, if not exploitation, by means

*Correspondence: G. J. Scott, Center for Latin American Studies, Stanford University, Stanford,
California 94305, USA; E-mail: gscott277@hotmail.com.

203

DOI: 10.1081/FRI-120018886 8755-9129 (Print); 1525-6103 (Online)

Copyright q 2003 by Marcel Dekker, Inc. www.dekker.com
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204 Scott

of improved conservation, production, or postharvest technology. Hence, in response

to the threat of genetic erosion and possible extinction of these commodities,
biological scientists and postharvest technologists have set forward a broad agenda of
future work to characterize and improve crop genetic resources; to enhance agronomic
practices as a means to overcome or at least reduce pest and disease constraints;
to increase resistance to adverse abiotic factors such as temperature and drought; or to
improve postharvest techniques for processing and storage (see this volume,
for example). The basic thesis of this paper is that nearly all of these endeavors
suffer from a common, fundamental flaw. They consider market requirements,
procedures, and policies to be problem areas to be addressed at some later date,
by someone else, or quite simply not at all. Instead, I will argue that answers
to questions in these areas constitute a fundamental part of any serious effort to
build a program of sustainable production and use for these threatened plants.
Whether commodities traditionally produced for on-farm use can be sustained by
developing markets is a question by no means peculiar to quinoa, but one faced by a
large number of living things found in diverse ecosystems. Given heightened
awareness about environmental issues and the evolving perceptions of the place of
human beings in nature (Lacey, 2000; Lawn, 2001; Leach et al., 1999; McLaughlin
and Khawaja, 2000; Merchant, 1992), various plants, animals, and other living
organisms can lay claim to resources to sustain their preservation. Those that can be
more readily marketed, common sense would suggest, have a better chance of
sustainability, independent of laws, regulations, or special public-supported projects to
achieve that end. Along with this heightened public awareness, public and private
funding agencies are increasingly reluctant to finance open-ended schemes to achieve
greater sustainability. Rather, the trend has been to provide seed money for efforts
expected to become financially self-supporting (Kotler and Andreasen, 1995; Letts et
al., 1997) or to search for market-based initiatives to address environmental concerns
(see, e.g. Anderson and Leal (1997) and Hart (1997)).
After a brief review of the traditional detours associated with confronting the
challenge of the market, examples of practical methods are presented to address
basic questions about what to produce and sell, when to sell, and how to sell. Also
included is information on how to access a more extensive collection of methods
materials on marketing issues via the Internet. The essential aim is to provide
the interested researcher or prospective entrepreneur with some basic tools so as to
enable him or her to embrace the challenge of the market for quinoa or similar
commodities threatened with extinction. It should be emphasized that an insistence on
incorporating marketing research into efforts to enhance sustainability should not be
misinterpreted to mean a blanket endorsement of the results of all such studies or to
defer to the market decisions about optimal levels of biodiversity (Bromley, 1997).
And, it does not mean that merely including marketing activities in such initiatives
will somehow ensure “success.” It will not (see, e.g., Scott et al. (1993) and Welles
(1998)). Rather, it argues for exploiting market opportunities when and where
appropriate, avoiding commercial pitfalls when such opportunities do not exist, and
using market information as one important input in any strategy to enhance
sustainability.
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Challenge of the Market 205

AVOIDING THE CHALLENGE OF THE MARKET

Part of the task of facing the challenge of the market consists of a better
understanding of how and why some advocates of sustainability for threatened
commodities like quinoa avoid the challenge of the market in the first place and the
underlying weaknesses in such reasoning. Common ways of avoiding marketing issues
include: 1) acknowledging such issues are important, but contending that addressing
them lies largely beyond the expertise and responsibility of those engaged in
producing the crop; 2) promoting continued production strictly for on-farm use; 3)
overanalyzing production phenomenon while supposedly conducting a “marketing”
study; and 4) insisting on developing new research methods first, then carrying out
particular marketing research.
Recent professional meetings in Peru, for example, included sessions in which some
quinoa farmers present urged the central government to establish a state-sponsored, crop-
purchasing scheme to buy up the then current oversupply of the crop, or, at a minimum, to
finance efforts to identify markets for the quinoa that farmers were eager to harvest and sell.
Such overtures merely reinforce the view that farmers would do best by producing and then
hoping to capture some commercial outlet—official or otherwise—rather than first
evaluating market requirements and then producing to meet that need in terms of quality and
quantity. In doing the former, farmers entrust their aspirations for continued, remunerative
production to the unpredictable political arena and associated time-consuming official
decision-making process, or to the vicissitudes and exigencies of the market at that very time
that they are ready to sell their output. The notion that farmers who produce endangered
crops should leave some, if not all, responsibility for achieving commercial success in
marketing to others implicitly assumes that farmers could derive no net gains from
becoming more proficient at such activities, even if they were to engage in them at any time
prior to last-minute overtures to public authorities to buy or help sell their harvest.
A second form of market avoidance involves advocating that the only viable way
of sustaining the existence of threatened living things is by preserving age-old
practices of producing only for household use and not for sale. But, this assessment of
the most viable option for such plants and animals is too categorical. It raises
questions about its applicability, for example, to all varieties of a given plant, in all
locations where the crop is grown, and whether the decision for continued subsistence
production is based on full knowledge of the benefits and costs to poor producers of
market participation for particular products in particular locations.
Another form of avoidance of the challenge of the market is the practice of
carrying out a “marketing” study by focusing nearly exclusively on such things as
historical trends in national supply of a given commodity or the costs and returns per
hectare for growing a particular crop. The justification given in these instances is that
important marketing questions can only be meaningfully addressed once the requisite
data have been collected and analyzed on producing the crop. However, an exhaustive
analysis of agronomic practices and even the economics of production all too often
leave little time to examine what is being bought and sold, under what terms, in what
quantities, and at what price, or precisely the queries one might otherwise expect
answers to from a marketing study.
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206 Scott

A fourth form of avoidance of the challenge of the market concerns the alleged
need to develop new, more appropriate research methods prior to actually attempting
to evaluate market requirements. While new and improved methods may well be an
asset, a remarkably diverse set of practical, applied research methods are already
available to help identify, characterize, and exploit market requirements (Carter, 1997;
Carter et al., 1997; Crawford, 1997a,b; Harriss-White, 1999; Scarborough and Kydd,
1992; Scott, 1995a; Scott and Griffon, 1998; Scott and Herrera, 1991; 1993)a,b. The
search for new methods then simply constitutes the pursuit of newness for newness
sake; or, reluctance to acknowledge the likely outcome of an initial market analysis
using available methods may very well preempt the necessity for further investigation.
In the remainder of this article, a brief synthesis of two existing methods will be
presented, including examples of the types of information to be gleaned from
their use, and indicating publications and websites where additional methods can be
located.

POTENTIAL PROCESSED PRODUCTS: THE INITIAL ASSESSMENT

Recent studies of heretofore subsistence commodities, including minor crops similar

to quinoa, have highlighted the importance of exploring their sustainability through
converting the associated raw material into new or improved processed products and
having those products serve as a means of broadening commercial appeal and enhancing
the economic viability of their continued production by small farmers. Past experience
with similar agroenterprise initiatives (see, e.g., Ostertag (inpress); Scott and Herrera
(1993); Wheatley et al. (1995; 1997)) emphasized the need at the outset of a critical
assessment of the comparative commercial potential of a variety of possible alternative
products. The complexity of this exercise is often underestimated by those interested in
such undertakings, because the number of potential products and corresponding market
outlets frequently proves far greater than initially contemplated. Identifying those with the
greatest commercial promise requires a timely, systematic appraisal. The concern here, as
well, is with a practical, low-cost, and rapid set of procedures to evaluate different
commercial options for commodities produced by small-to medium-scale agroenterprises.
In contrast with industrial (or semi-industrial) agribusinesses, these smaller agroenter-
prises rely much more heavily on labor than machinery or equipment. They also utilize a
minimum of sophisticated, hard-to-procure (imported), and expensive inputs, e.g.,
chemicals (see also Austin (1992); Edwardson and MacCormac (1984); Young and
MacCormac (1987)).
The procedure presented here for the initial commercial appraisal of agroenterprise
products is part of a more elaborate sequential approach divided into a series of

a
See also methodological guidelines in the website of the Marketing and Supply Group of
FAO-Rome: http://www.fao.org/waicent/faoinfo/agricult/ags/AGSM/marketin.htm.
b
See the World Bank’s website for the Guide to Developing Agricultural Markets and Agro-
Enterprises: http//wbln0018.worldbank.org/essd/nsf.
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Challenge of the Market 207

distinct steps (Ostertag (inpress); Scott and Herrera (1993); Wheatley et al. (1995;
1997)).c,d,e These steps include those required to decide whether to develop a specific
product beyond the initial, perhaps vague idea, to those appropriate for improving the
ongoing production and sale of particular commodities currently being commercialized.
The principal steps involved in evaluating the commercial viability of processing and
marketing new or improved agricultural products can be summarized as follows:

. Initial assessment.
. Evaluation of market competition and consumer demand.
. Input supply analysis.
. Analysis of costs and returns.
. Development of a marketing strategy.

This sequence of steps is not self-perpetuating. For example, if the initial assessment
shows a processed product to be uneconomical or technically problematic, then the idea
should be reconsidered at a minimum or simply abandoned in favor of other possible
alternatives (e.g., storage, improved marketing of fresh produce) to achieve the same
goals. Similarly, the other steps mentioned are by no means all-inclusive but rather
represent the major areas that require analysis. Furthermore, steps two through five are not
necessarily irreversible. Some work on input supply systems, for instance, might precede
completion of a consumer-oriented market survey. The collection of tasks that these steps
represent, however, build on one another, and taken together, offer a vision of how
commercial prospects for particular products might well be assessed. Past experience has
shown that the initial assessment is by far the most critical in terms of focusing all
subsequent efforts.
The initial assessment is the most important stage of any product development
initiative for a variety of reasons. At the outset, the period of time when opportunities are
analyzed and actual or potential commercial prospects and problems assessed,
expectations about the future are typically high, opportunities may seem particularly
promising, and eventual problems or constraints appear less formidable or are simply
unknown. Only limited resources have been committed to any product, and often only in
principle or on paper. Therefore, changing trajectory or even abandoning the entire
initiative can be done quickly and at relatively modest expense. Once things are underway,
the target market(s) have been chosen, and the corresponding products to produce and sell
in that market are selected, mistakes are much more costly and time-consuming to correct.

c
For more information on postharvest technology see Bell, A., Mazaud, F., Muck,O. Guidelines for
the Analysis of Post-Production Systems. A joint initiative of the Food and Agriculture Organization
of the United Nations (FAO) and the Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ)
GmbH: Rome, http://www.fao.org/inpho.
d
For information on postharvest issues as relate to roots and tubers see http://www.cipotato.org/
market/PostHvst/newposth.htm#Potato.
e
For specialized information in tropical food processing in Africa and in particular on food
processing and commercialization to help small and medium enterprises see Groupe de Recherche et
d’Echanges Technologiques (GRET) AgroAlimentaire Tropical-Réseau Technologie et Partenariat
en Agroalimentaire (TPA) http://www.gret.org/tpa.
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208 Scott

The enthusiasm and excitement that such a new undertaking may generate, or simple
ignorance about all of its ramifications, can often lead to overlooking key issues. Past
experience suggests that considering a checklist of issues can facilitate a rapid, but
nonetheless systematic consideration of the commercial viability of processed products at
the most preliminary level (see Scott and Herrera (1993); Wheatley et al. (1995; 1997),
and Appendix 1):

. Demand: Where is the target market located? Who will consume the product?
How many potential consumers are there? What is the purchasing power of the
target group? How traditional are the food preparation habits or consumption
patterns of the target group? What quantity of the product will perspective
consumers purchase?
. Raw material supply: What are the quantities of the commodity produced in the
region? Are there distinct periods of under- or oversupply in the market that
generate large fluctuations in prices? How well defined is this cycle?
. Consumer acceptance: Is there a broadly based acceptance of the commodity in
the local diet? Are products utilizing the same commodity already in local diets?
Used for animal feed? Or, for industrial use?
. Technology: How simple or complex are the associated technologies that are
being considered to produce the product? Can the agroenterprise be organized,
constructed, and maintained locally or will imported parts or equipment be
needed (see Scott (1991; 1995b; 1998))f?
. Labor: Many small agroenterprises use low-cost technologies that substitute
labor for capital expenditures on equipment. Is labor plentiful and cheap?
Are there seasonal shortages of labor that would affect operation of the
enterprise?
. Ecology: What are the climatic patterns in the region? Are these conducive for
production, harvesting, and storing raw material?
. Postharvest tradition: How well developed are current postharvest activities?
Does a similar product already exist?
. Organizational aspects: Who will be in charge of production and marketing?
How will this activity be organized: co-op? corporation? or, partnership? What is
the size of the typical local farm? Do some producers’ or agroentrepreneur
associations already exist?
. Capital requirements: What quantity of capital is required? What type of
investor can afford the investment? Is credit available for such investments
through existing banking facilities?

The essential feature of the initial assessment is to synthesize as much of the

available information as quickly as possible to consider all the various options.
Maximum use should be made of secondary data, informal surveys involving
established agroenterprises, as well as interviews with knowledgeable individuals in

f
Foodnet http://www.cgiar.org/foodnet is the postharvest network for research and training for East
and Southern Africa.
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Challenge of the Market 209

their respective areas of endeavor (e.g., extension agents) for answers about crop
production.
One, or possibly two, weeks should usually be sufficient to gather all the information
necessary for this preliminary assessment. However, it is important not to take shortcuts
(i.e., to make assumptions based on “common knowledge”). Rather, it is essential to
question rationalizations, assumptions, and the basis for optimistic (or pessimistic)
appraisals by those interviewed.
Results of this assessment provide an initial appraisal of the prospects for
the proposed processed product(s). The exercise is most useful for inexpensively
deciding not to produce; for quickly identifying major stumbling blocks to this
type of activity; or for clarifying which products seem most commercially
viable. Subsequent steps involve a more in-depth investigation of elements of
the original list, including an analysis of marketing channels for these or
similar products.

MAPPING MARKETING CHANNELS (MENDOZA, 1995)

Embracing the challenge of the market invariably involves analyzing the interaction
between buyers and sellers. Key questions for any initiative aimed at evaluating the
marketing prospects for new or improved products made from crops like quinoa are: Will
these products be traded in an existing marketing system for similar products? Or,
conceivably, will the sellers try to set up a modified or entirely new distribution system for
their products? In order to assess the advantages and disadvantages of these different
strategies, a rapid assessment of the current marketing system—in particular, the principal
marketing channels in use—is needed (Holtzman et al., 1995; 1998; Mendoza, 1991;
1998; Morris, 1995).
Marketing of agricultural commodities is usually seen as a “system,” because it
comprises several interrelated activities that, along with production and consumption,
capture the economic process from planting to final use. Assessments of marketing
activities may adopt different viewpoints and approaches depending on the priority given
particular issues. These include the functional or marketing functions (physical, economic,
and exchange) approach; the organizational approach covering all market participants
(producer, trader, transporter, wholesaler, retailer, consumer, etc.); and the postharvest
approach that analyzes all harmful or loss-provoking elements and other causes in the
transfer of agricultural commodities. Physical distribution (i.e., functions) and economic
activity (i.e., buying, selling) are two dimensions of marketing carried out by
organizations or individuals. An analysis of these two dimensions of agricultural
marketing is intimately linked to the institutions created by law or corporate standards
(whether these enterprises are public or privately-run companies), by custom or simply by
established procedures that have emerged as a result of the social and economic interaction
between the participants in the marketing process (middlemen, consumers, and
producers). Marketing organizations include market stabilization agencies, boards of
foreign trade, supermarket chains, individual or family-operated wholesale or retail
businesses, and storage owners, among others.
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210 Scott

An analysis of marketing channels provides a systematic appraisal of the flow of the

goods and services from their origin (producer) to their final destination (consumer). Such
an appraisal can often entail analyzing a complicated web of transactions and actors.
Rather than try to analyze the system in its totality from the outset, it often is easier to
begin this exercise by first identifying and then analyzing the conduct of the different
participants in the process.
According to Mendoza, the process that links production to consumption can be
centralized or decentralized (Mendoza, 1995). The organizational system for marketing
agents in a marketing chain may be classified accordingly. The focal point of centralized
systems is typically a wholesaler based in a central market or some other key location for
trading. The wholesaler’s most important function is to help establish prices. This function
has repercussions for the price of goods at various level from their origin (the producer
level) to their destination (the consumer level).
In the decentralized system, the focal point of activity at a single location, as
evidenced by the wholesaler’s traditional overtures toward retailers (and producers), is
completely displaced. Instead, producers and rural assemblers take on added
responsibilities. In Fig. 1, producers, grain warehouse operators, rural assemblers, and
truckers largely replace wholesalers in moving produce from its origin to the final user.
This example is intended to help provide the researcher with a scheme to begin mapping
out the various agents involved in the marketing process under examination, including
their connections and functions.
Some traditionally accepted definitions help to identify and classify participants in the
marketing process. In the real world, these classifications are by no means mutually
exclusive, as the same participant may assume the tasks of two or more types of marketing
agents (i.e., wholesaler-retailer, trucker-rural assembler):

. Producers: As the first link in the marketing chain, producers grow the crop
(raise the livestock, catch the fish) and supply the product to the second agent.
From the moment they choose what to grow, they are already making a
marketing decision (by answering the questions of “what?,” “when?,” and “how
much to grow?”).
. Rural assemblers: Sometimes also known as transporters or the traders/tran-
sporters, they are the first link between producers and other middlemen. They
typically collect several smaller lots of scattered rural production and combine
them into a single load at one location. In so doing, they often also classify these
diverse lots into fewer types. To the extent they arrange for or provide shipping,
the key function rural assemblers provide in addition to assembly is transport.
. Wholesalers: They concentrate the various, intermediate-sized loads and put the
product into large, uniform units. These activities contribute to price formation.
In so doing, wholesalers provide information to suppliers (e.g., growers, rural
assemblers) and may assume to a varying degree the risks associated with the
transfer of property rights attached to the goods and services being bought and
sold. They also facilitate mass and specialized storage operations, transportation,
and, in general, the subsequent distribution operations involving retailers.
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Challenge of the Market 211

Figure 1. Principal marketing channels for yellow maize in Paraguay. Source: Morris (1995).
(Reproduced with permission.)

. Retailers: Middlemen, which includes supermarkets and other large-scale

retailers, divide large shipments of produce and sell it to consumers in small
units. The basic function that they provide is bulk breaking.
. Food-processing companies: Such enterprises use agricultural commodities as
raw material, for example, to convert quinoa into toasted breakfast cereal.
. Exporters and importers: These are companies that buy and sell agricultural
products in foreign markets. The products vary from freshly harvested produce to
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212 Scott

intermediate or final products that have gone through various stages of

processing.
. Government institutions or agencies: These include all government
organizations that guarantee minimum prices to the producers and regular,
price-controlled supplies to consumers. In many countries, these organizations
no longer exist, or they no longer guarantee minimum prices or supplies. In some
cases, their sole role now is to provide food assistance to low-income
households. In others, they merely procure commodities for particular programs
or public organizations (i.e., hospitals, military bases, etc.).
. Producer and consumer associations: These include professional associations
and farmer cooperatives that regulate and influence the production and
marketing processes. They may also be consumer associations that substitute for
middlemen and have an impact on marketing margins.
. Brokers or commission agents: These entrepreneurs typically do not take full
ownership of agricultural products that they buy and sell, but rather work for a
fee, or commission, on behalf of other participants. They operate at all levels of
the marketing chain. Typically, they work on either a flat rate or percentage (of
the selling price) basis.
. Other organizations: Other institutions, such as “marketing boards,” may be
mixed public – private (parastatals) or solely private entities with some semi-
monopolistic concessions (private companies, export cartels, etc.).
. Consumers: They are the last link in the marketing chain. Families usually
personify final consumers. However, processing companies may also be
considered users (or consumers), albeit at the intermediate stage.

These participants and their respective functions may often overlap. In developing
countries, the most widespread combinations are traders/wholesalers that collect the
commodity and supply it to retailers, wholesalers/retailers (wholesalers that not only sell
in bulk to retailers, but also sell in small-sized lots directly to consumers),
wholesalers/exporters, and wholesalers/input suppliers.
By identifying which types of marketing agents participate in a particular marketing
channel (or noting their absence), one can analyze buying and selling of a class of products
(e.g., fruits, vegetables) or for a particular commodity. The type of analysis presented in Fig.
1 may require a large and systematic research effort aimed at a group of products coming in
and out of a particular market (Holtzman, 1995; Mendoza, 1991; 1995; 1998; Morris, 1995).
In-depth and more detailed analysis of marketing channels for a single product is more
frequent. The procedures involved in this type of analysis include the following.
The first step is to determine the final market for the product(s) in question. Next, the
requisite sources of supply must be identified. The concept of “marketing” summarizes the
physical and economic processes, whereby the goods are transferred from the producer to
the end-user. The “marketing chain” is the path the goods follow from their source of
original production to their ultimate destination for final use. As many marketing channels
may exist as there are separate sources and destinations for each item. A specific analysis
must be made in each case, in which the objective in every instance is to trace the
movement (purchase and sale) of the product from the source of supply through as many
steps as exist before it reaches its point of final sale. While other channels may exist in the
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Challenge of the Market 213

Figure 2. Flow of vegetable supplies into Greater Santiago (Chile). Source: Mendoza (1995).
(Reproduced with permission.)

same country (region or locality) for the same product, it is critical for the researcher to
identify and then concentrate on analyzing the most important one(s) and to be clear as to
why it is most important. For example, out of five existing marketing channels for quinoa,
does this one handle the largest volume? Does it deal in the most lucrative form of sale,
e.g., processed and unprocessed quinoa, as opposed to only unprocessed quinoa? Does this
channel have the greatest direct participation by farmers?
Once the product’s source(s) and final destination(s) have been determined, certain
parameters can be established. These include the volume (or period) of supply, or the time
during which the harvest occurs (this may be one week or over a month). The essential
component of the analysis is the appropriate unit of measure, i.e., one that accurately
represents what it is that is supplied and demanded, bought and sold. The extent of detail
portrayed in this unit of measure depends on the statistical information available and on
the accuracy and depth of the assessment.
The research on vegetable marketing in Santiago (Chile) was to collect the basic
information needed to plan the establishment of a wholesale terminal market to improve
supply of farming products to Greater Santiago. As a sample frame, the study analyzed
secondary data on 100% of the supply of vegetables that went into and out of the city during
a 6-month period. The findings illustrated in Fig. 2 enabled researchers to determine the
origin of supply (by regions), its final destination (consumers in Santiago and regional
markets after going through Santiago), and the relative importance of different types of
middlemen. In every case, the volume handled is given as a percentage of the total.
The next step consists of a participatory survey of all of the types of marketing agents
involved in the marketing chain. By interviewing all types of marketing agents, one can
more easily follow the marketing process from its origin to its final destination (this can
also be done the other way around: from its final destination to its origin). Sampling is
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214 Scott

done so as to include and thereby classify the physical functions of all the “segments” or
stages in the marketing chain provided by one type of marketing agent against that
provided by other types. The “participatory” aspect refers to the in situ interviews so that
one can note responses and observe marketing practices simultaneously.
The sequential nature of the survey procedures not only provides a systematic
appreciation of the respective roles of the different marketing agents but also facilitates
verifying or qualifying responses.
Proper sampling and the interviews mean it is possible to determine who acts as the
marketing agent, who sells (e.g., producer, rural assembler, trader/transporter), and the one
who acts as the marketing agent, who buys (e.g., wholesaler), where transactions take
place, the physical functions carried out (transportation, classification, packaging, and
storage), and other functions (financing and price information, for example). It also serves
to verify the accuracy of the responses given. For example, by asking “From whom do you
buy? and “To whom do you sell?,” each agent in the chain confirms (contradicts or
clarifies) what the preceding (or following) one said. For example, if the wholesaler is
asked “Whom do you buy from?” and he answers “From the rural trader or transporter,” he
identifies the seller and his answers can be compared. The rural trader or transporter should
have answered, “To the wholesaler,” when asked, “To whom did you sell?”
Besides information on the workings of existing marketing channels and their
possible commercial and legal justification, such a survey can also generate data on other,
related marketing issues such as interest in possible new or improved products and their
introduction into established marketing channels, by including questions concerning other
aspects of trading activity.
There is no ironclad rule to help one determine the number of interviews required for
each stage or segment of the marketing chain. The decisions involved are partly a function of
the information currently known, time and resources available, accessibility to and
openness of the marketing participants, as well as the estimated size of the trading
population. Perhaps it is best to begin by determining the different types of agents at each
stage of the marketing chain and the possible size (number of stages) of the marketing
channel. For the marketing of a single type of agricultural commodity, from one production
area (origin) and for one urban market (destination), several hundreds or thousands of
producers, thousands and even millions of consumers, one to two dozen rural traders, two to
three dozen wholesalers, and 500 to 1000 and even thousands of retailers, can often be
found. Thus, the establishment of a fixed procedure (e.g., a certain percentage of the
estimated population of a particular type of participant) could prove excessive for some
segments of the study (in particular traders and wholesalers) and insufficient for others (the
consumer segment). In some studies of marketing channels and margins, as many as 30% of
all traders and wholesalers were surveyed (approximately 12 interviews in each case),
between 5% and 8% of producers, 5% of retailers, and less than 1% of consumers.
Sampling by segments without size limits established a priori can simplify things,
particularly in rapid appraisals of marketing systems. One rule of thumb to apply in these
instances is to reduce or amplify the number of interviews to be conducted in the sample
according to the extent of variability in the responses to the questions. A trained surveyor
typically becomes rapidly aware of the degree of uniformity or variability in the answers.
This helps determine the appropriate sample size needed for each type of participant in
each market segment.
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Challenge of the Market 215

CONCLUSION

The focus of this article was on the problem of evaluating the market prospects for
new or improved products made from commodities that have been traditionally produced
largely for on-farm use and whose sustainability may be enhanced by expanding
commercial outlets. It outlined steps to help assess the original idea of marketing a
particular product by more carefully identifying the needs, size, and growth prospects of a
particular product market as well as the resources required to produce and sell actual
output. It also included guidelines to analyze existing or similar marketing channels. The
highly synthesized methods presented are by no means all-inclusive, but rather suggest the
principal types of activities that need to be undertaken to determine the economic
feasibility of new marketing initiatives. While the emphasis was exclusively on
socioeconomic methods, the procedures repeatedly call upon the need for information
about technical procedures and product characteristics as well. Finally, readers are
cautioned that marketing information is a necessary but insufficient ingredient in efforts to
enhance the sustainability of crops like quinoa.

APPENDIX 1. CHECKLIST FOR FINAL SCREENING OF PRODUCTS

Demand
Define target market (city, region, etc.)
How many consumers (total, % who could purchase)?
How much product per person/year?
Is purchasing power increasing or not?
Are consumption, food purchase habits changing?
Does product fit these changes?
If product is novel, will acceptance be good?
If product is competing against others, will price and quality be better than
competitors?
For industrial markets: What is the volume of purchases and the price of competing
raw materials by industries concerned?

Raw material supply

Volume of production target region.
Demand in other markets for this production.
Seasonality of production and demand in other markets.
Price fluctuations/cycles.
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216 Scott

Characteristics of both traditional and new varieties (growth cycles, quality, yield).
Potential for and constraints to increasing production (diseases, erosion, drought,
etc.).

Physical factors
Determine harvest times and feasibility of natural drying systems:
Rainfall (dry and wet seasons)
Does dry season coincide with harvest time?
Temperature
Relative humidity.
Is there ready access to clean water (for starch extraction especially)?

Organizational aspects
Are farmers market or subsistence oriented?
Are farmers willing to experiment?
Has there been a positive experience with co-ops?
Is institutional support available for co-ops/small businesses?
Is credit available?
Are capital requirements manageable?
Is a separate distribution entity needed?
Is technical and financial support available for this?
Will many institutions be involved? Is inter-institutional coordination satisfactory?

Existence of similar activities

Is small farmer processing novel or a continuation of existing practices?
What are the strengths and weaknesses of existing operations?
How can weaknesses be corrected?
Are there any existing facilities that can be utilized to reduce capital outlay?

Consumer acceptance
Is this crop accepted in the diet (fresh, processed)?
Is image good or not?
Is this product being made already? If not, why not?
If an existing product, what improvements can be made?
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Challenge of the Market 217

If a novel product, is this crop accepted in other foods or is it a food accepted with
other ingredients?

Capital requirements
Amount, conditions of loan (interest rate, grace period, etc.)
Requirement of collateral (land holdings, etc.)
Standard banking arrangement or special loan scheme for small businesses, co-ops

Labor
Costs
Availability (seasonality)
Educational level
Gender issues: replacing manual operations by machinery often reduces women’s
role and can have negative social consequences

Technology
Is it already developed, or is further research required; if so, how much and what are
the chances of success?
Imported or local? If imported, are spares, etc., available?
Can it be managed by farmer group if necessary?
What training will be required (process operation, business, marketing etc.); who
can provide and finance training activities?
Can local labor and materials be used in construction?

Benefits
How well will the product fit project objectives?
Who will benefit and by how much?
What is the risk of failure? Who suffers if project fails?
How much; i.e., economic feasibility.

Source: Wheatley et al. (1995). (Reproduced with permission.)

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