The greater the distance between producer and consumer, the more complex is the marketing organization required to ensure that eggs reach consumers in the form, place and time desired. Producers may decide to market their produce directly to consumers - direct marketing - or may choose from a variety of marketing organizations that make up a marketing channel.
Direct marketing includes the following methods of selling:
A typical marketing channel is made up of:
Figure 12 - Direct marketing
Figure 12 - Organized marketing channel
Egg producers who are situated a short distance from consumers may be able to practise direct marketing. Before choosing to sell their products directly to consumers, however, they must evaluate two main factors:
There are four main ways to carry out direct marketing.
Sales from the farm
Producers may be able to sell eggs directly from the farm (farm gate). This, however, will depend on whether consumers are able and willing to go to the producers facilities. The main advantage of farm-gate selling is that the producer may be able to obtain a market price for eggs without incurring marketing costs. The main advantage for the consumers is that eggs will be fresh with little or no quality loss.
Door-to-door sales/street hawking
Some consumers prefer that eggs be brought directly to their door. This means that the producer must spend time on marketing; however, consumers may appreciate the service and be willing to pay a good price. Furthermore, the producer can take orders directly from consumers and carry only what he/she is assured will be bought. Eggs may also be sold on the street as can be seen in Photograph 30.
Usually the producer simply occupies a stall in a public marketplace and offers his/her produce for sale. Eggs are commonly displayed in baskets and often differentiated by weight/size and colour (see Photograph 31). Sales in producers markets permit a farmer to make direct contact with consumers who are not able to go to the production facilities. The main disadvantage of using such markets is that, towards the end of the day, the producer may have to either reduce his prices sharply to dispose of remaining stock or carry it back to the farm.
Sales to local retail shops
Producers can also sell directly to local retail shops. This requires some sort of agreement between the two parties regarding constant supply, quality and payment methods.
In some cases it may be possible for producers to sell directly to institutional consumers such as hotels, restaurants, schools and hospitals. This type of direct marketing, however, requires negotiation, which may result in a written contract of the duties and obligations of both parties. It also requires continual interaction over time between producer and buyer, a standard egg quality agreement and a constant supply. The producer must carefully evaluate the issues involved including the regular production and transport of large quantities of eggs.
A marketing channel is composed of a set of separate but interdependent organizations involved in the process of making a product available to consumers. The use of a marketing channel is convenient particularly when the producer does not have the time or financial means to carry out direct marketing. Intermediaries are usually able to make the product widely available and accessible because they are specialized and have experience and contacts. They also have a better understanding of the egg market. Intermediaries take the risks involved in marketing and also pay for the produce immediately.
Collectors undertake the initial work of assembling eggs from various producers or local country markets. They operate either on a commission basis or by purchasing on their own account. Where the quantity of eggs collected at each stop is small and frequent, this system is often the most economic. Collectors may be itinerant merchants, producers themselves, assembly merchants, wholesalers or their agents, or retailers.
Assembly merchants may be divided into the following categories: local assembly market; independent processor-packer; and, cooperative processor-packer.
Local assembly market. In a typical local assembly market, a private firm, a producers cooperative or a municipality provides an enclosed space for the use of sellers. Sales may take place by public auction or by private negotiation, subject to rules such as those on quality and payment arrangements. Auctioning requires the eggs to be graded and possibly presented in standardized containers, marked with identifying names or symbols. The local assembly market may provide cold storage facilities for the convenience of market users.
Independent processor-packer. This type of enterprise usually purchases eggs either through collectors or directly from producers. The processor-packer may pass by the farm and pick up the eggs or the producer may deliver the eggs to the processing facilities where they are graded and packed. Usually eggs are sold to wholesalers; however, they are also sold directly to retailers and institutional consumers such as hotels, restaurants and hospitals.
Cooperative processor-packer. The same type of enterprise may be set up and run by a cooperative association of producers. The main advantage is that the business is run by and for those who use it, rather than by those who own it. Cooperatives can obtain financing, provide extra competition to independent processor-packers and provide an alternative to established intermediaries.
Before forming a cooperative, producers should carefully evaluate:
Wholesaling includes all the activities involved in selling goods to those who buy for resale or for business use. The main function of the wholesale distributor is to balance supplies against retail requirements and to take the initiative of bringing produce from areas where it is plentiful and cheap to those where it is relatively scare and expensive. Wholesalers usually have a good knowledge of the market, access to the best information on trends and prospects and working capital to carry business risks as required.
Wholesalers usually obtain eggs from central wholesale markets, assembly merchants, collectors and local country markets; however, in some instances they go directly to the producers. Eggs may be purchased directly or accepted for sale on a commission basis. Many wholesalers have their own storage facilities. Wholesale distributors may engage specialized transport agencies to transport eggs or operate such services on their own account.
Central wholesale markets
Central wholesale markets receive shipments from large farms and from country markets, and constitute a supply source where wholesalers and retailers can obtain the various types of produce they need. General wholesale markets sell many different products, including eggs. Because it is the focus point of many smaller markets and also the point of contact for suppliers to important groups of consumers, a central market is usually the primary price-making mechanism for the production areas it serves. In this way it balances demand and supply.
In urban areas, egg sales are made through retailers. Four types of retailers usually carry eggs in their shops:
In some instances retailers buy eggs directly from the producer and may have their own process-packing facilities.
As we have seen, marketing channels have different organizations that carry out different functions, or it may be possible that an organization carries out more than one function. Vertical integration occurs when more than one of the stages of the marketing channel is carried out by a single organization. For example, a wholesaler may have processing-packing facilities, retail outlets and employ collectors as well.
Before choosing a marketing channel or channels to market eggs, producers should carefully evaluate the following factors: