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Organic Marketing (OAGR 2300)

Offered by the University of Guelph


Please note that this course is not currently scheduled for the 2015/2016 academic year.


Economic theory of markets principles are applied to the marketing of organically-produced and processed products, through exploring open market price formation, value added, marketing margins, alternative marketing outlets and branding. Adherence to organic production and marketing standards, market price premia, quality management, supply chain management, advertising and promotion, and opportunities for Canadian organic agri-food sector expansion issues are also addressed.

Topics:

  • Origins of market price premia for organically-produced commodities (OPCs)
  • Canada Organic Standard and comparison internationally
  • Open Market price formation and the supremacy of the consumer
  • Supply chain components, attributes and management
  • Marketing venue alternatives for OPCs and impacts on market power, marketing
    costs, marketing margins, value added and supply chain management
  • Branding and its importance for marketing OPCs domestically and internationally
  • Advertising and promotion as strategies for increasing market demand

The course is presented in six modules:

Module I: The Organic Agri-Food Sector: An Overview

This Module provides an overview of the basic characteristics and trends in the organic agri-food sector in Canada and other member countries of the Organization of Economic Co-operation and Development (OECD). It is not only in Canada that organic agri-food represents the fastest-growing sector of the agri-food industry; this applies across most all OECD countries, and in particular to Canada's major trading partners, the USA, the EU, and Japan. Opportunities abound for Canadian organic agri-food producers and processors to expand exports especially to OECD trading partners and to replace imports, at least in theory. The business of translating theoretical expansion opportunities into actuality will be taken up in Module VI.

Module II: Characteristics of Organically-Produced Commodities and Organic Agri-Food Markets

One of the most discussed attributes of organically-produced commodities (OPCs) is their ability to attract price premia in the marketplace. The question is why? An ancillary question is to ask whether these premia are justified. A hypothetical answer might be to suppose that these premia stem from relative scarcities placing upward pressure on market prices. It turns out that this provides a partial answer, but one too simplistic. The purpose of this Module is to explore those characteristics of OPCs and organic agri-food markets that help to explain the origin and persistence of market price premia. We rely heavily on the published results of surveys of consumers of OPCs for the material in this module, and particularly on a review of these results by Bonti-Ankomah (2003).

Module III: The Mechanism of an Open Market System

This module is designed to review a) how open markets operate to determine exchange prices through the forces of supply and demand; b) the definition, calculation and interpretation of elasticity of supply and demand; and c) how to interpret the term efficiency of open market systems.

These theories and concepts have all been thoroughly dealt with in the pre-requisites for this course, hence the use of the term "review". Do make sure you understand these important theories and concepts reviewed in this module before moving on; also attempt the exercise before moving on.

Module IV: Supply Chain Management

In this module, we introduce the concept of supply chains in the organic agri-food sector and explain the role that supply chains play in transforming the raw food products of farmers into the processed, refined and packaged foods ready for retailing to consumers. It is important to understand how the supply chain system operates to provide for the food needs and wants of consumers by performing the various marketing functions efficiently and effectively. This in turn means that we have to understand what the marketing functions are and why they are important. Then there is the question of who might best perform each marketing function, taking into account the need for managing risks. We also need to appreciate that supply chains can vary in length and complexity, depending on the commodity and the extent of value-adding activities.

Module V: Alternative Marketing Venues

In this Module we take the theoretical material about Supply Chain Management presented in Module IV, and cast it in a practical setting. We will explore a number of alternatives for food marketing, each of which can have a marked impact in the agribusiness sector on such things as the operation of markets, market power, and marketing costs and profits. As you'll also learn, each of the alternatives to be examined is associated with a different degree of ownership concentration, ranging from complete vertical integration at one extreme to completely open competition at the other. We shall examine these marketing alternatives to establish the relative strengths and limitations of each.

Module VI: Influencing Consumer Behaviour

The truism that "consumer is king" has been stated a number of times throughout this course manual, and with good reason and intent. It is the fundamental underpinning to the operation of the open market system, and therefore constant focus on it is critical to the successful management of agri-food sector businesses. It is nevertheless possible for businesses to take certain management measures that can influence consumer behaviour. For all organically-produced commodities (OPCs), it goes without saying that certification requirements must be fully met and so stated on so-called generic labels. Beyond that, individual producers and marketers of OPCs can employ branding and labelling, together with advertising and promotion programmes, as means of manipulating consumer purchasing decisions to the advantage of their business. Branding and labelling are important tools for identifying a specific product with a particular business, and can be used for establishing customer loyalty, gaining market share, and other goals. Advertising and promotion programmes, used in conjunction with branding, can further advance the achievement of such business goals. In addition to producers and processors of OPCs helping themselves, governments in Canada could do much to assist the organic agri-food sector in taking fullest advantage of OPC consumer growth in both domestic and export markets.


Please note that this course is not currently scheduled for the 2016/2017 academic year.