A study on the marketing channels involving in the egg marketing

Submitted bySilambarasan R

09MBAA50

A marketing channel is a set of independent

organizations involved in the process of making a product or service available for use or consumption.

“Intermediary” refers to any distribution

channel member located between the supplier and the end user.

Introduction to the study

Poultry industry is one of the fast growing agriculture sector.

Namakkal industry places a significant role in poultry industry.

Necc is the deciding authority of egg price.

Industry profile

1999

-200

0

2001

-02

2004

-05

2006

-07

2008

-09

050

100150200250300350400450

Growth of Poultry Industry in Na-

makkal

Number of layersNumber of ggs

Noon food plan12%Exports

10%

Egg powder6%

Sales to Kerala28%

sales in Tamilnadu30%

0ther states14%

Contribution of Namakkal to poultryIndustry

Egg marketing channels

FARMERS FARMERS FARMERS

BROKERSBROKERS

WHOLESALERSWHOLESALERSWHOLESALERS

CBTS

RETAILORSRETAILORSRETAILORS

CONSUMERSCONSUMERSCONSUMERS

CHANNEL 1 CHANNEL 3CHANNEL 2

Aishwarya group is being a leading name in poultry farming in

Namakkal. The concern owns about 70acres of farm land. It maintains a

turnover of 120crores per year Production rate is 2lack eggs/day and 70ton

feeds/day. Sales rate is 4 lack eggs/day. Own transport. They use all those three channels to sell their

produce. Especially as a cbts they are selling 2lack eggs per

day.

Company profile

the effective marketing channel is very

important For every commodity to reach customers without any hurdles and constrains. This study tends to identify the cost effective marketing channel in poultry industry at namakkal.

Need of the study

The study is focused on nammakal district

only and its cannot be generalized to other areas.

There was limitation over time and resources.

Limitation

Primary objective: To identify the marketing channel which makes high

profit margin to Aishwarya poultry, namakkal.Secondary objective: To understand the marketing channel systems

practice at poultry industry in namakkal. To identify the profit margin of every intermediate

in all channels To identify the production cost and marketing cost

in all channels.

objective

Research Methodology The type of research used in this project is a Descriptive research design.Data collection The data given in this study are collected from the poultry farms that are in contract with the Aishwarya feeds, individual marketing farms, brokers, wholesalers, retailers, traders association and NECC, Namakkal.

Research Methodology

Sample size 30 farmers 15wholesalers 30 brokers

Sampling design: convenient sampling

Research methodology

Tool used:Marketing efficiency:MME = FP/(MC+MM)Whereas,MME = modified measures of marketing efficiencyFP = price received by the farmers,MC = total marketing costMM = marketing margin  Note: The cost of eggs considered in this study is the average cost of 100 eggs in the month of June, 2010.

Various cost incurred by

farmerChannel 1 Channel 2 Channel 3

Production cost 225.00 225.00 246.00

transport cost 10.00 0 0

labour cost 2.20 1.00 1.00

damage cost 2.70 1.00 1.00

miscellaneous .10 0 0

Total cost 240.00 227.00 248.00

Cost incurred by farmers in channel1, channel2, channel3

Various cost incurred by broker

Channel 1 Channel 2 Channel 3

Purchase price 0 255.00 255.00

Transport cost 0 10.00 10.00

Labour cost 0 1.20 1.20

Damage cost 0 2.60 2.60

Miscellaneous 0 .10 .10

Total cost 0 268.90 268.90

Cost incurred by brokers in channel1, channel2, channel3

Various cost incurred by wholesaler

Channel 1 Channel 2 Channel 3

Purchase price 270.00 275.00 275.00

transport cost 1.00 1.00 1.00

labour cost .30 .30 .30

damage cost .60 .60 .60

miscellaneous .10 .10 .10

Total cost 272.00 277.00 277.00

Cost incurred by wholesaler in channle1, channel2, channel3

Comparative Table All the cost incurred by channel partners in channel1, channel2, Channle3

4 Broker’s purchase price

  255.00 255.00

  Cost incurred by Broker - -  

  (a)Transport cost - 10.00 10.00

  (b)Labour cost - - -

  i)Loading - - -

  ii)Unloading - 1.20 1.20

  (c)Damage cost - 2.60 2.60

  (d)Miscellaneous - .10 .10

  Total cost - 13.90 13.90

  Absolute Margin of Brokers’

- 6.10 6.10

5 Wholesaler’s purchase price

270.00 275.00 275.00

  Cost incurred by wholesaler

- - -

  (a)Transport cost 1.00 1.00 1.00

  (b)Labour cost .30 .30 .30

  (c)Damage cost .60 .60 .60

  (d)Miscellaneous .10 .10 .10

  Total cost 2.00 2.00 2.00

  Absolute Margin of WS 8.00 8.00 8.00

6 Retailer’s purchase price 280.00 285.00 285.00

  (a)Damage cost 0 0 0

7 Margin of retailer 20 20 20

           Consumer purchase price 300.00 305.00 305.00

S.No

Particulars I II III

1 Farmer’s sale price 270.00 255.00 275.00

2 Operation cost to the farmer

     

  (a)Production cost 225.00 225.00 246.00

  (b)Transport cost 10.00 - -

  (c)Labour cost   - -

  i)Loading 1.00 1.00 1.00

  ii)Unloading 1.20 - -

  (d)Damage cost 2.70 1.00 1.00

  (e)miscellaneous .10 - -

  Total cost 240.00 227.00 248.00

  Absolute Margin of Producers’

30.00 28.00 27.00

3 CBT’s Purchase Price - - 275.00

  Cost incurred by PHC - - -

  (a)Transport cost - - -

  (b)Labour cost - - -

  i)Loading - - -

  ii)Unloading - - -

  (c)Damage cost - - -

  (d)Miscellaneous - - -

  Total cost - - 0

  Absolute Margin of CBTs’

- - -20.00

Channel Consumer’s purchase

priceI 290.00

II 300.00

III 300.00

When consumer, purchases eggs directly from wholesaler, their purchasing cost is

Particulars Channel I Channel II Channel III

Producers’ margin

30 28 27

Cbts’ margin

0 0 -20

Brokers’ margin

0 6.10 6.10

Wholesalers’ margin

8 8 8

Retailers’ margin

20 20 20

Production cost

225 225 246

Marketing cost

17 17.80 17.80

Consumer price

300 305 305

Margin for channel partners in three different Channel systems

Marketing efficiency:

Channels I II III

MME 90 83.6 82.9

I II III78

80

82

84

86

88

90

MME

MME

Transport cost is one of the major constraint

to go for direct marketing. But in channel 1 system profit margin is very high including transport cost.

the purchasing price of wholesaler from the farmers in channel 2 and channel 3 is significantly high and it’s results the price increasing in retail purchase price and consumer purchase price .

findings

Identifying potential wholesalers is one of the

important constraint at channel 1 but when they choose channel2 and channel 3 ,for every 100 eggs the poultry loss 2 rupees in their margin .it ‘s make huge impact when the production is more than lacks of eggs every day.

To retain and maintain the customers the Contract based traders may reduce their egg price but they compensate with selling feeds to the farmers.

findings

Transport cost considers as one of the major factor

for forgo channel 1 but it may recommend to go for channel 1 system .Even we including the transport cost the profit margin is comparatively high in channel system

Most of the farmers think finding and communicating with the wholesalers are hectic work .So they refused to go for channel1 but for every 100 eggs the poultry loss Rs2 in their margin when they go for channel 2 and channel 3. It’s made huge impact when the daily turnover of poultry is more than lacks eggs. So it’s wise to go for direct marketing.

suggestions

From contract based trader perspective, in order

to retain more formers, aishwarya poultry may purchase the eggs with lower margin even with minimum loss, because they may compensate the same with selling price of the feeds.

The contract based traders perspective aishwarya feeds may omit the layers of intermediates between the aishwarya feeds and wholesaler. If they are go by this its makes their margin almost double

suggestions

From the above study, channel 1 is the most

cost effective channel system among three channel systems practiced in Aishwarya poultry. Even though the production rate is high, It is strongly recommended to go for channel 1 system because after the constraints and struggles of retaining the wholesalers in the initial stage the channel 1 system give more margin in long term perspective.

conclusions

Thank u