Why does market development become more important aspect of marketing as consumer income rises?

Market development is a strategic step made by a company to develop the existing market rather than looking for a new market.

The company searches for new buyers to sell the product to a different segment of consumers to increase sales. 

Market Development is a 2-step process to get the untapped market. It starts with market research where a company does a segmentation analysis. It is a try to use the existing product or service to attract new customers.

The goal is to expand the reach a different segment or unexplored market.

Once the company decides which segment to choose, the next step of market development involves creating a promotional strategy to enter into the market. For that, companies may have to take the support of both audio and visual media to push the product deeper into the market. 

On the demand side, income can play a significant role. As income rises, people will buy more of some goods or even begin to purchase higher quality – or more expensive – goods. The price of related goods can also alter demand.

 If the price of one cereal increases, For example, demand will likely switch to a similar cereal – which would be considered a substitute good? If the goods are considered to be complimentary – or are typically used together – a decrease in the price of one of the goods will increase the demand for another.

 Examples of complementary goods are cars and gasoline, where the price of gasoline depends partly on the number of cars. Personal tastes and expectations of the future also influence individual demands as does the number of buyers (an increase in buyers vying for a specific number of goods will increase the demand and likely increase the overall purchase price).

So when the incomes of the customers rise, the company needs to work harder to develop their market. They need to make different strategies, promotions, need to launch new products or need to develop the existing products. as because when income rises,  people seem to switch their choices to better products. So in this case, it becomes harder to gain the same customers with those same products. So companies need to develop their markets as well with the income of the customers. After doing this, they can gain more customers or customers won’t switch their brand or company.

This is why market develops is necessary with income rising.

List the pros and cons of the present financing arrangements for farmer cooperatives.

The general rules of finance apply to co-operatives. Like all businesses, agricultural co-operatives must maintain sufficient levels of equity capital to ensure the financial viability of their operations.

However, in a co-operative, equity capital also provides the basis for member ownership and control. This feature makes some of the financial characteristics of co-operatives different from other forms of business.

The following considerations factor into the financial decisions and policies of co-operatives:

•       Control over the co-operatives future and direction must rest with the membership, and not with outside interests. Therefore, the bulk of a co-operatives equity capital should be obtained from members.

•       Members, as the owners of the business, have an obligation to contribute capital to the co-operative in proportion to the benefits they expect to receive from its operation.

•       Equity ownership should be held by the current membership of the co-operative, namely those who have recently used the services provided by the business.

These considerations influence the ways in which co-operatives finance their operations and handle equity in the business.

In this section, some of the methods agricultural co-ops use to acquire capital, accumulate equity, and redeem member equity are outlined.

Two specific types of co-operative capital structures are discussed in detail—the base capital plan and the financial structure.

 When forming a co-operative business, co-operative leaders must plan how they will acquire sufficient capital to finance the start-up of the business.

Potential sources of capital for new co-operatives include -

member investment and debt financing. The investment of capital by people or organizations who are not members of the co-operative.

Direct investment by members can also be a way for established co-operatives to raise capital for a special need, such as purchasing new assets or expanding operations.

Why haven’t consumer food buying cooperatives been as successful as farmer cooperatives?

Consumer cooperatives are organized by consumers that want to achieve better prices or quality in the goods or services they purchase. Opposite to the traditional retail stores or service providers, a consumer cooperative exists to deliver goods or services rather than to maximize profit.

Nationally, the most widely used co-op form is the credit union, with some 90 million members. Credit union assets have grown a hundred-fold in three decades.  Credit unions are essentially cooperatives of people that use banking services.

Other common types of consumer cooperatives include grocery stores (food coops), energy-buying cooperatives, schools, health care cooperatives, insurance cooperatives, and housing cooperatives.

Farmer cooperatives are businesses owned and controlled by farmers, ranchers or growers. By their cooperatives, farmers are empowered, as elected board members, to make decisions. When a farmer joins a cooperative, they benefit through earnings returned on a patronage basis.

For example, a farmer-member who accounts for 10 percent of the volume of milk delivered to the cooperative would receive 10 percent of the net earnings derived from the handling, processing, marketing and sale of that milk or related products. Such patronage dividends help boost the income of farmers directly.

Through their cooperatives, farmers are able to:

•       Improve their income from the marketplace

•       Strengthen their bargaining power

•       Maintain access to competitive credit sources

•       Compete effectively in the global economy

•       Capitalize on new marketplace opportunities, including value-added processing

•       Manage risk

•       Access technical assistance and other services

There are more than 3,000 farmer cooperatives throughout the United States, whose members include a majority of our nation’s 2 million farmers.

What are the differences between federated and centralized cooperative associations?

The difference between federated and centralized cooperative associations is:

When many local cooperatives come up together under the same offices, the unit becomes a "federated" cooperative, with a central office seeing the works of every member cooperative. The members of a federated cooperative are not individuals. Commercial business firms use the federating principle.

Management over a wide area is centralized, but at the same time members keep control. All savings from the central and the district exchanges go back to the individual members of the local cooperative packing houses.

Purchasing cooperatives also use the federated type of organization. This cooperative owns refineries, pipelines, and oil-producing corporations. It produces, transports, refines and distributes gasoline, oil, and other petroleum products from the oil well to the consumer.

Commercial business firms use by forming the federating principle retailer-owned cooperatives. These associations differ from cooperatives in a different way: The members are privately owned retail companies. Over 100,000 grocers are federated in this way.

 Similar retailer cooperatives are also serving drug, hardware, and other types of stores.

Why do you think cooperatives are much more important than in the marketing of dairy products than in livestock marketing?

The importance of farm cooperatives varies with commodities. Cooperatives are important in today’s farming and dairy economy. More than 3800 farmers’ cooperatives reported a business volume of 106 billion. Membership in farmer cooperatives totals about 3.2 million, indicating that many farmers belong to cooperatives than any other industry. Dairy products accounted for more than 60 of cooperatives marketing associations’ sales.

Cooperatives return more than 1 billion to their farmers in the dairy industry. Marketing cooperatives sell farmers’ products. They are an example of farmers vertically integrating into the food marketing channel. These cooperatives collect, sale, sore, package and perform their other functions. Their objective is to secure maximum profits for the products for the former owner.

Marketing cooperatives accounted for approximately 30% of all farm cash receipts.

Thus the cooperative market share is highest for milk and lower for livestock and livestock products.

Most cooperatives follow the Rochdale Principles, named for a pioneering cooperative in Rochdale, England. What are these principles and how faithfully do modern cooperatives adhere to them?

The Rochdale Principles are a set of ideas created by the Rochdale Society of Equitable Pioneers in 1844. The Rochdale Pioneers are founders of the cooperative movement because of their promises to make organizational standards.  The Rochdale Principles are the basis for the cooperative principles used around the world to this day.

The seven principles are:

1. Voluntary and Open Membership: they should open and voluntary membership. The Rochdale Principles established anti-discrimination policies and a system of motivations and rewards.

2. Democratic Member Control: The Rochdale Principles injunction that cooperatives must have democratic member control. It gives members the equitable to take part in the decision making processes.

3. Member Economic Participation: Members equitably participate in the capital of their cooperative. That capital is neutral assets of the cooperative and members normally get the limited salary. Surplus economy (i.e. profits) are managed by the members to build the cooperative, support other organizations, or returned to the members.

4. Autonomy: The Rochdale Principles recommend that cooperatives must be autonomous and independent. If they go to partnerships with other organization it must be on terms that assure democratic control. For example, if a cooperative joins an economic partnership with another organization, that organization does not gain control over decision making, regardless of the amount they have considered. Decisions are always made by members.

5. Education, Training, and Information: Cooperatives must provide education and training to their members. Added that, cooperatives give information and education to the public about the nature of co-operation.

6. Cooperation among Cooperatives: Cooperatives are autonomous organizations, but they work together to communicate through cooperatives and to make a stronger cooperative movement.

7. Concern for the Community: Cooperatives should be responsible partners for their communities. Decisions must benefit the larger community. 

Why do these principles make business sense? First, a worker-owner is a continues worker, not a person who wants to ignore work.

The theory of cooperation, in general, helps the business’s bottom line.  In game theory, people in the most actually by cooperating co-ops. It creates a structure and a culture that get the cooperation going.

This is another example of how it is good and good for other people, and good for income, can all go together.

 This is how faithfully modern corporations adhere to them.

Overview of Milk & Dairy Industries in Bangladesh

Milk is a very important and essential commodity in the daily life of the human diet. Dairying has become a commercial enterprise. A wide range of producers undertakes this profession in both organized and unorganized sectors, which supply milk and milk products to the customers under several brand names.

Consumers in any production system play a vital role around which the whole system revolves with the rising income levels of the consumers and their changing tastes and preferences, the demand for milk are undergoing a change both in quantitative and qualitative.

In the earlier stage of dairy, firms were like; people produced milk and delivered raw milk to the consumer. But day by day consumers is getting smart. They demand the new product that’s why producers need to expand their business and launch a new product line. Producers need to collecting, processing and selling milk and milk products in packaged form with the promise of hygiene and quality.

Milk production areas in Bangladesh are Dhaka, Gajipur, Bogra, Natore, and Rangpur.

Here the names of some of the major companies in Bangladesh-

1.    Bangladesh cooperative union limited (Milk Vita)

2.    Pran dairy

3.    Aarong dairy

4.    Igloo dairy

5.    Aftab milk and milk products Ltd.

6.    Rangpur dairy and food products Ltd.

Consumption and production:

Per capita need	Per capita availability	Total need (year)	Total production (year)	Total deficit (year)
250 ml/day	33.95 ml/day	9.855 mmt (100%)	1.338 mmt (13.58%)	8.517 mmt (86.42%)

   Mmt= million metric ton
   source: Alam J (1994)

The deficit in production is met bulk imports of milk powder, mainly from Australia, New Zealand, Holland, Denmark, and Poland.

The quantity of powdered milk imported by Bangladesh during the last few years is shown in the following table.

Year	Quantity (Metric Ton)	Taka (In millions)
1985-86	64.821	1,828
1986-87	69.640	2,067
1987-88	66.000	2,120
1988-89	70.000	3,200
1989-90	72.000	4,100
1990-91	73.000	4,300
1991-92	75.000	4,500

   Source: Livestock Dictionary, 1992-93.

The production system in Bangladesh:

The four major dairy production systems are followed in Bangladesh. These are-

1.      Traditional dairy production system: This system is characterized by small family farms in an integrated animal–crop production system. The average size of landholding is 0.05–2.49 acres. Family labor is the only source of labor.
Nearly 40% of the country’s milk production comes from this system (DLS, 2010).
Farmers mainly use the traditional market to sell their milk directly to neighbors or to consumers in the nearby market.

2.      Extensive dairy production system: The extensive dairy production system is practiced mainly by market-oriented dairy farmers operating on a small, medium or large scale with a greater area of land (2.5–7.5 acres) than in the traditional system. The major objective is to produce marketable milk. Average milk production varies from 600 to 800 liters per lactation. The labor is provided partly from the family but is partly hired labor – a key difference from traditional production.
The farmers are linked either to cooperatives or to a private processor, although marketing milk through traditional channels is well accepted.

3.      Intensive dairy production systems: The driving force for the intensification of dairying in the country is the rapidly decreasing availability of agricultural land. Farmers sell 85% of the milk produced, and the remaining 15% is used for family consumption, especially for children. The success of this dairy production system is closely related to the efficient use of available support services.

4.      Bathan production system: The bathan-based production system is unique to Bangladesh and is practiced only by cooperative dairy farmers. It is formed from a natural aggregation and concentration of smallholder dairy units in two of the northern districts, Sirajgonj and Pabna. Approximately 68% of the animals in Pabna and Sirajgonj districts are reared under the bathan system and 32% are reared in the non-bathan system (Islam et al, 2010). The average milk production varies from 1,200 to 1800 liters per cow per lactation.