Chapter 1: Conduct market scan

Marketing agri-enterprise products and services requires a deep understanding of the market environment in which these products and services compete. Conducting a market scan is a critical preliminary step that enables professionals across diverse sectors to gather relevant information about customer needs, competitors, and broader market trends. This chapter introduces key concepts and terminology essential for effectively carrying out a market scan, which is foundational for strategic marketing decisions in Kenya's dynamic economic landscape.

1.1 Definition of terms

Two terms carry the rest of this unit: market and market scanning. An agri-enterprise that is clear about both knows who it is selling to, what those buyers want and how to find out before it spends money on seed, feed, packaging or transport. The definitions below are used in every later topic of the unit.

Market

A market is any place, arrangement or channel where buyers and sellers meet to exchange products or services for money or for another form of value. It can be a physical place such as an open-air produce market, a livestock auction or a farm gate, or a virtual one such as a WhatsApp buyers' group or an online marketplace. In marketing the word also means the whole group of people and businesses who buy, or could buy, a product. A tomato grower who says "the market is slow today" may mean one trading place, while "the market for tomatoes" means every household, hotel kitchen and trader who buys them.

Every market has the same basic parts:

• Buyers: the households, businesses or traders that need the product and have the money to pay for it, for example a greengrocer buying kale or a hotel kitchen buying eggs.
• Sellers: the producers and traders who supply the product, including the enterprise's own competitors.
• Product or service: what is exchanged, such as fresh milk, certified seed, a tractor-hire service or an artificial insemination service.
• Price: the amount of money agreed for the exchange, which moves with supply, demand and quality.
• Means of contact: the place or channel through which buyer and seller meet, such as a roadside stall, a delivery route, a phone call or an online page.

Example: A farmer who grows French beans for export sells to a packhouse, which is one market. The same farmer also sells the grade-two beans at a roadside stall, which is a second market with different buyers, a different price and different quality requirements. Both are markets for the same crop.

Market scanning

Market scanning is the regular, planned process of collecting, recording and studying information about the market so that an enterprise can decide what to produce, how much, where to sell and at what price. It covers customers, competitors, prices, suppliers, sales channels, trends and rules that affect the business. A scan looks at the whole market picture and is repeated as conditions change, because farm gate prices, input costs, weather and buyer tastes do not stay still.

Example: A dairy farmer who wants to start selling yoghurt walks through the local shops and kiosks and notes which brands are stocked, their pack sizes and shelf prices. The farmer also asks two or three shop owners what customers request most, and checks the price paid for milk and for the cost of packaging. All of this is a market scan: it shows whether there is room for a new yoghurt before any money is spent on equipment.

A market scan usually looks at these areas:

• Customers: who buys, how much, how often, and what they say about quality, pack size and price.
• Competitors: who else supplies the product, their prices, quality, delivery and credit terms.
• Prices: current and seasonal price levels at the farm gate, at wholesale and at retail.
• Suppliers and inputs: the cost, quality and availability of seed, feed, fertiliser, packaging and transport.
• Channels: the routes the product takes to the buyer, such as direct sales, traders, retailers or online sales.
• Trends and rules: changes in tastes, technology, weather patterns, and regulations that affect how the product is grown, packed or sold.

The stages of a scan follow in the next topics of this chapter: why it is done, collecting data, sampling, tools, analysis and report writing.

Market environment

The market environment is made up of all the outside factors that affect how an enterprise can serve its customers. It is divided into the micro environment, which is close to the business, and the macro environment, which is wider and which the enterprise cannot control.

The micro environment includes:

• Customers: their needs, buying power and loyalty decide sales.
• Suppliers: the reliability and prices of seed, feed, fertiliser and packaging affect production cost.
• Competitors: their prices, quality and promotion influence what the enterprise can charge.
• Intermediaries: traders, transporters and retailers who help the product reach the buyer.
• The public: neighbours, local groups and the media, whose opinion affects the enterprise's reputation.

The macro environment includes:

• Economic factors: inflation, fuel prices and household incomes affect what buyers can pay.
• Political and legal factors: laws on food safety, labelling, trading and taxes, and public policy on agriculture.
• Social and cultural factors: eating habits, population changes and attitudes to farming.
• Technological factors: new tools such as mobile payments, cold chain equipment and online marketplaces.
• Natural and environmental factors: rainfall, drought and pests, which change supply and price.

Example: A grower of leafy vegetables finds that a rise in fuel prices, which belongs to the macro environment, has made the trader who collects the produce charge more for transport, and that a new competitor has begun selling in the same market, which belongs to the micro environment. A market scan that looks at both levels shows the grower why margins are falling and what to change.

Market scanning compared with market research

Market scanning and market research are related but not the same. A scan is broad, repeated and general: it keeps an eye on the whole market to spot changes and openings. Market research is a focused study that answers one specific question, such as whether farmers would pay more for a pre-treated seed or which pack size sells best. A scan often points to a question, and research then answers it in detail.

Market intelligence

Market intelligence is the information that a continuous scan produces once it has been recorded, checked and organised so that decisions can be made from it. Raw notes about prices become intelligence when they are compared over several weeks and show a pattern, for example that tomato prices fall every time rain delays transport. An enterprise that keeps a simple price notebook and updates it every week is building its own market intelligence.

Chapter Summary

This chapter began by clarifying key terms related to market scanning, establishing a foundation for understanding the process. It emphasized the importance and role of market scanning in identifying opportunities and threats for agri-enterprises. Various methods of data collection were discussed, highlighting the need for accurate and relevant information. The concept of sampling was covered to explain how representative data is obtained efficiently. Tools used for data collection, such as surveys and interviews, were examined for their suitability in different contexts. The chapter then explored data analysis techniques, focusing on how to interpret collected information effectively. Measures of central tendency, including mean, median, and mode, were introduced as essential statistical tools for summarizing data. Finally, the chapter addressed report writing, underscoring the significance of clear and concise communication of market scan findings.