Research Reports
Enhancement of Marketing Performance of Small- Scale Agricultural Business Corporations in Korea
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AuthorSeo, Seongcheon
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Publication Date2007.09.01
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Original
Our research has been carried out to identify key issues or problems associated with agricultural business corporations' marketing activities in Korea and to contrive the realistic suggestions for boosting up their dormant potentials associated with marketing performance. Also, during 2005, the total number of agricultural business corporations exceeds 3,500 excluding the tiny firms operated by a single investor & owner. Currently, there are mainly two types of agricultural business corporations in Korea: One is the corporation whose operation style has the similarity with the current Agricultural Corporative Associations. The other is the corporation whose operation style has the contiguity with the general business corporations belonging to the non- agricultural sector.
Our research is a kind of case study selecting 24 agricultural business corporations as the sample set out of 3,500 agricultural business corporations. Our samples are selected with several criteria such as annual amount of total sales should exceed 1 billion won. Also, we performed both the oral interview and written paper based survey with the CEOs or prime managers of marketing & sales division.
Current Rules and System associated with supporting agricultural business corporations has comprised most contents linked to the taxation exemption or reduction rules for the limited time period until 2006. Our National Assembly has been deliberating and debating whether the expired date of tax exemption or reduction should be extended, or not for the current or newly founded agricultural business corporations. As the result of debates and deliberation, some rules associated with tax exemption or reduction are extended until 2009 under 2006 National Assembly. On the matter of boosting up the agricultural business corporations' marketing performance, there is no government support or consultation program at all for them.
Key Findings of our research are the followings: First, based on our corporation survey composed of 24 sample companies, average 'sales' margin ratio' and 'net profit ratio before tax' are 14.3%, and 7.0% respectively. Also, based on the quantitative evaluation of the relevancy of number of employees or quality of current employees' performance pertaining to the division of Sales & Marketing, even though their level of satisfaction is better than average, they also exhibited that more talented employees on that division are needed.
Second, on the context of factor analysis associated with marketing 4Ps, we found only 3Ps (Product, Place, Promotion) are mixed together on the evaluation of individual firm's practical carrying- out of marketing. Price is assessed as if it is functioning independently.
Third, we analyzed the relationship between individual corporation's business performances as the outcome factors and several marketing activities as the causal factors. ① The corporations with the better marketing activities linked to 'Product' exhibits higher total annual sales amount than the other. ② The corporation group with the higher expenditure ratio associated with all promotion activities exhibits higher growth rate of annual total sales amount than the other. ③ On the matter of net- profit ratio, the corporation group with the better marketing activities linked to 'Product' or 'Price' has outperformed the other group.
There are three major factors which play a key role as the limitation of agricultural business corporations' marketing: impossibility to hire good quality of human resource for the marketing & sales division, low competency of company and brand's publicity or promotion, five key deficiencies such as capital stock, publicity, labor stock, competent (talented) brain, information.
Marketing is a kind of Comprehensive Art. To push up the marketing competency of current agricultural business corporations, the government taxation reduction or exemption may plays an important role. However, more comprehensive and sophisticated support program needs to be prepared along with the company's growth stage (3 stages: entry, growing, established) of agricultural business corporations. The newly suggested support system may include all kinds of management issues even though it focuses on the marketing. Thus, to carry out successfully the new support program, we might establish a new institution or organization which plays a core role such as incubator, too.
Currently, there exist two major government institutions such as Small and Medium Business Administration, or Small Business Corporation for the general small business corporations. These two institutions may also take care of small business corporations either related to agriculture or non- agriculture as customer or government policy target. Because presumably majority (over 98%) of their major clients belongs to the arena of non- agriculture sector, they may lack the proper comprehension of current reality of Korea agriculture based on the viewpoints of most interviewed CEOs'. Thus, newly suggested institution might be needed for the enhanced marketing development of current or future agricultural business corporations in Korea.
Researchers: Seo, Seong-Cheon and Kim, Jeong-Ho
Research period: 2007. 4. -2007. 9.
E- mail address: sseo@krei.re.kr
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