The Role of Agricultural Promotions in Reducing Uncertainties of Exported Fruits and Vegetables

Exporters have long used various promotional tools in the export of agricultural products, including the export of horticultural produce. These promotional activities include various types of advertising, trade and retail promotion. One reason for use of promotions is the uncertainty inherent in the production, marketing and buying of agricultural products, particularly perishables like fresh fruits and vegetables. This paper addresses the question: When is promotion effective? A model is developed to indicate how traders (exporters) will choose their optimal level and type of promotion. A taxonomy of various types of promotion is developed and then used to indicate which types of promotion will be used under various circumstances. The paper concludes that there are several factors that improve the effectiveness of promotions in horticulture. (1) Promotions that reduce the buyer's pre-purchase uncertainty (for example, through the use of demonstrations and product sampling) are needed. (2) Larger organizations will do better. There are economies of scale with promotions (particularly advertisement). (3) Vertical co-ordination along the supply chain. To meet consumer demands, information and incentives need to be relayed to all sectors along the supply chain. The more integrated the chain, the more effective the promotion. (4) Securing supply quality and quantity will enhance promotional programs. (5) The combination of long-term goodwill and brand builders (advertisement) and short-term sales generators (promotions) is useful.