The concept of marketing of balanced development and features of its implementation in the food market

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Khmelnytskyi National University

The concept of marketing of balanced development and features of its implementation in the food market

Valentyna Stadnyk, Galyna Pchelianska, Yuliia Holovchuk, Liudmyla Dybchuk

Purpose. The purpose of this paper was to analyze the development of the food market in Ukraine and determine its compliance with the goals of sustainable economic development, to formulate the concept of marketing of balanced development in relation to the food market and to identify a set of tasks that need to be addressed within this concept.

Methodology / approach. While writing the article we used the following: methods of content analysis - to study scientific approaches to the interpretation of marketing tasks in terms of the concept of «sustainable development»; morphological analysis, generalization and scientific abstraction - to clarify the essence of the definition of «marketing of balanced development» and its conceptual content; economic-statistical and comparative analysis - for research, the dynamics of the food market and the market of organic products in Ukraine, the structure of exports of agricultural products to Ukraine, as well as the impact of the agro-industrial sector on the environment. To visualize the results, we used methods of graphical and tabular representation. The method of SWOT analysis assessed the qualitative characteristics of the state of the market of organic products of Ukraine in the light of opportunities and obstacles to the implementation of the concept of «sustainable development». Abstract-logical method was used to form a complex of marketing of balanced development, conclusions of the article and directions for further research.

Results. The article is devoted to the study of the dynamics of the Ukraine food market development as a component of the national economy and food security of the state. It was determined that the areas of agro-food production, food processing and food products trade were showing growth due to increased demand in domestic and foreign markets. However, as a result of technological and resource features, agro-food production has a negative impact on the environment of Ukraine. Trends in the development of organic production as a way to implement the concept of sustainable development in the food sector were studied. The author 's interpretation of the essence of the concept of balanced market development was offered and the complex of tasks of marketing for the enterprises functioning in the food market was defined.

Originality / scientific novelty. The article defines the magnitude and extent of the impact of agro-food production on the environment. The essential content of the definition of «marketing of balanced development» in relation to the agro-industrial sector through the prism of the concept of «sustainable development» was clarified. For the first time, a SWOT analysis was used to assess the state of the market of organic products of Ukraine in the light of opportunities and obstacles to the implementation of the concept of «sustainable development», which allowed determining the main directions for improving the marketing set for food market entities. The provision of the concept of sustainable development in the food sector was further developed.

Practical value / implications. The main results of the study can be used for (i) structuring tasks of the marketing of balanced development of agribusiness entities; (ii) determining balanced development marketing complex for enterprise, will be relevant for both the organic market and the food market as a whole; (iii) definition of the purposes of balanced development at development of strategy of the enterprises; (iv) development of strategic directions of activity for the enterprises of the organic market on the basis of the conducted SWOT analysis.

Key words: marketing, organic products, sustainable development, marketing complex environment, SWOT analysis.

Introduction

Review of literature. Modem trends in the development of world food markets, which are characterized by significant globalization processes, rapid changes in international economic and political factors, high intensity of competition, dependence on the influence of natural and environmental factors, special technological parameters of production and storage of products, indicate the need to find effective mechanisms to support and improve the efficiency of food producers. An important tool for the successful functioning of the food market subject is the implementation of a marketing approach to management in all economic activities, that is, subordination of all aspects of its activities to the marketing philosophy.

According to the Ministry of Economic Development, Trade and Agriculture of Ukraine, 20 % of the employed population is concentrated in the field of agricultural and food production, in addition, the industry provides 39 % of all national exports. Thus, the food market of Ukraine makes a significant contribution to the economy of the whole country, so the search for ways to improve the marketing activities of enterprises that ensure food and environmental safety is relevant and necessary.

A significant number of scientists have devoted their research papers to the expansion of marketing tasks in the activities of modern enterprises. And especially - the enterprises of an agro-food complex having the specificity - both in nature use, and in work with the market O. Varchenko, V. Hrynchuk [1] reviewed the production, market and institutional features of the agro-food market in Ukraine. The authors analyzed the marketing environment for interaction in creating effective value chains and attracting them to small agricultural producers. A. Tanasiichuk, O. Hromova, A. Abdullaieva, Yu. Holovchuk and K. Sokoliuk [2] reviewed the dynamics of the development of the agro-food complex of Ukraine and substantiated the need to create a new functional and organizational structure that will maximally contribute to the marketing strategy of business diversification by agricultural enterprises.

Scientists A. Kucher [3], M. Ihnatenko, N. Novak [4], O. Skydan, O. Nykolyuk, P. Pyvovar, I. Martynchuk [5] identified the problems of the development of agrarian production and organic agrarian production in Ukraine. Other authors studied the emergence of environmental problems and challenges of environmental pollution in the process of agricultural production, such as M. Kulyk, V. Kurilo, N. Pryshliak, V. Pryshliak [6], and also L. Kucher, S. Drokin and Y. Ulko [7] investigated the reasons of environmental problems and environmental pollution challenges in the process of agri-food production.

Y. K. van Dam and P. A. C. Apeldoorn [8] defined the role of marketing in a limited ecological space, and considered scientific approaches to the formation of environmental Economics. Therefore, the implementation of balanced development marketing is a prerequisite for sustainable development of the society, however the essence of this term is not disclosed in detail. M. Shershun, T. Mikitin [9] considered the stages of the formation of balanced development marketing, its relationship with rational nature management, and analyzed the evolution of the influence of marketing on the environment. We defined the stages of formation and directions of using balanced development marketing. But their interpretation of this definition mainly emphasizes compliance with the environmental safety standards of the entity in justifying the development strategy. The authors do not consider the issue of balanced development.

K. J. Alsem, E. Kostelijk [10] investigated the formation of the balanced marketing paradigm development, correlating it with the main priorities of the concept of “sustainable development”. However, they also focused on reducing the negative impact of businesses on the environment and recommended to emphasize this during branding and positioning. Thus, A. Kuchmiev [11] reviewed the position of environmental safety marketing, identified the main goals of environmental marketing, considered ways to calculate the environmental price of goods, marketing communications and environmental distribution of goods and services.

Kvyatkovska [12] proposed a system of evaluation parameters of the external and internal environment of the enterprise factors influence. She studied the essence of an integrated approach to enterprise management, which involves meeting public and personal needs in a cost-effective way of spending resources. S. Khaminich, Yu. Khizhnyak [13] reviewed the concept of environmental marketing and its communication tools, which are aimed at creating competitive advantages through a careful attitude to natural resources and their preservation among eco-conscious consumers.

S. Petrovska, L. Pokotylo [14] reviewed the conditions for the emergence and development of the concept of “green” marketing in the world. They studied the features of using “green” marketing as an innovative way to compete in the market. O. Kolomytseva, I. Goryana and O. Vasilchenko [15] and S. Berezyuk, D. Tokarchuk, N. Pryhliak [16] reviewed the algorithm for implementing environmental marketing and types of environmental strategies. The authors developed the main marketing activities in the field of environmental marketing, analyzed the trends in the development of environmental trends in Ukraine, as well as the world market of organic products. J. Paul, J. Rana [17] and V. Koziuk, Yu. Hayda, O. Dluhopolskyi, S. Kozlovskyi [18] investigated the impact of demographic factors, health benefits and availability on consumer behavior in the organic food market.

T. Ustik, M. Lyshenko [19] and S. Mkhize, D. Ellis [20] determined that the transition to the principles of sustainable marketing contributes to the sustainability of enterprises and entire sectors of the domestic economy through the attraction and use of socially responsible marketing tools, support and protection of environmental systems in the external and internal marketing environment.

Thus, the analysis of scientific sources on the implementation of the marketing function in the concept of “sustainable development” shows the predominance of environmental or resource-saving approach to expanding the objectives of marketing. It is followed by many scientists, positioning it as a marketing of sustainable development.

In our opinion, in this interpretation, the functions of marketing are transferred from a single market entity to the meso- or macro level, which is quite debatable and unlikely for market relations. Current trends in the global economy development require a more detailed justification of the essence of the concept of sustainable development marketing and its tools at the level of individual businesses. In particular, it is expedient to specify the tools of balanced development marketing for enterprises of the agro-industrial sector of the Ukrainian economy, operating in the food market.

The purpose of the article was to analyze the development of the food market in Ukraine and determine its compliance with the goals of sustainable economic development, to formulate the concept marketing of balanced development in relation to the food market and to identify a set of tasks that need to be addressed within this concept. The objectives of the article were (i) to determine the size and form of the impact of agro-food production on the environment; (ii) to consider and analyze trends in the development of organic production as one of the approaches to implement the concept of sustainable development and environmental production of agro-food products; (iii) to conduct a SWOT analysis of the implementation of the concept of sustainable development as a marketing concept of organic market entities.

Results and discussion

The food market in Ukraine is a complex structure that ensures the production and sale of food products and raw materials for wholesale and final buyers. According to the Ministry of Economic Development, Trade and Agriculture of Ukraine, the domestic food industry, which is part of the agroindustrial complex (AIC), which unites more than 40 sub-sectors and industries, which involved about 15 thousand economic entities - these are powerful, modern businesses that are on the same level with the leading players in the global market, small and medium processors that are actively increasing the production volumes for filling the domestic market and gradually enter the international one. The largest number produces meat and meat products, oil and animal fats, flour and cereals, bread, bakery and flour products, ready-made food and dishes [21].

The basis of the food market is the branch of agricultural production, which forms the raw material base for the food industry. The dynamics of production of main types of agricultural products during 2014-2018 shows an increase in the production of grain and leguminous crops, oil crops, fruits and berries, honey (Table 1). food market economic

During the same period, there was a reduction in production of factory sugar beet, vegetables, eggs, the volume of meat production of all types remained relatively constant. The volume of production of the main types of agricultural products depended on climatic factors and technological equipment of agricultural production, but also are in the institutional features of the market environment in the country. Technological features of agricultural production provide for a significant dependence of industries (especially crop production) on natural and climatic factors, i.e. the influence of weather conditions, namely: soil moisture, precipitation (droughts or floods), the number of sunny days during the growing season on productivity and gross harvest.

Table 1 Production of basic agricultural products in Ukraine, thsd. t

Source: formed by the authors on the basis of the IFOAM and Federation of Organic Movement of Ukraine [29; 30].

Ukraine produces more than 400 types of organic products. Most of it is bought by the Netherlands, Germany, Austria, Italy, Poland and the United Kingdom, but in general, Ukrainian organic products are exported to more than 40 countries.

The main organic export products from Ukraine are cereals - corn, wheat, barley, oilseeds-sunflower, legumes, wild berries, mushrooms, nuts and herbs. According to the Swiss-Ukrainian project “development of the organic market in Ukraine” Research Institute of Organic Agriculture (FiBL), in 2017, organic exports from Ukraine reached 264 thousand tons, and the valuable value of organic exports was about 90 mln USD [21].

Thus, the growth of Ukrainian organic production indicates a stable and growing demand for environmental food products in Ukraine and the world. And today in Ukraine the preconditions for increasing the volume of organic production have been formed. This is facilitated by both natural and climatic conditions and the growing demand for such products on the world market. In addition, the development of organic production fits harmoniously into the concept of “sustainable development” of the national economy, in line with its priorities. At the same time, there are some restraining factors that do not allow domestic producers to take advantage of favorable market trends and to a greater extent to realize the market potential of organic production.

Marketing of balanced development, as a key concept of marketing activities of organic market entities in Ukraine, has threats and opportunities for application, due to the realities of the Ukrainian and world economy. Table 4 shows the results of a SWOT analysis of the market of organic products of Ukraine from the point of view of the concept of “sustainable development”, among which the insufficient level of competence of business entities on the nature and objectives of sustainable development marketing is highlighted.

Table 4 SWOT analysis of the market of organic products of Ukraine from the point of view of the concept of “sustainable development”

Source: formed by the authors.

In order to ensure the participants of the national organic market with their effective operation and economic growth, it is necessary to restructure the marketing management system in accordance with new requirements and market trends. The authors proposed a marketing mix according to the concept of “sustainable development”, which will be relevant for both the organic market and the food market as a whole (Fig. 4).

Marketing product policy in the conditions of balanced development should be based on the development and supply of products on the market, the production of which corresponds to Ukrainian and international standards for organic and food products. The purchase of equipment and plant protection products must take into account the standards for the production of organic products. Special marketing efforts are required to develop packaging for food products, since it must not only protect the goods from damage, but also meet the requirements for environmental friendliness, be recyclable and used, as well as perform the functions of informing consumers about the composition and nutritional value of the product, and advertising the benefits of organic products to maintain health.

The price of an organic product or food product is a measure of the consumer value of the product offered by the market. At the same time, the consumer uses the price to evaluate the quality of the product, according to the principle “the higher the price, the higher the quality”. Therefore, given that organic production requires higher costs than conventional agricultural production, the price of organic food is significantly higher than the price of conventional food products.

In addition to high costs, organic production does not involve the use of mineral fertilizers, plant protection chemicals, growth stimulants, hormones and antibiotics for animals, so the yield and gross growth will not be high. High costs and low yields lead to the highest cost of organic products, so its price cannot be equal to the price of conventional agri-food products.

The pricing methodology for organic products should include environmental costs (in the form of lost crops or animal growth) in the final price for the consumer.

The problem of pricing is the low level of solvency of potential consumers of organic products. At the same time, the goal of marketing of balanced development is to create a sustainable demand for organic products, to form an understanding and readiness of the consumer to pay a higher price.

Fig. 4. Marketing mix: of balanced development for producers of goods

Source: formed by the authors.

The development of a di stribution and logistics systdn for organic products should be based on time delivery of goods to the right place, in the right quantity and at the right time. At the same time, it is necessary to take into account a significant reduction in the shelf life of some groups of goods - this affects the size of the batch and the frequency of delivery, increasing logistics costs.

Marketing communications policy of organic market companies must include elements of promoting a healthy lifestyle, which includes the consumption of organic foods. The goal of advertising is to create an information space about the existence of organic products, influence the consciousness and behavior of consumers. The result of advertising is a situation where consumers want to buy though expensive, but healthier products that do not harm the environment.

The objectives of the public relations system for entities engaged in the production and sale of organic products are:

1) establishing partnerships with actual and potential business partners to form mutually beneficial business relationships and improve the efficiency of commercial activities;

2) informing the stakeholders of the company's mission that the producer or seller of organic products works not only for profit, but also in the interests of the whole society, ensuring that their activities take care of the environment, land, water and other resources, and therefore care for the current and future generation of consumers;

3) formation of pride in the company's employees for their enterprise, goods and services, creation of a favorable socio-psychological climate in the labor collectives, ensuring employee satisfaction from entering into the implementation of the concept of sustainable development by the enterprise;

4) formation of public opinion on the importance and relevance of the company's activities as a representative of socially responsible business and implementer of the concept of balanced development.

Conclusions

The increase in the production of organic products in Ukraine fits into the global trends of growing demand for organic food products, ensuring a reduction in the negative impact on the environment. This corresponds to the main priorities of the concept of “sustainable development”. To intensify the processes of economical resource consumption in the agri-food sector, the idea of marketing of balanced development is proposed as a concept of marketing activities of a market participant, which is based on the principles of “smart” and safe consumption and provides a set of ethical marketing tools for all participants, balance between economic growth and the state of the environment.

The implementation of marketing of balanced development in the activities of enterprises operating in the food market can ensure its sustainable economic growth. However, not so much due to the economical use of limited natural resources and reduction of environmental damage (on the contrary, it will lead to additional production costs, as it requires investment in improving the technology of its cultivation, industrial processing and storage, expanding its range and forms of supply to consumers), and purposeful work to promote the benefits of organic farming for the people of the country, the correct positioning in the market of organic products. This will help consumers to realize its usefulness for themselves and future generations, and thus - will increase its consumption in the current period and will form a stable demand for it in the strategic perspective.

However, the concept of marketing of balanced development has not yet been widely developed in the Ukrainian food market. The reasons for this are very different: the lack of environmental purchasing behavior of Ukrainian consumers, their psychological and financial unwillingness to pay a higher price for organic and high-quality food products, low awareness of the benefits for health and food safety. A more detailed analysis of domestic retail market of organic food products, main sales channels, points and places of sale is needed to gradually remove these obstacles. Also unresolved issues of the article are a detailed analysis of the domestic retail market of organic food products, the main sales channels, points and places of sale. Therefore, the study of forms and methods of retail sale of ready-to-eat organic food products can become the directions of further research.

In addition, it requires special marketing research and study of the characteristics of buyers of organic products, the main factors affecting the purchase, segmentation of the organic market and improving its means of market positioning. The significant role of the agro-food sector in ensuring food, environmental and social security confirms the relevance of future research.

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