Abstract:
Strategies for managing production and marketing costs ensure greater
profitability and stability, especially for direct marketers who decide to expand and diversify their operations. In developing these strategies, it is important to understand concepts such as fixed and variable costs, depreciation, and interest. These concepts can help you develop budgets that can be used, along with breakeven analysis, to strategically maximize your profit potential. Overall, you can use production and marketing cost planning to:
1. Determine input requirements for production and marketing, such as
chemicals, fertilizer, fuel, labor, and packaging materials
2. Develop a sound marketing plan, which begins with selecting the
appropriate crop mix and determining prices necessary to cover total
production costs and a profit margin
3. Prepare a cash-flow system necessary to support any applications for credit
4. Determine the amount you can afford to pay for land rent, marketing
space, and other capital assets used in your production and marketing
