designing marketing innovation model of date business
TRANSCRIPT
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Designing Marketing Innovation Model of date
Business Cluster in Iran (Case study: Khuzestan
Province)
Masoud Hekmat Department of Agricultural Development, Science and Research Branch, Islamic
Azad University, Tehran, Iran
Seyed Mehdi Mirdamadi: Corresponding Author Associate Professor, Department of Agricultural Development, Science and Research
Branch, Islamic Azad University, Tehran, Iran
Seyed Jamal Farajollah Hosseini Associate Professor, Department of Agricultural Extension and Education, Science
and Research Branch, Islamic Azad University, Tehran, Iran
Davood Samari Associate Professor, Islamic Azad University, Karaj Branch, Karaj, Iran
Mohsen Ebrahimpour Institute of Planning and Agricultural Economics Research, Tehran, Iran
Abstract: The aim of the research is to design marketing innovation model of date business cluster in
Khuzestan, Iran. Regarding the nature of the subject, this study is quantitative and regarding the
purpose, it is applied. In terms of methodology, it is descriptive-correlational and analytical, and
causal-relational type regarding controlling the variables, and in terms of time, it is a review study.
The study population includes all executives, assistants, and marketing staff of date production and
processing workshops that are members of the date business cluster of Khuzestan. They are totally
67 workshops in which 392 people are employed in marketing. In this study, to determine the study
population, random sampling method was used and the number of sample was selected in proportion
to the village population. Using the table provided by Krejcie and Morgan (1970) and according to
the number of people and volume of the study sample size, the study population was estimated as
n=190. Dependent variable is marketing innovation aspects in date business cluster and
independent variables are individual characteristics, policy factors, infrastructure factors, economic
factors, social factors, management factors and educational factors. The results obtained using
structural equation modeling indicated that "education-promoting" factor with factor loadings (0.87)
has the highest and "policymaking" factor with factor loadings (0.79) has the lowest correlation with
latent variable “Marketing innovation dimensions of date business clusters." In addition, "innovation
management" with factor loadings (2.28) has the most and "innovative activities" with factor
loadings (-0.2) has the lowest correlation with the latent variable.
Keywords: Business cluster, Khuzestan Province, Dates, Marketing, Innovation
Designing Marketing Innovation Model of date Business Cluster in Iran
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1- Introduction
Reduced economic efficiency, misallocation of resources and unfavorable income
distribution with reduction of incentives to invest in the long term will negatively affect the
economic growth of communities, especially Third World countries. In recent decades, some
developing countries have reached considerable success in economic development and trade,
especially non-oil exports (Hosseini and Hosseini, 2009). In past decades, Iran has had
abundant oil revenues, but physical capital infrastructure has not been in good conditions.
Legal and Cognitive institutions required for the country's economic growth do not exist,
and unproductive sector has dominated the economy and affected the allocation of
resources. All these factors combine to make such a difficult status of growth and prosperity
to the country (Mehregan and Mohseni, 2012).
One of the major factors that lead to failure to achieve the objectives of agricultural
development and increased production and income of farmers in developing countries is the
agricultural marketing system failure. Today, in most advanced countries, marketing of
agricultural products is considered as one of the major sectors of the economy. Given the
current world situation, the production has gotten away from traditional form and
production for sale on the market is one of the main targets of manufacturers. Market is the
embodiment of all activities of producers to get a profit from production. Thus, marketing
campaign does not start from the beginning of harvest time but from the decision to
produce. In this regard, the marketing of agricultural products gets special importance due
to the particular characteristics of these products including corruptibility, seasonality and
demand for all-season. One of the things that have always been in the marketing of
agricultural products in less developed countries including Iran is the difference in price of
the producer that is the price he gets with the price the consumer pays. However, it should
not be assumed that this difference in price is only in developing countries, but it is also
seen in developed countries. However, here the higher price differences are due to services
such as packing, grading and converting the product whereas in less developed countries
little service is done on the product. One of the factors blamed for this difference in prices is
mediating factor called speculators. This mediating factor has a decisive role in prices and
thereby becomes the owner of huge profits due to the monopoly control of the market
(Mirzajani, 2011).
Population growth, growth of urbanization, food security and food security crisis, the
instability of the environment, the move from traditional agriculture to commercial
agriculture have caused enhancing living standards and improving the income of producers
to be the subject of agribusiness and providing innovative patterns to be important. This is
such that marketing concepts in the current circumstances have assumed broader
dimensions and instead of concentrating only on consumers, it includes all stages from
planning stage to stages later after consumption. Therefore, it makes the importance of
innovation in marketing of agricultural products and the need to review the current
situation and the structure of the market and marketing of agricultural products inevitable
(Kazemnejad, et al., 2004).
Today, with the increasing number of domestic and foreign producers, competition for
granting consumer satisfaction is an important goal of any market. Improved packaging,
grading, storage and timely delivery of product, reducing the sale prices by reducing costs,
reducing intermediation margin are of the factors that play an important role is satisfying
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producers and consumers and lead to increase of product marketing and internal and
external market boom (Rajai Nasiri, 2011).
Increasing unemployment alongside increasing degradation of resources is of economic-
cultural challenges of many developing countries including Iran. These problems have more
depth and complexity in rural areas. One of the basic economic problems of the agricultural
sector in Iran in the past and now is the low average income of agricultural producers. Low
income is the cause of many problems including poverty, inequality, and migration and so
on. Low-income of farmers and producers have several reasons, one of the most important
one is hidden and seen unemployment in the agricultural sector, which is due to the
inability to create jobs in this sector.
Agribusiness business clusters due to the nature of their activities and the focus on
different areas can greatly reduce unemployment in their performance areas and prevent
possible social damage in these areas. Thus, identifying and access to new markets and
offering innovative models in the field of marketing of these clusters can play a significant
role in reducing these problems (Mollashahi, 2012).
Business clusters of agriculture could be the working engine of national and regional
economy, and the development of agricultural enterprises and production units in the form
of cluster development will be more efficient due to increased output of cooperation and
collaborative activities. On the other hand, attention to marketing of agricultural business
clusters and creating and deploying an innovative marketing system could increase the
number of production units in the region, improve the employment, boost exports, create
links with other areas, and identifying and access to new markets.
Iran is considered as a major producer of dates in the world, so that in 2007, with
production of more than 16% of world date, after Egypt won the second place in the world,
but because of problems in the field of marketing, packaging and fulfillment of export
promotion programs, it could not compete with other producers and exporters (Karimifard
et al., 2011).
This research seeks to explain and design the pattern of innovation in marketing of date
business cluster in Khuzestan, to make it possible to offer the produced product with a
simpler way to consumer markets and on the other hand significantly increase the income
of the producers through decreasing the role of intermediaries and speculators. Obviously,
achieving these goals paves the way for the entry of other interested in producing. Thus,
improving the employment status in the region will not be away from reality that will bring
about the economic growth in the studied area.
Mousavi and colleagues (2014) conducted a study called social factors contributing to the
enhancement of innovation management in agriculture and rural cooperatives in Tehran.
The results showed that increasing cooperation and interaction between the managers and
members of co-operatives in the field of innovation, beliefs, and convictions of members of
the innovation in cooperatives and agricultural cooperatives with each other in exchanging
innovative experiences have explained 55.2% of the changes of improving management of
innovation in rural agricultural cooperatives.
Saafi sis et al (2014) conducted a study titled comparative analysis of the role of public and
private organizations in promoting the adoption of agricultural initiatives in Tarom,
Zanjan. The results of the regression analysis showed that social capital of public sector of
agricultural extension explains 31.5% of the and the changes in adoption of innovations,
this is while the private sector accounted for only 3.5% of the changes of adoption.
Designing Marketing Innovation Model of date Business Cluster in Iran
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Mousavi and Farajollah Hosseini (2013) conducted a study titled “Effective educational
strategies to promote innovation management in agriculture and rural cooperatives in
Tehran.” The results of multiple stepwise regression analysis showed that the solutions of
visiting research-scientific centers active in the field of innovative technologies in
agriculture and holding educational courses of introduction to innovation management for
cooperative managers explained 45 percent of the change in promotion of innovation
management in agricultural and rural cooperatives.
Soltani et al (2012) carried out a study as the identification of factors affecting the
management of innovation in small rural food industry in Tehran. The results showed that
environmental factors and relationship with manufacturers’ factors have a positive impact
on the companies becoming innovative. Among innovative companies, factors affecting the
level of innovation management are the properties of company with negative impact contact
with consultant with a positive impact.
Moreira et al (2015) conducted a study called (Drivers of marketing innovation in
companies in Portugal.” The results showed that the financial support of the research and
development of research activities within the company: the acquisition of machinery,
software, and equipment, acquisition of foreign knowledge and performance of other
producers affect marketing activities towards the tendency of companies to innovate in the
marketing process.
Omani (2015) conducted a study entitled “Analyzing the innovation management prediction
model in management of process industries of livestock. The results showed that the level of
innovation management in the processing and finishing industries of livestock products in
Khuzestan is not in a good condition. Income, competitiveness, responsibility, risk-taking,
the desire to creativity, education and attitude towards innovation play a positive and
effective role in improving the management of innovation.
Mumtaz Baloch and Gopal Thapa (2014) conducted a study titled “Agricultural Extension
in Pakistan: access and content of date owners.” Logistic regression analysis identified 5
variables out of 6 variables that had a significant effect on date owners access to extension
services including age of household head, education of household head, number of palms
owned by the household head, the trees inherited and the percentage of dead trees. The
majority of farmers were not satisfied with three main ways to promote public extension
services provided by the authorities. In order to overcome this shortcoming, reviewing
policy and advocacy planning largely eliminates the problem of agriculture.
Ghanee (2014) conducted a study titled “Status of Iranian date market and its ability to
enter the EU market. The results showed that Europe date imports has allocated 10% of
world imports to itself while its value is 30% of the total value of world exports. The results
reflect the fact that any country wishing to enter EU market to export date to Europe, at
first must be removed from their traditional state. However, with ups and downs in the
export, Iran does not have a permanent and stable overseas market, but Iran has the
opportunity to match its date in line with international standards in terms of quality and
packaging and in this way achieve widespread markets.
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2- Research Methodology
Regarding the nature of the subject, this study is quantitative and regarding the purpose, it
is applied. In terms of methodology, it is descriptive-correlational and analytical, and
causal-relational type regarding controlling the variables, and in terms of time, it is a
review study.
The study population includes all executives, assistants, and marketing staff of date
production and processing workshops that are members of the date business cluster of
Khuzestan. They are totally 67 workshops in which 392 people are employed in marketing.
In this study, to determine the study population, random sampling method was used and
the number of sample was selected in proportion to the village population. Using the table
provided by Krejcie and Morgan (1970) and according to the number of people and volume
of the study sample size, the study population was estimated as n=190.
Dependent variable is marketing innovation aspects in date business cluster, which
includes three aspects: innovation activities, innovation management, and Cognitive
factors.
Independent variables in this study are in the following groups:
Individual characteristics (age, sex, level of education, experience in the production and
marketing of dates, marital status), policy factors, infrastructure factors, economic factors,
social factors, management factors, and educational factors. To identify latent variables of
the research and their extent of effect, structural equation modeling using LISREL
software was used.
3- Results
The results obtained showed that 79.5% of the respondents with frequency of 151 were men
and 20.5 were women with frequency of 39. In studying the marital status, it was found
that 27.9% of the study population with 53 frequency were single and 72.1% with a
frequency of 137 were married.
The data showed that of the total of 190 staff members of the date business cluster
associated with marketing activities regarding the age groups, 5.9% with a frequency of 11
subjects are less than 20 years, 35.3% with a frequency of 67 people in the group of 21-35
years, 43.6% with frequency of 83 are in 36-50 age group, 11.6% with a frequency of 22
people in the 51-65 group and 3.7% with a frequency of 7 persons are in 66 years and over
group.
The results showed that 4.7% of subjects with a frequency of 9 people in terms of education
are illiterate, 10.5 percent with a frequency of 20 have elementary level studies, 17.4% with
a frequency of 33 people have guidance school education, 20 percent with a frequency of 38
subjects have high school education, 25.3 percent with a frequency of 48 have a diploma,
and 22.1% with a frequency of 42 have higher than diploma level of education.
The results showed that 60% of subjects with a frequency of 114 in terms of experience in
date production are in 1 to 5 years’ experience, 19.5 percent with a frequency of 37 people
are in group of 6 to 10 years, 8.4 percent with a frequency of 16 people are in from 11 to 15
years, 3.2% with a frequency of 6 people from 16 to 20 years, 7.3 percent with a frequency
of 14 persons at 21 to 25 years of experience and 1.6% with a frequency of 3 subjects are in
the group of 26 to 30 years of experience.
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The results showed that 76.8% of subjects with a frequency of 146 in terms of marketing
experience of date are in group 1 to 10 years, 11.6% with a frequency of 22 are in the group
of 11 to 20 years of experience, 10% with a frequency of 19 people in the group from 21 to 30
years and 1.6%, with a frequency of 3 subjects are in 31 to 40 years (table 1).
Table 1. Distribution of individuals according to personal characteristics
Variables frequency (n) Percent The cumulative percentage
Gender
Man 151 79.5
Women 39 20.5
Marital status
Single 53 27.9
Married 137 72.1
Age Groups
Less than 20 11 5.8 5.8
35 to 21 67 35.3 41.1
50 to 36 83 43.6 84.7
65 to 51 22 11.6 96.3
66 and over 7 3.7 100
Education
Illiterate 46 13.1 13.1
Elementary 97 27.6 40.6
Guidance 85 24.1 64.8
High school 37 10.5 75.3
Diploma 62 17.6 92.9
Higher than diploma 25 7.1 100
The record in date production
5 to 1 114 60 60
10 to 6 37 19.5 79.5
15 to 11 16 8.4 87.9
to 20 16 6 3.2 91.1
21 to 25 14 7.3 98.4
26 to 30 3 1.6 100
Marketing experience
1 to 10 146 76.8 76.8
11 to 20 22 11.6 88.4
21 to 30 19 10 98.4
31 to 40 3 1.6 100
Modeling of structural equation Due to the inclusion of SEM measurement errors in the model, structural equation model
provides more accurate estimates of the causal relationship. Weighted least squares
estimation model with data correlation and covariance matrix asymptotic Couric were used
Designing Marketing Innovation Model of date Business Cluster in Iran
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to analyze the data. Weighted least squares method was preferred because the data were
stratified in five classes and Couric solidarity should be calculated instead of Pearson
correlation.
Chi-Square=739.34 df=428 P-value=0.12 RMSEA=0.044
Figure 1: Structural Equation Model of the Research
COG= Cognitive Factors Man= Managerial Factors Policy= Policy Making Factors
IM= Innovation Management Edu= Educational Factors Social= Social Factors
IA= Innovation Activity INNO MAR= Innovation
Marketing
Eco= Economical Factors
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Table 2: Studying the values of the structural equation
Structures Symbol Standard rate value T Significance
Cogn
itiv
e
Fact
ors
C1 0.66 - Insignificant
C2 0.70 6.54 Significant
C3 0.67 6.37 Significant
C4 0.71 6.65 Significant
C5 0.69 6.49 Significant
C6 0.66 6.27 Significant
C6 0.58 5.70 Significant
Inn
ovati
on
Man
agem
en
t
I M1 0.60 - Insignificant
I M2 0.70 8.41 Significant
I M3 0.67 8.19 Significant
I M4 0.65 8.01 Significant
I M5 0.64 7.90 Significant
I M6 0.60 7.53 Significant
I M7 0.60 8.21 Significant
I M8 0.63 7.80 Significant
I M9 0.61 7.57 Significant
I M10 0.09 7.28 Significant
Inn
ovati
ve A
ctiv
ity
I A1 0.67 - Insignificant
I A2 0.66 7.75 Significant
I A3 0.62 7.33 Significant
I A4 0.64 7.55 Significant
I A5 0.62 7.37 Significant
I A6 0.61 7.22 Significant
I A7 0.75 8.61 Significant
I A8 0.75 8.65 Significant
I A9 0.55 6.61 Significant
According to the results obtained from this analysis, each of the options according to their
special are placed in a special place. In cognitive factors, "the interaction between managers
and employees" with the highest factor loadings (0.70) is the first priority, and "the
importance of marketing and identifying new markets" with (0.58) factor loadings is in the
last priority (Table 2).
In innovative activities “improvement of distribution network” with the highest factor
loadings (0.85) is in the first priority, and “improving the quality of services” with factor
loadings (0.55) has the last priority (Table 2).
In “management of innovation” the factor of “investment in research and development” with
highest factor loadings (0.70) is in the first priority, and elements of “marketing innovation
must be accompanied by spending cuts” with factor loadings (0.09) is in the last priority
(Table 2). Table 3: Overview of structural equation modeling
Latent variable Observed variables Standard rate value T Significance
Mark
et
ing
Mech
an
ism
s
social factors 0.81 13.39 Significant
Economic factors 0.87 14.91 Significant
Management factors 0.82 13.72
Significant
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Educational factors
- extension 0.87 14.95
Significant
Policy making
factors 0.79 13.00
Significant
Dim
en
sion
s o
f
Mark
eti
ng
Inn
ovati
on
Innovation
Management
2.28 2.05 Significant
Innovative activities -0.2 -1.08
Significant
Cognitive factors 0.82 7.96 Significant
The results obtained using structural equation modeling indicated that "education-
promoting" elements with factor loadings (0.87) has the highest and "policymaking" with
factor loadings (0.79) has the lowest correlation with latent variables "Dimensions of
marketing innovation." Moreover, “innovation management" with factor loadings (2.28) has
the highest and “innovative activities" with factor loadings (-0.2) has the lowest correlation
with hidden variable “marketing innovation." Table 4: Measures to assess overall fit of the structural model
Row Index Value Desirable level status
1 X2 739.34 - -
2 Df 428 - -
3 P 0.12 0.05> Desirable
4 X2/df 1.72 3> Desirable
5 RMSEA 0.044 0.05< Desirable
6 GFI 0.8 0.9< Relatively desirable
7 AGFI 0.77 0.9< Relatively desirable
8 NFI 0.95 0.9< Desirable
9 CFI 0.98 0.9< Desirable
10 RMR 0.053 Closer to Zero Desirable
A total of 10 indicators to measure the structural model, 8 are in good condition and only 2
indices AGFI and GFI are in relatively good condition. According to the results, it can be
stated that the overall fit of the structural model is in good condition. In other words, the
quality of the overall fit of the structural model estimated is as appropriate.
4- Discussion and conclusion
Management factors have an impact on marketing innovation of date business clusters.
This result is consistent with many studies such as Mousavi et al (2015), Soltani et al
(2013) and Mumtaz Baloch and Gopal Thapa (2014). It seems that the development of a
strategic plan by the manager, getting advice from marketing experts by the manager and
using specialists can pave the ground for marketing innovation in marketing innovation of
date business clusters.
Social factors have an impact on marketing innovation of date business clusters. This result
is consistent with studies such as Moreira et al (2015), Ommani (2015), Mumtaz Baloch and
Gopal Thapa (2014). It seems that the improvement of date consumption Cognitive in the
community and considering the need of the consumer can provide the grounds for
marketing innovation in date business clusters.
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Economic factors have an impact on marketing innovation of date business clusters. This
result is consistent with different studies such as Moreira et al (2015), Saafi Sis et al (2014)
and Ghane (2014). It seems that regulating the pricing of date, narrowing the gap between
wholesale and retail prices, and creating financial incentives, price adjustment, and
processing industry on the market could pave the ground for the creation of marketing
innovation in dates business clusters.
Policy making factors have an impact on marketing innovation of date business clusters.
This result is consistent with different studies such Mousavi and Farajollah Hosseini(2014),
Soltani et al(2013) and Moreira et al (2015). This result suggests that the adjustment of the
agricultural sector in relation to the date and manner of its exports, improving marketing
research and complementary industries and increasing the capacity of the Union of date in
protecting the rights of its members can lead to innovation in date business clusters.
Participating in educational-promotion courses has an impact on marketing innovation of
date business clusters. This result is consistent with different studies such as Moreira et al
(2015), Saafi Sis et al (2014) and Mumtaz Baloch and Gopal Thapa (2014). This result
suggests that holding educational courses for managers for familiarity with marketing
firms, and specialized training programs for managers of enterprises, increasing
advertising and marketing courses in innovative thinking can lead to innovation in date
business clusters.
Findings of structural equation modeling showed that cognitive factors have a significant
positive correlation with latent variable "aspects of marketing innovation." Several studies
such as Moreira et al (2015), and Mumtaz Baloch and Gopal Thapa (2014), Ommani (2015)
support these findings. This result suggests that creating a comprehensive and holistic view
towards creating new markets and to deal with strategic inertia (attachment to the
previous strategies) could be the way to develop innovative marketing programs for
managers and owners to attend workshops in competitive markets.
Findings of structural equation modeling showed that the management of innovation has a
significant positive correlation with latent variable "aspects of marketing innovation."
Various studies such as Mousavi and Farajollah Hosseini (2014), Soltani et al (2013) and
Mumtaz Baloch and Gopal Thapa (2014) support these findings. Based on these findings, it
appears that investment in research and development, the relationship between managers
and owners of manufacturing firms and research centers, implementation, development
and enhancement of the quality management system in the company increase the
production capacity of the firm through knowledge management.
Suggestions
From delving into research, especially its analytical results, some recommendations can be
given especially with regards to policy making, promotion-education, and infrastructure,
social, economic and administrative issues as follows to promote innovation in the field of
date business marketing innovation clusters. Achieving some of these goals and improving
educational programs to encourage authority in business workshops in the field of
marketing innovation of date business cluster should be paid attention to by the authorities
and other stakeholders in the agricultural sector so that the managers who are members of
date business cluster could improve work situation in the field of marketing innovation
boost it from lower and average levels to higher ones.
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Since 84.7 per cent of producers are less than 50 years old, and on the other hand over 60
per cent of producers have less than 5 years' experience of manufacturing dates, it is
recommended that Dried Fruits and Dates Union take advantage of people with experience
and expertise in date production as the advisers of the workshops. Moreover, as 92.9
percent of producers have secondary level and lower in terms of education, it is
recommended that higher education institutions (such as Scientific-Applied University and
agriculture training centers and Agricultural Jihad), like other courses that have been
required for the regional market and have also been established in these centers, try to
create date production and marketing major, because date is the most strategic garden
product of Khuzestan and has always brought good exchange for the country.
The results showed that there is a significant positive correlation between management
and innovation dimensions of marketing of date business cluster, so it is recommended
that by developing a proper strategic planning and marketing strategy, along with the
acquisition of advice from the experts and using specialists forces, they should enhance
their innovation capacity and while reducing production costs, create new demand for
production units.
Instability of marketing policies, illiteracy and lack of information of business owners about
legal and business issues have caused date production workshop managers of Khuzestan to
act weakly in the field of date marketing research and complementary industries and not be
able to use modern methods of marketing. Accordingly, it is recommended that Dried Fruits
and Dates Union act more strongly in support of its members rights and by creation of
active marketing units to monitor and educate about harvesting, packaging, grading, and
transport to improve product exports for producers and producers be able to brand their
products.
Due to the instability of export earnings from dates because of the fluctuations in the
demand for this product in Iran, by taking measures such as holding training-promoting
classes in various stages of production (planting, maintaining and harvesting) for managers
of workshops and date growers and by providing the required inputs such as pesticides and
fertilizers by Agricultural Jihad pave the ground for the production of higher quality
product so as it can compete in new competitive markets and obtain appropriate market
favor, and thus increase the demand for it.
With regard to the fact that in the present system of marketing the most interests is
obtained by dealers (wholesale-retail and reseller) resulting in less revenue and profit for
manufacturers that causes reduction of the incentive among producers and on the other
hand, the date price increases much higher than the marketing costs on it, government and
policy making organizations can establish marketing and distribution cooperatives of dates
business clusters with the cooperation of member producers in Khuzestan and thus reduce
the retail price and the marketing margin. Moreover, timely announcement of guaranteed
purchase rate and cash funds for date producers can create the ground for the removal of
profiteers and speculators and avoid the drop in prices at the farm.
Iran dates due to the variety and uniqueness of different species and some of its types in
world-class, which from the experts' perspective is of high quality, after processing and
export marketing, due to the failure of the distribution tool and shortcomings in
presentation, packaging and advertising, marketing efficiency is low. Thus, rival countries
in the region that are major producers of palm get the upper hand in exports and gaining
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higher advantages, and to survive in the global and international markets, Iran has to
lower the prices to preserves the possibility of export for manufacturers.
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