Download What is Your Marketing Situation?

What is Your Marketing Situation?
Things to Consider
Direct marketing is a common component in many new agricultural opportunities, including
agri-tourism, locally grown products, and other alternative enterprises. Before venturing into a
new aspect of your current business, or creating a entirely new agricultural operation, you should
consider what marketing strategies will be required to ensure a successful business.
For creating a successful marketing strategy, you should consider your product, customers,
unique features, distribution, pricing, promotion, and market.
Product – What is our product?
This may seem to be an easy question to answer, but it is useful to consider the full scope
of products you may be providing. Products can include commodities, final consumer goods,
and services. As an example, your primary product may be organically grown produce, but you
may also provide workshops on your farm or field days for visitors. All of these different
products have different potential and should be considered at the beginning of your planning.
Customers – What markets do we serve?
You should think of your market in terms of the potential customers you will be serving.
For your individual business, you may serve several different markets or several distinct groups
within a single market. The types of product and services you provide may be very different
when serving individual customers on farm or at farmers’ markets as compared to selling to
restaurants or other large groups.
Once you’ve determined what markets you will be serving, you should gather more
specific information on the segmentation of the market to answer specific questions: Are there
distinct segments in your customer base? How many potential customers are there in each
segment in the area you serve? How many customers in each segment do you have and how
much do they buy?
Unique Features – What distinguishes our product?
Finding what differentiates your product from other competitors makes it more attractive
to customers and improves your marketing potential. Your product may become known for its
freshness, high quality, location, or other qualities. You may be able to market your product as
locally grown, organic, grass fed, or naturally grown. Some of these characteristics may be
difficult for competitors to imitate, but does not rule out other competitors who venture into the
marketplace. When determining what unique features your products have, you may consider
what features you want to incorporate in the future to appeal to other segments of your market
that have good growth potential.
Distribution – How do we distribute our product?
Distribution techniques vary from the simple to more complex, and the costs associated
with these techniques can vary greatly. Most farm product distribution systems fall under three
categories:
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Sale to a first handler or processor – sale of grain to a local elevator, milk to a creamery,
or beef cows to a slaughter facility.
Sale through a grocery wholesaler or retailer – sale of processed, packaged chickens
through a local retailer or sale of fresh vegetables through a natural foods cooperative.
Direct marketing – sale of fresh products at a roadside stand, sale of farm-produced
cheese at a farmers’ market, or catalog sales of nursery plants and flowers
There are strengths and weaknesses to each of these strategies and the various
combinations there-in. You should consider which of these help you maintain the unique
qualities of your product. For instance, direct marketing of grass-fed meat maintains the
unique aspect of direct consumer/producer interaction while selling milk to a cooperative
minimizes the ability to reach consumers directly. You should consider the costs
associated with of these strategies. The costs of on-farm processing of milk are usually
much greater than those associated with selling to a local cooperative. Careful
considerations of the trade-offs associated with these distribution strategies and how they
affect your marketing abilities are important in your agricultural enterprise.
Pricing – How do we price our products?
The price for your products will be influenced by your customer’s willingness to pay and
the production costs of you and your competition. Your competition may be other producers at
farmers’ markets, similar producers selling directly on the farm, your local supermarket, or some
other product. Your original pricing may be at a level that covers all production costs and yields
a profit. However, if at a farmers’ market for instance, the price for a perishable product may
drop well below production costs if you are competing with several producers who have a large
supply of product that would be wasted if not sold. In these instances, efficient production
practices will prove critical in maintaining a sustainable business.
Your pricing flexibility is also dependent on the uniqueness of your product. If you have the
“corner” on a certain market in your area (i.e. grass-fed beef, direct-sale milk, local produce,
etc.), you have a higher degree of liberty in setting your price. However, if competition is
intense, the more difficult it will be to set a premium price.
Promotion – How do we promote our products?
Successful marketing is dependent on effective product promotion. There are many ways
to inform your potential market of your products. This may take the form of brochures, posters,
or a website. You may host taste-tests in retail stores or farmers’ markets or set up displays at
exhibitions, trade shows, local festivals, or other large gatherings. Regardless of your
promotional strategies, you should consider the market you are targeting and what will appeal to
their specific demographic.
Market and Industry – How is our market changing?
Markets are not static. New competitors are entering the marketplace as old rivals may
be leaving or entering new marketplaces entirely. New products might reduce demand for your
products or new research may provide information that helps promote certain benefits of your
product. Be sure to consider a wide range of potential changes in your market. Questioning
assumptions you might have about your markets can help you identify potential issues that
should be addressed.
Adapted from “Building a Sustainable Business: A Guide to Developing a Business Plan for
Farms and Rural Businesses.” 2003. Sustainable Agriculture Network. Beltsville, MD