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Transcript
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: 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