IV Marketing

Chapter author: Daniel W. Block, Professor, California State Polytechnic University, San Luis Obispo

Freedom, creativity, and innovation have characterized the small farmer for decades. Those qualities have built the remarkably efficient agricultural industry of the United States. Those same qualities are essential for you to be a successful and dynamic marketer.

Agriculture has long been production oriented. Our objective has been to produce, then ask, "How can I get people to eat more wheat?" or "more lettuce?" But, focusing on the product is fatal in today’s marketplace.

You need to be marketing oriented. You need to identify customer needs and desires. This approach can have profound effects on business operations. You might find yourself exploring new products or new forms of packaging or spending more time with consumers who influence what you produce.

The kind of marketing that makes a small-scale farming operation profitable today is niche marketing: finding out what customers need or want and providing it; not just presenting what you have and hoping they will buy. You are in business to serve your customers’ needs, and those needs dictate the type and form of your products.

As you shift from being production oriented to being marketing oriented, you will become a strong and profitable producer who meets your business objectives.

Planning

Frequently, people have excuses for why they can’t plan: "Things change too rapidly to make a plan useful," or, "I’m too busy!" If you have unlimited money, unlimited time, and unlimited customers, you don’t need to do much planning. But all of us in small farming know our capital and time are limited, and we have to share our customers with an increasing number of competitors. In today’s marketplace, if you are responsible for an agricultural operation and you do not have a marketing plan, you are playing with a time bomb that will surely go off within the next decade! Knowing your customers’ needs and having a written program to satisfy those needs is vital. (Filling out the worksheets at the end of the book will help you develop your market plan.)

Developing a marketing plan can be a simple project that can yield tremendous, long-term benefits. A marketing plan allows you to maximize limited resources and to react to changes more effectively.

As the marketplace becomes affected by rapid change, increasing international competition, and decreasing resources, an interesting phenomenon is occurring. Whereas producers used to make a product and sell to any and all who could buy it, today’s market-oriented farmers define their target market and focus their time and resources on that target exclusively.

Planning to focus your marketing energies on a specific target often means the difference between wasting valuable resources while hoping someone will buy your product and efficiently managing your resources to "get the most bang for your buck." Marketers call this "targeting a market segment" or "picking a niche."

You cannot be all things to all people. You can make more money, more efficiently, when you tailor your product and services to specific segments in the marketplace for whom you can do a good job. Finding your niche in the market means finding customers who have needs that you can satisfy better than anyone else. It means differentiating your product to a specific segment of customers, and building a relationship with those customers. They will perceive you to be especially qualified or equipped to satisfy their unique demands.

To get information you need to do marketing research. You need to know all about your customers and your competition. You need to know who your customers are, where they live, what they buy, how they buy, when they buy, and who influences their purchases. You need to know which customer needs are not being satisfied.

Marketing Research

Look around and see who is successful. A potato farmer in the Bakersfield area, seeing that other growers packed and identified their products as "premium" and got higher prices, designed his own box to differentiate his product. Buyers began to perceive his potatoes as having better quality, and he started to get better prices. Once he ran out of the new boxes and had to use a neighbor’s. He received a reduced price even though the potatoes in the boxes were the same as he had always delivered to his customer. He was marketing perceptions as well as food.

The California Department of Food and Agriculture and U.C. Cooperative Extension distribute publications and sponsor seminars that will show you how to put together a marketing program for your operation. Attending trade association meetings and conventions is also helpful.

Today’s small farmer needs to read metropolitan, national, and international newspapers to be aware of what’s going on in the marketplace and with customers. Your local newspaper is not enough.

Divide up all the customers in your market into categories. Customers can be defined by geographic areas, such as San Francisco, Ventura, or cold climates and warm climates. Customers can be defined by their lifestyle – energetic or sedentary. They can be defined by age, such as retired people, young families, teenagers, or children. They can be defined by taste preferences – some like things sweet or tart, large or small, processed or raw. They can be defined by season or time, such as spring or fall calving, pre-planting or post-emergence. Precisely identify the unique needs of the customers in your market, and select those needs which you can most uniquely meet and for which there are large enough numbers of customers for you to be profitable. This gives you the edge over your competitors and conserves your resources.

Another form of market research is simply to ask your customers what they want. Conduct a personal or telephone interview or send out a simple questionnaire to people with whom you deal. If you own a roadside stand, ask people who shop at your stand whey they stopped, what they are looking for, and what else you can do to satisfy them. If you are thinking of selling to the food service industry, such as restaurants, ask the chefs what they want and in what form they want it. You will become aware of opportunities you never before considered.

All of these ways of defining customers provide a way of finding potential opportunities in the marketplace that are not always apparent. Agricultural producers who have been successful in targeting specific niches include vegetable growers who provide Asian vegetables to the expanding Asian populations in southern California; or producers who target restaurants and provide them with products of specific sizes and quantities; or alfalfa hay producers who grow exclusively for the purebred horse market; or a cherry producer in Stockton who packs cherries specifically for the very particular tastes of his customers in Hong Kong. All of these people are specialists to their customers, uniquely suited to meet their customers’ special needs.

Many small farmers are doing these things already. They are getting an advantage over those who still spend all their time in the field. If you aren’t already doing so, get off your tractor and go talk to your customers!

SOS/BAM: A Tool for Developing a Marketing Plan

A simple structure for developing a marketing plan is the SOS/BAM model. This structure, when used properly, will give you an operational tool that is as handy as a pair of pliers or a screwdriver.

The situation analysis is the most important part of your marketing planning and requires careful thought. You analyze where you are right now – your situation. You look at market potential, customer needs, your product’s and your operation’s strengths and weaknesses compared to your neighbor’s, industry needs. You talk to your neighbors, observe operations that are successful, consider articles and journals you’ve read that tell about trends in your area of business. Analyze your market for potential niches. Ask your employees what they think your operation’s strengths and weaknesses are. You might be surprised at what they say.

You don’t need to accomplish this analysis in one sitting. It may take a few periods of writing separated by intervals of thinking and information gathering. An almost magical process begins to take place when you do a situation analysis. New ideas emerge. You’ll discover creativity in yourself and your employees you may never have known were there.

The Objective section is very simple. You put down on paper specific, measurable objectives you’d like to achieve with your operation. You may want to increase the number of customers, or want people to be more aware of your brand name, or want a greater profit. Good objectives are measurable and have a completion date. Don’t say, "I want to sell more watermelons." Say, "I want to sell 10 percent more watermelons by August 31." Make your objectives attainable. They should make you stretch, but not be impossible to achieve.

Strategies is the part of your plan where you put down ideas for increasing your business through marketing. Include:

• Product development – packaging, branding, warranty, and service to meet the unique needs of your target market.
• Pricing decisions – raising your price or asking for a premium price.
• Place or distribution decisions – deciding whether to continue with your present buyers.
• Promotion – advertising, personal selling, public relations and publicity, special incentives; communicating to your customers that you can satisfy their needs.

The BAM in the model stands for:

Budget – there has to be an economic justification for implementing the plan.

Action-Plan – calendar of events stating when you are going to start these activities.

Measurement – a means of evaluating your progress to see if you are on your way to achieving these objectives. A marketing plan is essential in the competitive market today. It is not an overwhelming task, and it yields some interesting results. Developing a marketing plan is a catalyst to new and innovative ideas. If you make the effort to begin the process, you’ll find yourself thinking in directions you never before considered.

Product Strategy

Quality

Your most important marketing strategy is to produce the most desirable product you can. All other marketing factors – advertising, public relations, farmers’ markets, roadside stands, salespeople – are useful only if your product truly satisfies the customers and is of the quality that you claim it is. The old saying that began in agriculture is appropriate today: "You can’t make a silk purse out of a sow’s ear!"

But, remember, working 12 hours a day in the field to produce the highest quality product you can is not all there is to it. Beyond the physical features of your products, which you work so hard at perfecting, lie features that are less visible yet eagerly desired by your customers, and often neglected by producers.

Adding Value

You must differentiate what you are offering from all other products in the marketplace to show that your product will better satisfy the needs of your target market. This is called "adding value," and the more value you add to your product, the more profit you will receive.

One way of adding value is with a guarantee. This can set your product apart. An example is a Red Angus purebred breeder in Montana. He guarantees his heifers will be free from calving problems. If a rancher has calving problems, his money is refunded or he gets a new heifer. This breeder’s customers are purchasing the security of knowing they have minimized their financial risks. He is selling peace of mind.

Another way of adding value is with a special phone number or hotline. Some marketers have a toll free number for their customers.

Adding information and education to your product is always of high value to your customers. Consider seminars or workshops. Information about cooking it, processing it, delivering it, cutting it, vaccinating it, unloading it, or boxing it are a few options that may apply to your business. All will add value to your product.

Building a close relationship is one of the oldest and most effective means of adding value to your product. If two carloads of grain are the same quality, the same price, and can be delivered at the same time and under the same terms, the seller who has the closest and most helpful working relationship with the buyer will get the business.

If you can keep the product longer, you add value. Perhaps you can dry, ferment, or can it. You may produce jams, jellies, preserves; juices; cow, goat, sheep milk and cheese; pies; vinegars; smoked meats; wreaths; garlic braids, etc.

Perceptions

A product is more than its physical and functional characteristics. Your customers are not simply purchasing material items with characteristics resulting from your combining soil and water, or genetics and feed. They are also purchasing a perception of more value for their money, whether it be through services, guarantees, or even an image.

A farmer with 80 acres of apples in Tehachapi markets his blossoms. At blossom time, he hauls Los Angeles area senior citizens through his orchard in reconditioned manure spreaders. They love it – it’s a refreshing change from the congestion of the city. He’s selling an experience, an image, a perception. It’s a simple marketing technique and it’s fun. He gets about 300 busloads a year, and he makes a profit. That’s understanding what your product really is.

Brand Name

Another way to differentiate your business or product is by using a brand name. Many producers, both large and small, identify their products with a brand name or logo. This identification can be used on a box, on advertising, on packaging, or on the product itself. Studies show that both domestic and foreign customers prefer branded produce over unbranded. They think it is of higher quality.

When selecting a brand name, pick one that will mean something to the customers, that will make them want to buy your product. Keep it simple to say. It’s usually a waste of a good marketing opportunity to pick a name that you think is clever or has your family name as part of it. "Butterball" says nothing about the farmer who grows the turkeys, but certainly gets the customers licking their lips.

Pricing

The old adage that "farmers are price takers, not price makers" is not always true today.

If you want to receive a higher price for your product, you have two alternatives; (1) get the government to guarantee a higher price through price supports or subsidies, or 2) add value to your product. You probably won’t choose the first alternative because it is very difficult.

Providing customers with a quality product – a product with the features that the customers want, both tangible and intangible, allows you to ask a higher price.

A large citrus grower in Porterville garners a higher price than his competitors by providing high quality produce on time. The large chain store to which he sells pays a premium price because they know the order will be consistently filled with high quality produce, on time, without problems.

Place

Out of financial necessity, the battle cry of the innovative producer today is, "Get close to your final consumer!"

Today it is much easier than in times past. For decades it was almost impossible for a farmer to communicate with the consumer because it was a long way to town and there was really no reason for communication. Farmers were making money, folks in the city were getting their food, people had respect for farmers, and most producers were too busy working on the farm to worry about a system that was working satisfactorily. Producers relied on the railroads and vast networks of brokers, wholesalers, grocery store owners, and small vendors. Most people were sympathetic to problems of farmers.

But that situation has changed. Farmers are struggling to find a profit. Although food continues to flow smoothly to the 98 percent of the US population that is not on a farm, a lack of sympathy for how food is produced has created a relationship problem between the farmer and the consumer. One thing hasn’t changed: the farmer is still working hard. But, working hard is not a valid excuse for not getting involved in the marketing process. Communication and transportation today allow you to bypass middlemen. You can sell directly through roadside stands, farmers’ markets, or to local markets and restaurants. You can even make contacts in Tokyo, New York, Atlanta, or Hong Kong by spending a few dollars on a phone call. For a relatively small investment in a fax machine, you can communicate globally for just pennies.

Bypassing traditional distribution channels is appealing. Nevertheless, remember, the sword that decapitates the middleman is two-edged. An ill-planned strategy could overlook some vital functions your middleman performs, and which you may not be able to duplicate. Developing the necessary contacts and maintaining the retailer and jobber relationships in markets far from your operation take time and money.

Promotion

Promotion is what marketing is all about. You want to let customers know that you have the product with the features and benefits they need. Reaching the largest number of people in your target market for your dollar is your goal, and the method of promotion you select should be governed by this principle.

Advertising is the most visible form of marketing, but promotion also includes personal contact, public relations and publicity, direct mail, and special promotional incentives.

Personal Contact

The oldest and least expensive form of promotion is "word of mouth." That form of customer goodwill and support cannot be bought with flashy advertising. It is earned by delivering the highest value to your customers for their money. For people making buying decisions, nothing beats a person-to-person relationship between buyer and seller. A vegetable grower in the Bakersfield area makes regular trips to his buyers in the Los Angeles area just to say hello. He knows that a smiling face associated with his farming operation goes a long way to differentiate his produce from his competition's.

There’s always room to strengthen your personal relationship with your customers. One rancher sends birthday cards to an extensive list of buyers. Another producer telephones his buyers regularly. The power of personal relationships lies not only in words, but also in non-verbal communication. Customers sense when you sincerely want to satisfy their needs. The world has become so computerized that your personal "How can I help you?" will be a breath of fresh air.

Advertising

Dancing raisins, avocados wearing party hats, musical videos showing the latest "models" of Angus bulls, and colorful direct mail catalogues attest to the fact that agricultural producers in the US are awake to the potential of sophisticated advertising. Advertising agencies throughout the country are busy putting together clever campaigns to promote turkeys, almonds, milk, specialty fruits, cattle, and dozens of other agricultural commodities. This trend will continue as producers strive to differentiate their products and garner higher margins.

When deciding how and if to advertise, find out which media your target market reads, watches, or listens to. Don’t throw away money placing your ad in the wrong type of media. Most reliable publications and stations will give you a free profile of their subscribers or listeners. Then you can decide if that publication or station is the best way to reach your target market.

Direct Mail

Direct mail offers an effective way of communicating your message. Many purebred cattle producers send out catalogues and mailers to ranchers to promote their sales and maintain customer loyalty.

Successful Marketers

Successful marketers are more concerned with what their customers want than with what they are producing. They are listeners and question askers. They are long-range thinkers and are willing to forego short-term profits for long-term growth. They are curious about the world, and hungry to learn. Successful agrimarketers are identical in one area: they like people and they enjoy serving them. That is what marketing is all about.

Additional Resources and References

Fresh Trends: A Profile of Fresh Produce Consumers (annual edition). Overland Park, KS: Vance Publishing Company

Levinson, Jay Conrad. 1984. Guerrilla Marketing: Secrets for Making Big Profits from Your Business. Boston, MA: Houghton Mifflin Co.

Marketing US Agriculture (1988 Yearbook of Agriculture). Washington, DC: US Government Printing Office. 327 p.

Nelson, Theodore. Measuring Markets: A Guide to the Use of Federal and State Statistical Data. 1987. Washington, DC: us Department of Commerce, Industry and Trade Administration.

Smallwood, M., J.R. Blaylock, and J.M. Harris. 1987. Food Spending Trends in American Households, 1982-84. Statistical Bulletin 753. Washington, DC: US Department of Agriculture, Educational Research Service.

Tourism USA: Guidelines for Tourism Development. 1986. Columbia, MO: University of Missouri.