Direct Marketing

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Direct Marketing

• 
  
  NickAugostini
• Marketing Specialist
• NCDA CS

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What is Direct Marketing

• Direct marketing includes any method by which
  farmers sell their products directly to
  consumers.
• Justification for establishing a direct marketing
  outlet is based primarily on the producers
• desire to increase the financial returns from
  farm production.
• This opportunity for increased returns stems from
  
• 1) opportunities to reduce marketing costs
  (and capture
• profits) attributed to
  intermediaries (middlemen)
• in the supply chain.
• 2) consumer desire to buy (and willingness to
  perhaps pay a
• premium for) riper, fresher,
  higher-quality fruits and vegetables. These two
  factors combined have often generated
  substantially higher net returns for producers.
• 3) Operators of small farms may find that
  direct marketing translates into additional
• income when there is insufficient volume or
  product selection to attract large processors
• and/or commercial retail buyers. Thus, direct
  marketing may be the only viable marketing
• alternative for small farmers. A substantial
  number of producers use direct marketing
• channels to augment sales to wholesalers,
  retailers, and processors to reduce the risk of
• relying on a single market channel.

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Direct Marketing

• Advantages
• Greater control over marketing
• Producer sets price
• Satisfaction in selling to the people who enjoy
  your produce
• Use of family labor
• Cash payment
• Greater profit potential
• Customer feedback
• Less stringent packing requirements than
  wholesale

• Disadvantage
• Limited volume
• Must deal with all kinds of people
• Need for greater variety of marketing skills
• Greater time resources spent in marketing

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Types of Markets

• Pick-Your Own

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U-Pick
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Pick-Your-Own

• Advantages
• Reduced need for seasonal harvest
  labor--transportation, grading. Washing, packing,
  packaging,and storage cost are eliminated
• Average purchase per customer is larger than at
  other direct market outlets and
• Lower capital needed to get started

• Disadvantage
• Customers may damage produce or plants
• Increased cost for insurance
• May need alternate outlets
• Need for large parking areas
• Increase cost for sales and supervisory labor
• lowest prices
• Long hours
• Bad weather may reduce customers

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Types of Markets

• Pick-Your Own
• Roadside Markets

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Roadside Markets
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Roadside Stands

• Advantages
• Reduced marketing costs such as transportation,
  shipping containers and commission charges
• Chance to use family labor and
• Attractive displays and variety of produce can
  help draw customers.

• Disadvantages
• Higher operating costs
• Sales labor needed for operating stand
• higher cost for advertising, promotions and
  consumer packaging materials and
• zoning and planning restrictions

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Types of Markets

• Pick-Your Own
• Roadside Markets
• Farmers Tailgate Markets

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Farmer Markets
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Farmers Tailgate Markets

• Advantages
• Minimal marketing startup costs
• exemption from standard size and packing
  regulations
• Little or no packaging, advertising and promotion
  costs
• Prices substantially higher than wholesale

• Disadvantages
• Limited volume-need for other outlets
• Greater time involved
• Weather can keep customers away
• Rules, policies and politics you have to deal
  with
• Volume per sale smaller than wholesale

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Types of Markets

• Pick-Your Own
• Roadside Markets
• Farmers Tailgate Markets
• CSAs

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CSAs
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CSA

• Advantages
• CSA's direct marketing gives farmers and growers
  the fairest return on their products.
• CSA keeps food dollars in the local community and
  contributes to the maintenance and establishment
  of regional food production.
• CSA encourages communication and cooperation
  among farmers.
• With a "guaranteed market" for their produce,
  farmers can invest their time in doing the best
  job they can rather than looking for buyers.
• CSA supports the biodiversity of a given area and
  the diversity of agriculture through the
  preservation of small farms producing a wide
  variety of crops.
• CSA creates opportunity for dialogue between
  farmers and consumers.
• CSA creates a sense of social responsibility and
  stewardship of local land.
• CSA puts "the farmers face on food" and increases
  understanding of how, where, and by whom our food
  is grown.

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CSA

• Special Challenges
• Educating consumers about the delights of eating
  in-season produce
• Management-Dont over commit
• Management-People skills are needed to deal with
  the variety of consumers
• Customer turnover 30-50/year
• Need for continues marketing

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Types of Markets

• Pick-Your Own
• Roadside Markets
• Farmers Tailgate Markets
• CSA
• Restaurants

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Restaurants
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Restaurants

• Advantages
• Steady market throughout season
• Advanced orders
• Premium pricing
• Greater flexibility in products grown

• Disadvantages
• Not practical unless you are near large
  population centers
• Requires frequent deliveries
• Limited volume may not justify direct delivery
• Product liability insurance may be required

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Types of Markets

• Pick-Your Own
• Roadside Markets
• Farmers Tailgate Markets
• CSA
• Restaurants
• Retail Chains

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Retail Chains
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Retail Outlets

• Advantages
• Small capital investment to get started
• Potential for large volumes
• Upscale markets may be willing to pay top prices
  for specialty items
• Potential for brand name product identity

• Disadvantages
• Increased transportation costs
• Increased delivery time and cost
• Increased packaging costs
• Dependence on the retailers ability to sell the
  product

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Growing and Marketing for Quality

• Quality builds repeat customer business its
  quality and taste that brings them back for more
• Quality brings higher prices
• The most important ingredient for good taste is
  freshness
• Dont mix premium products with lesser grade
  products
• Have an outlet for your seconds

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Preparing To Sell

• Know yourself and your product
• Ask yourself Why should buyer buy from me?
• Have a price list ready
• Know what your production and transportation
  costs are
• Never ask a buyer what the best price is he can
  pay

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Satisfying Expectations of the Buyer

• Communications

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Communicate
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Satisfying Expectations of the Buyer

• Communications
• Liability Insurance
• GAPs
• Constant flow of product e.g.Scheduled
  plantings for that customer.
• Post harvest handling.

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Post Harvest Handling
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Satisfying Expectations of the Buyer

• Communications
• Liability Insurance
• GAPs
• Constant flow of product e.g.Scheduled
  plantings for that customer.
• Post harvest handling.
• Proper packing and labeling.

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Satisfying Expectations of the Buyer

• Communications
• Liability Insurance
• GAPs
• Constant flow of product e.g.Scheduled
  plantings for that customer.
• Post harvest handling.
• Pre-cooling.

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Pre-Cooling
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Satisfying Expectations of the Buyer

• Communications
• Liability Insurance
• GAPs
• Constant flow of product e.g.Scheduled
  plantings for that customer.
• Post harvest handling.
• Proper packing and labeling.
• Pre-cooling.
• Trucking.

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Trucking
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Satisfying Expectations of the Buyer

• Communications
• Liability Insurance
• GAPs
• Constant flow of product e.g.Scheduled
  plantings for that customer.
• Post harvest handling.
• Proper packing and labeling.
• Pre-cooling.
• Trucking.
• Marketing and promotional materials.

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Marketing materials

• POP materials, signs, recipes
• PLU or UPCs
• Boxes

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www.ams.usda.gov

• Pricing
• Packaging
• Wholesale Market Reports
• Farmers Market Reports
• Auction Market Reports
• Ornamental Crop Reports

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Publications

• The Packer
• Produce News
• Produce Merchandising
• Produce Business
• American Fruit Grower
• American Vegetable Grower

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In Conclusion

• Marketing research and planning should be done
  prior to planting.
• Marketing is knowing what your customer wants and
  needs and filling them on a consistent basis with
  a quality product.
• Promotion is a part of marketing and helps to
  identify and create demand for your product with
  the buyers.
• Communication is a key ingredient of success.
• Building buyer confidence is not an overnight
  thing.
• Your not only selling your product-your selling
  yourself and the reputation of your business.

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• Questions ?