Choosing evaluating marketing channels
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Choosing & Evaluating Marketing Channels. Matt LeRoux, Marketing Specialist. Matt LeRoux. Marketing Specialist with CCE, Tompkins County. Recent Master’s in Ag/Food Marketing from Cornell. Worked for 5 years for the New England Livestock Alliance & Heritage Breeds Conservancy.

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Choosing & Evaluating Marketing Channels

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Choosing evaluating marketing channels

Choosing & Evaluating Marketing Channels

Matt LeRoux, Marketing Specialist


Matt leroux

Matt LeRoux

  • Marketing Specialist with CCE, Tompkins County.

  • Recent Master’s in Ag/Food Marketing from Cornell.

  • Worked for 5 years for the New England Livestock Alliance & Heritage Breeds Conservancy.

  • Started 2 brands of Natural & Grass-fed beef.


Choosing evaluating marketing channels

Wholesale

Direct

Selling to a buyer who is not the end user.

Selling directly to the end user.

Packer

Farmers’ Market

Restaurant

Freezer Trade

Grocery/Retail

CSA/Buying Club

Distributor

Farm Stand/Store

Auction

Web

Institution/Food Service

U-pick


Location local population

Location & Local Population

Factors to consider when choosing marketing channels:

What is your production like?

In Scale & Diversity

In Specialization

How many of them are there?

What do they want?


Choosing evaluating marketing channels

Opportunity is knocking…

CSA

Farmers’ Market

U-Pick

Restaurant

Grocery

Cooperative

Distributor

Farm Stand


Choosing evaluating marketing channels

But, it costs $300 per day to sell there.

Joe, if you bring your beef to the farmers’ market the prices are so high you can sell $500 worth per hour!

That’s great. I am going to sell there.

…and its only 1 hour per week...

…and it takes 12 hours to prepare...

…and if it rains no customers come.


Choosing evaluating marketing channels

Price & Profit

You can sell $500 worth per hour!

It costs $300/day to sell there.

Associated Costs

…and its only 1 hour per week...

Sales Volume

…and it takes 12 hours to prepare...

Labor Requirements

…and if it rains no customers come.

Risk

How do you evaluate a market opportunity?

Six interacting factors impact the “performance” of a marketing channel including:

Lifestyle Preferences


The moving target

The Moving Target

  • Which channel is best?

  • One channel does well in one way, poorly in another so how do you know?


Muddy fingers farm

Muddy Fingers Farm

  • Diverse vegetable & fruit production.

  • Farmers’ markets, CSA, & restaurants.

  • No paid labor, 6 working shares, family & friends that volunteer.

  • 2.5 acres in

  • production.

  • Over 45 crops.


Methodology

Why labor logs?

  • Labor is the largest marketing expense.

  • Consistent unit and format.

  • Operators tell hired help to complete the forms.

  • Each employee filled out their own sheets.

Methodology

  • Collect logs of all marketing labor (from harvest to sale) for one typical, peak season week.

  • Collect gross sales & mileage for the week.

  • Collect ranking on lifestyle & risk.

  • Collect weights for each ranked category.


Labor logs

Harvest

Process & Pack

Travel & Delivery

Sales time

Labor logs


Methodology1

Methodology

  • Use data to rank and compare channels:

    • Profit (gross sales – (labor + mileage cost)

    • Labor hours required

    • Sales volume

  • Also use farmer ranking for :

    • Risk perception (financial risk, lost sales, etc…)

    • Lifestyle preference (enjoyment, stress aversion)


Sales volume by channel

Sales Volume by Channel


Total labor hours

Total Labor Hours


Simple comparison of labor sales

Simple Comparison of Labor & Sales

CSA: 18% of weekly labor, 45% of weekly gross sales.

Watkins Glen FM: 13% of weekly labor, 5% of weekly gross sales.


Profit

Profit

Profit as % of Gross Sales (with Owner Labor Valued)


Risks preferences

Risks & Preferences:

Labor requirements

Price risk

Customer turn-out

Competition

Buyer back-out

Processor is booked

People on the farm

Customer interaction

Time in the field

Wash & pack

Displays


Based on 5 factors and farmer chosen weights

Based on 5 factors and farmer chosen weights.

Rank & Compare Opportunities for Performance Factors


Practical application marketing decisions

Practical Application: Marketing Decisions

  • Considering a marketing change, what should it be?

  • Reduce participation in weakest performing channel.

  • Increase participation in best performing channel.

  • Strategic channel combination to maximize sales and reduce risks.


Practical application marketing decisions1

Practical Application: Marketing Decisions

  • Muddy Fingers Farm has been considering a marketing change, what should it be?

  • Could drop the Watkins Glen Farmers’ Market and add 12 shares.

  • Weekly gross sales remain equal.

  • 8-9 hours/week less labor.


Choosing evaluating marketing channels

Channel Combination with prioritized selling maximizes sales of unpredictable perishable crop yields.


Marketing channel assessment

Marketing Channel Assessment

  • Identify your goals and lifestyle preferences.

  • Keep marketing cost & returns records, if only for “snapshot” periods.

  • Value your own time to present an accurate picture of marketing costs.

  • Rank & compare opportunities to maximize profits.

  • Combine channels to max sales & reduce risks.


Contact information

Contact information:

Matthew LeRoux

Agricultural Marketing Specialist

Cornell Cooperative Extension Tompkins Co.

615 Willow Ave., Ithaca, NY 14850

607-272-2292

[email protected]


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