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Choosing & Evaluating Marketing Channels

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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  1. Choosing & Evaluating Marketing Channels Matt LeRoux, Marketing Specialist

  2. 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.

  3. 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

  4. 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?

  5. Opportunity is knocking… CSA Farmers’ Market U-Pick Restaurant Grocery Cooperative Distributor Farm Stand

  6. 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.

  7. 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

  8. The Moving Target • Which channel is best? • One channel does well in one way, poorly in another so how do you know?

  9. 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.

  10. 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.

  11. Harvest Process & Pack Travel & Delivery Sales time Labor logs

  12. 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)

  13. Sales Volume by Channel

  14. Total Labor Hours

  15. 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.

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

  17. 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

  18. Based on 5 factors and farmer chosen weights. Rank & Compare Opportunities for Performance Factors

  19. 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.

  20. 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.

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

  22. 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.

  23. Contact information: Matthew LeRoux Agricultural Marketing Specialist Cornell Cooperative Extension Tompkins Co. 615 Willow Ave., Ithaca, NY 14850 607-272-2292 mnl28@cornell.edu

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