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Exploring Direct and Niche Marketing. Lee Meyer and Tim Woods Ag Econ Extension Specialists . Quiz: What is Marketing?. All of the steps between production and consumption Cannot be eliminated, just moved to someone else. What is “direct marketing”?.

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Exploring direct and niche marketing

Exploring Direct and Niche Marketing

Lee Meyer and Tim Woods Ag Econ Extension Specialists


Quiz what is marketing
Quiz: What is Marketing?

All of the steps between production and consumption

Cannot be eliminated, just moved to someone else


What is direct marketing
What is “direct marketing”?

  • Concept – straight from producer to consumer

  • Practice – often includes intermediate steps

  • Examples:

    • Farmers’ markets

    • Restaurant “back door” sales

    • Internet sales

    • Roadside markets


Direct marketing advantages
Direct Marketing – Advantages

Prices higher than at wholesale markets

More control over price

Flexibility in product types

Opportunity to build customer loyalty

Capture personality value

Diversification (products, markets)


Direct marketing disadvantages
Direct Marketing – Disadvantages

  • Promotion is expensive - money and time

  • Legal issues and insurance

  • Sales expenses and logistics

  • On Farm Sales

    • Investment

    • Traffic, privacy,


What is niche marketing
What is “niche” marketing?

  • A niche is a small market segment – in terms of customers and suppliers

  • Niche markets are niche for a reason

    • A new product – salmon in the 1950s

    • A narrow customer base – Halal meats


Marketing niche products
Marketing niche products

  • Potential to over supply

    • You

    • Your competition

  • Targeting the customer may be expensive

  • Through direct and/or wholesale markets


Some key considerations
Some key considerations:

Pricing

Competition

Costs of processing, packaging

Budgeting


Products continuum
Products Continuum

Specialized/ Nich Product

Commodity

Examples: *corn *soybeans *cotton

Examples: *organic feed *beef - direct

Examples: *feeder cattle *IP grain

* Hort prod.

What makes a successful operation in each category?


Specialized products
Specialized Products

  • Have unique attributes, not standardized

  • Exchange usually depends on direct communication

  • Competition can be limited by offering services, trust

  • Competition still happens, but it is more difficult for others to enter your market


Marketing building on changing consumer attitudes
Marketing - building on changing consumer attitudes

Buyers and consumers want to have a relationship with producers. This provides them assurances that can not be easily quantified through grades and standards.

Differentiated products fit this model.

Adapted from the “Cluetrain Manifesto”


Creating value three types
Creating Value – three types:

  • Direct and Observable:

    • For example, color, condition, freshness

  • Direct and Hidden

    • For example, vaccination, moisture level

  • Indirect

    • Who (relationships) and how the product is produced, secondary impacts of production


  • Direct and Observable:

    • For example, color, condition, freshness

  • Direct and Hidden

    • For example, vaccination, moisture level, production methods


Indirect

Who (relationships)

How the product is produced (impacts of production)


Case study discussion direct sales of ky raised beef
Case Study Discussion: direct sales of Ky raised beef

  • Product

  • Place

  • Price

  • Promotion


Marketmaker demographics and product promotion www marketmakerky com
MarketMaker– demographics and product promotion www.MarketMakerKy.com

Interactive data base system for linking buyers and sellers of food products. MarketMakerKy currently has census/demographic data, a directory of all 16,000 Kentucky food related business, Kentucky Proud farmers, a list of all farmers markets, and more.


Primer
PRIMER

worksheets for entrepreneurs needing a systematic way of evaluating a new enterprise

can be downloaded at:

http://www.uky.edu/Ag/AgEcon/extpubs.html


New crop opportunities center
New Crop Opportunities Center

extensive crop marketing information

archives of farm market, auction prices

fact sheets on selling to restaurants, cooperatives, auctions, farm markets, CSA’s, and other channels.

specific crop marketing profiles

http://www.uky.edu/Ag/NewCrops/welcome.html


Ky food consumer panel
Ky. Food Consumer Panel

quarterly survey provides consumer market data targeting 1000 Ky.

updates, trends, market issues, product opportunities, and market research are provided through the survey

http://www.ca.uky.edu/Agecon/index.php?p=269


Ky center for ag rural dev
Ky. Center for Ag & Rural Dev.

market feasibility projects

Helps implement USDA market programs

participate in project marketing and management (e.g. management “audits”)

http://www.kcard.info/about_services.php


Other resources
Other Resources:

  • Commodity Market Outlooks – ag. econ.

  • Focus Groups –

    • Tim Woods (Ag. Econ), Scarlett Wesley (MAT Dept.)

  • UK Specialists – every dept. in College of Ag.

  • Ky. Dept of Ag. – www.kyagr.com

  • Ky. Farm Bureau – Roadside Market program

  • SBDC – Small Business Dev. Centers


Some key considerations1
Some key considerations:

Pricing

Competition

Costs of processing, packaging

Budgeting


Livestock meat opportunities
Livestock & Meat Opportunities

Beef

Pork

Lamb and Goat

Chicken

Eggs


Livestock meat examples
Livestock & meat examples:

Beef: value of cuts $1,600 - $2,000

value of live steer: $1,020

Processing cost: $300 - $400/hd.

Yield: 60% dressing; 70% cuts

about 40% boneless cuts


Beef example cont
Beef Example, cont:

  • Pricing: what is customer’s goal?

    • Less expensive beef?

    • Premium quality?

    • Known source?

    • Other attributes (organic, “ASH” free, etc.)


Beef example cont1
Beef Example, cont:

  • Other costs:

    • Your time and trucking

    • Consistency of sales, inventory?

  • Decisions – depending on your customers

    • Bulk – may be custom exempt

    • Cuts – requires Fed. Inspection


Chicken
Chicken

  • Prices - $2-$3/ lb.

  • Feed cost ~ $3- $4/bird

  • Processing cost $2.65/bird

  • Your time: priceless?

  • Markets -

    • Both individuals and restaurants


Other species
Other Species:

  • Pork – large potential market

    • Not much experience on production systems

  • Chicken

    • Strong market, at both household and restaurant levels

  • Eggs

    • Expanding market, consumer price resistance

  • Lamb and Goat

    • Lamb market is doing well

    • goat – ethnic demand


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