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Direct Marketing. NickAugostini Marketing Specialist NCDA & CS. 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 producer’s

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direct marketing

Direct Marketing

NickAugostini

Marketing Specialist

NCDA & CS

what is direct marketing
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 producer’s
  • 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.
direct marketing3
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
types of markets
Types of Markets
  • Pick-Your Own
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

Pick-Your-Own
types of markets7
Types of Markets
  • Pick-Your Own
  • Roadside Markets
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

Roadside Stands
types of markets10
Types of Markets
  • Pick-Your Own
  • Roadside Markets
  • Farmers & Tailgate Markets
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

Farmers & Tailgate Markets
types of markets13
Types of Markets
  • Pick-Your Own
  • Roadside Markets
  • Farmers & Tailgate Markets
  • CSA’s
slide15
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.
slide16
CSA

Special Challenges

  • Educating consumers about the delights of eating in-season produce
  • Management-Don’t over commit
  • Management-People skills are needed to deal with the variety of consumers
  • Customer turnover 30%-50%/year
  • Need for continues marketing
types of markets17
Types of Markets
  • Pick-Your Own
  • Roadside Markets
  • Farmers & Tailgate Markets
  • CSA
  • Restaurants
restaurants19
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

Restaurants
types of markets20
Types of Markets
  • Pick-Your Own
  • Roadside Markets
  • Farmers & Tailgate Markets
  • CSA
  • Restaurants
  • Retail Chains
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 retailer’s ability to sell the product

Retail Outlets
growing and marketing for quality
Growing and Marketing for Quality
  • Quality builds repeat customer business; it’s quality and taste that brings them back for more
  • Quality brings higher prices
  • The most important ingredient for good taste is freshness
  • Don’t mix premium products with lesser grade products
  • Have an outlet for your seconds
preparing to sell
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
slide27

Satisfying Expectations of the Buyer

  • Communications
  • Liability Insurance
  • GAP’s
  • Constant flow of product: e.g.:Scheduled plantings for that customer.
  • Post harvest handling.
slide29

Satisfying Expectations of the Buyer

  • Communications
  • Liability Insurance
  • GAP’s
  • Constant flow of product: e.g.:Scheduled plantings for that customer.
  • Post harvest handling.
  • Proper packing and labeling.
slide31

Satisfying Expectations of the Buyer

  • Communications
  • Liability Insurance
  • GAP’s
  • Constant flow of product: e.g.:Scheduled plantings for that customer.
  • Post harvest handling.
  • Pre-cooling.
slide33

Satisfying Expectations of the Buyer

  • Communications
  • Liability Insurance
  • GAP’s
  • Constant flow of product: e.g.:Scheduled plantings for that customer.
  • Post harvest handling.
  • Proper packing and labeling.
  • Pre-cooling.
  • Trucking.
slide35

Satisfying Expectations of the Buyer

  • Communications
  • Liability Insurance
  • GAP’s
  • 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.
marketing materials
Marketing materials
  • POP materials, signs, recipes
  • PLU or UPC’s
  • Boxes
slide37

www.ams.usda.gov

  • Pricing
  • Packaging
  • Wholesale Market Reports
  • Farmers Market Reports
  • Auction Market Reports
  • Ornamental Crop Reports
publications
Publications
  • The Packer
  • Produce News
  • Produce Merchandising
  • Produce Business
  • American Fruit Grower
  • American Vegetable Grower
in conclusion
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.