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Prepared by Gerald B. White Professor Department of Agricultural, Resource, and Managerial Economics Cornell University Ithaca, NY 14853. DEVELOPING A STRATEGIC MARKETING PLAN For Horticultural Firms. Characteristics of Strategic Planning.
Gerald B. White
Department of Agricultural, Resource, and Managerial Economics
Ithaca, NY 14853
Strategic planning is more of an art than a science; it is more intuitive, systematic and analytical, not quantitative.
firms are often at risk!
Strategic planning attempts to identify and isolate present actions and forecast how results can be expected to influence the future.
Reasons a firm can gain a competitive advantage from the strategic planning process include:
give your customers a reason to buy your products
The following questions can help to position your products/services!
Target market: a group of customers (people or firms) at whom the company aims its marketing effort.
Target markets help to give focus to all aspects of the market plan, especially promotion and pricing.
A target market is not simply whoever is now buying, or will buy your horticultural products!
Exploit quality differences (size, color, taste, varieties,etc.) which command higher prices.
Integrate vertically--move forward into the marketing chain toward retail to capture more of the value-added revenue.
Integrate horizontally -- become larger by marketing products from other production areas to spread fixed marketing costs over more units and to become a year-round supplier.
Identify new markets, either for other commodities or enterprises, or new buyers.
Add services (delivery, unloading, etc.)
Reduce risk (crop insurance, hedging, forward contracting -- except for crop insurance, not often available for horticultural commodities;
Unique value- If they believe the product offers values that cannot be found in other products, they are willing to pay more
Difficult comparisons - If they have difficulty comparing prices, prices will be less important, within reasonable limits
Penetration pricing- When a firm wants to increase their presence in a given market, they often do so by setting a low price with the specific intention of gaining market share. This strategy can also be employed at a later stage in the product’s life cycle.
Fresh market growers typically have the following alternative outlets:
Direct to consumers-The potential volume which can be marketed direct is greatest near large population centers---an advantage often enjoyed by Northeast growers!
Grower has own processing facilities-usually in combination with direct marketing (apple cider, home-made jam, specialty food products)
To respond to negative news, or to take advantage of positive news (new health research results).
Marketers can choose from a wide range of communications media to convey their messages to target audiences. In choosing among communication media, a number of considerations are significant -
2) the medium is appropriate for the message conveyed; and
3) cost differences among media are important when establishing an effective communication mix.
Some horticultural businesses are primarily service providers or have a substantial service component to them. To market their services, firms may consider three additional P’s;
Processes- Some businesses need to develop orderly, efficient processes to take care of customers- e. g. U-pick operations need to design a systematic way to handle customers- parking, containers, assigning rows or areas to pick, and handling the cash register.
People- In most horticultural businesses, personnel expenses represent the largest category of cash expenses, so effective Human Resource management is extremely important for attaining profitability.
But with businesses which have an important service component, people or employees, assume an even greater importance because they are the customer’s contact point with the business. Services typically cannot be separated from the creator-seller of the service.
Presentation- This could be considered as the “packaging” of a service business. Customers often form opinions of a company and its service on the basis of the service encounters.