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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.

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Presentation Transcript
slide1
Prepared by

Gerald B. White

Professor

Department of Agricultural, Resource, and Managerial Economics

Cornell University

Ithaca, NY 14853

DEVELOPING A STRATEGICMARKETING PLANFor Horticultural Firms

characteristics of strategic planning
Characteristics of Strategic Planning

Strategic planning is more of an art than a science; it is more intuitive, systematic and analytical, not quantitative.

some characteristics of strategic planning are
Some characteristics of strategic planning are:
  • Looks at the “Big Picture”
  • Leads to substantial changes
  • Considers future environmental forces in the Industry
  • Anticipates the reactions of competitors
  • Looks at a longer time horizon
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WHY STRATEGIC MARKET PLANNING IS NOW A

“HOT TOPIC”

  • Globalization
  • Growing concentration in the retail sector
  • Changes in wholesaling
slide5

Survival of horticultural

firms are often at risk!

  • Depressed commodity prices
  • Workforce availability
  • Availability of pesticides (FQPA)
  • Changes in consumer attitudes
the purpose of strategic planning
The Purpose of Strategic Planning

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:

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Establishing goals, objectives, priorities and strategies to be completed within specified time period; hence, a clear direction for management and employees to follow
  • Defining in measurable terms what is most important for the firm
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Establishing a basis for evaluating the performance of management and key employees
  • Providing a management framework which can be used to facilitate timely response to changed conditions, unplanned events, and deviations from plans
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Anticipating problems and taking steps to eliminate them
  • Allocating resources more efficiently to meet changes including labor, machinery and equipment, buildings, and capital
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Description of products/services

  • The products and services offered by most horticultural businesses are generic
  • It is a challenge to differentiate horticultural products, but it is the only way to enhance product prices
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One of the most important aspects of marketing is to

give your customers a reason to buy your products

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The following questions can help to position your products/services!

  • What are your products and services?
  • What are their benefits?
  • How do they differ from competitors’ products and services?
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Target Markets

Target market: a group of customers (people or firms) at whom the company aims its marketing effort.

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Target markets help to give focus to all aspects of the market plan, especially promotion and pricing.

  • Your choice of target markets will determine your production and marketing practices, not vice versa.
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A target market is not simply whoever is now buying, or will buy your horticultural products!

  • The target market consists of the individuals or businesses that you identify as the most desirable customers.
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The group identified is not necessarily your current customers.

  • Determining a target market can help identify a competitive advantage for the firm in the market.
competitive strategies21
Competitive Strategies
  • For firms which are “price-takers”

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.

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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;

diversification)

competitive strategies23
Competitive Strategies
  • For firms which have some degree of control over pricing, consider Porter’s four generic competitive marketing strategies:
source of competitive advantage

Competitive Scope

LOWER COST

DIFFERENTIATION

BROAD

TARGET

1. Cost

leadership

2. Differentiation

NARROW

TARGET

3. Cost focus

4. Differentiation

focus

SOURCE OF COMPETITIVE ADVANTAGE

Porter’s four generic business strategies

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Cost leadership strategy - requires serious commitment to reducing expenses that, in turn, lowers the price in a relatively broad array of market segments
  • Differentiation strategy- requires uniqueness or significant points of differences in product offerings
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Cost-focus strategy - involves controlling expenses and, in turn, lowering prices in a narrow range of market segments
  • Differentiation focus strategy- utilizes significant points of difference to one or a few market segments
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A fifth generic strategy sometimesappears in some treatments of Porter’s generic strategies: Best-cost provider- giving customers more value for the money by combining an emphasis on low cost with an emphasis on upscale differentiation
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PRICE

STRATEGY

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Some aspects of pricing strategy

  • Qualitative - What firms can use to guide pricing is a qualitative technique, judging price sensitivity from customers reaction to price increases or “high prices” in the following ways:
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Unique value- If they believe the product offers values that cannot be found in other products, they are willing to pay more

  • Substitute awareness- If they are aware of close substitutes, they will be sensitive to price changes
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Difficult comparisons - If they have difficulty comparing prices, prices will be less important, within reasonable limits

  • Total expenditure relative to income - Most people won’t agonize over a 10 percent increase in the price of a bag of apples, but the same people might over a 10 percent increase in the price of a car.
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Some aspects of pricing strategy

  • Some other pricing techniques
  • Relative to its competitors. Increasingly used to describe the practice of adopting a lower price while maintaining the product’s basic value.
  • Skim pricing- When introducinga new, innovative product, charge a highprice,implying that you are“skimmingthe cream”.
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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.

slide34

Psychological pricing

  • Prestige pricing- Use price to help you position a product as high quality or exclusive.
  • Odd-even pricing- Prices are set at uneven (or odd) amounts.
slide35
PLACE

OR

DISTRIBUTION

STRATEGY

slide36

Place or Distribution Strategy: Marketing Channels

Fresh market growers typically have the following alternative outlets:

slide37

Consignment through a packer-shipper

  • Orchard or field run sales
  • Growers own packing-shipping facilities (product sold by the grower, sales agents or brokers)
slide38

Organized wholesale markets or terminal markets

  • Individual wholesale marketers (wholesale distributors, sales agents, brokers)
  • Marketing cooperatives
slide39

Another important outlet

is marketing-

Direct to consumers-The potential volume which can be marketed direct is greatest near large population centers---an advantage often enjoyed by Northeast growers!

slide40

U-pick, Pick-Your-Own

  • Roadside stand, farm market, and retail store.
  • Local farmer’s market (Ithaca Farmer’s Market)
slide41

Urban farmer’s market (Greenmarket in NYC)

  • Mail order, E-commerce
  • Direct to business users (produce to restaurants, ornamental plants to business offices)
slide42

Processing produce growers typically have the following outlets:

  • Sell to proprietary or investor- owned processors
  • Processing cooperatives
slide43

Grower has own processing facilities-usually in combination with direct marketing (apple cider, home-made jam, specialty food products)

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PROMOTION

STRATEGY

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Ask yourself what is the role of promotion in your marketing strategy?

  • To provide information about products
  • To stimulate demand
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To differentiate products and/or to build a brand image

  • To remind current customers about product benefits
  • To counter competitors
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To respond to negative news, or to take advantage of positive news (new health research results).

  • To smooth out seasonal demand fluctuations.
slide48

Promotion strategy

  • Advertising

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 -

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1) the medium will actually reach the target audience;

2) the medium is appropriate for the message conveyed; and

3) cost differences among media are important when establishing an effective communication mix.

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Public relations

  • Public relations is a broad, overall communications effort to influence public’s attitudes toward the firm or its products. Publicity is a promotion technique that uses non-paid communications presented by the media.
slide51

Sales promotion activities

  • Salespromotion activities include coupons, premiums, in-store displays, trade shows, samples, in-store demonstrations, and contests. A major function of sales promotion is to supplement and coordinate efforts in the advertising and personal selling efforts.
slide52

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;

slide53

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.

slide54

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.

slide55

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.

slide56

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.