March/April 1992
May/June 1992

Developing
Your Marketing Plan

State-of-the-art marketing today means being sensitive and responsive to customer needs and providing the products and services customers want; not just presenting what we have, and hoping they will buy. The traditional viewpoint in agriculture has been "I am a wheat farmer. How can I get people to eat more of my wheat?" This tendency to focus on our product as the reason we exist is fatal in today's marketplace. We must recognize that we are in business to serve our customers' needs, and let the customers dictate the type and form of our products.

The kind of marketing that will make your small-scale farming operation profitable is niche marketing, finding a unique aspect or type of buyer in the market, and focusing your efforts on reaching that niche. Simply stated, this means you will want to differentiate your product, or set it apart from those of your competitors and target it to a select group of customers with unique needs.

Market Research

The first thing you will need is information, professionals call it marketing research. You need to know who your customers are, where they live, what they buy, how they buy, when they buy, and who influences their purchases. Additionally, a marketing oriented producer wants to know about customer needs that are not being satisfied.

Look around you and see who is successful and seems to be doing things right. A potato farmer in the Bakersfield area designed his own unique box to differentiate his product in the southern California market. The buyers began to perceive his potatoes as having better quality, and he started to get better prices than his competitors.

This very simple form of product differentiation worked so well that when, at one time, he ran out of his own boxes and had to use a neighbor's boxes, he received a reduced price, even though the potatoes in the boxes were the same as he had always delivered to this customer. This brings up an extremely important point about our customers. Remember -- in marketing, perception is everything! We, in California agriculture, are marketing perceptions, not just food.

Most importantly, today's small farmer needs to be routinely reading selected publications and newspapers. Agricultural producers need to be reading national and international publications in order to be more aware of what's going on in their marketplace and with their customers.

Another form of practical market research that any individual can do inexpensively is simply to ask your buyers and your customers what they want. This can be done in the form of a personal interview, a telephone call, or a simple questionnaire. If you own a roadside stand, ask those people who purchase from you or shop at your stand, why they stopped, what are they looking for, and what else can you do to

"Remember -- in marketing, perception is everything! We, in California
agriculture, are marketing perceptions, not just food."

Satisfy them and meet their needs. If you are thinking of targeting restaurants, go to some and ask them what they would like to have supplied, and in what form would they want it. For the sake of your own survival, take some time to get off the tractor and go talk to your customers. That alone will make you aware of opportunities that you never before considered.

Freedom, creativity and innovation have characterized the small farmer for decades. It is those qualities that have built the remarkably efficient agricultural industry of the United States, and it is those same qualities that are essential to being a dynamic marketer. Therefore, as we in small farming draw on these qualities and make a radical shift from a production mentality to a marketing mentality, we will find that we will be strong and profitable producers that meet our personal and business objectives. It all starts with marketing, and marketing starts with asking those customers, "What do you need?"

Planning

Knowing your customers' needs and having a written program to consistently satisfy those needs, is vital.

Unfortunately for much of small farming, we've been traditionally poor planners. Developing a marketing plan can be a simple project that can yield tremendous, long-term benefits. Having a usable marketing plan allows one to react to changes more effectively when they occur, but most importantly, the purpose of planning for an agricultural marketer is to maximize limited resources.

Frequently we make excuses why we can't plan. We often cry out that things change too rapidly to make a plan useful or, "I'm too busy to plan!" Occasionally we become victims of the old syndrome where, "We're so busy chopping wood, we don't have time to sharpen the axe." Actually, these reactions indicate a dire need for planning! If you have unlimited money, time, and customers, then you don't need to spend the energy to do much planning. But all of us in small farming know that our capital and time are limited, and we're just becoming aware that we have to share our customers with an increasing number of competitors. Take heed, in today's marketplace, if you are not presently doing a marketing plan for your organization, then you are playing with a time bomb that will surely go off within the next decade!

Producers used to make a product and sell to any and all who could buy it, today "market-oriented" farmers incorporate in their plans a precise definition of who their target market is, and focus their time and resources on that target exclusively. Marketers call this "targeting a market segment" or, more commonly, "picking a niche."

Finding your niche in the market means finding customers who have needs that you can satisfy better than anyone else. It means differentiating your product to a specific segment of customers, and building a relationship with those customers where they perceive you to be specially qualified or equipped to satisfy their unique demands. If there has been one significant development that has characterized the "cutting edge" of marketing today, "niche" marketing is it.

How does one identify a niche to target? The basic tool for finding unique niches in the marketplace that are presently not being filled, is by doing the simplest, but most effective kind of marketing research. Ask questions and be observant. Divide up all the customers in your market into various categories or segments. For instance, customers can be defined by geographic areas, or by such things as lifestyle, age, or taste preferences. The object of this process is to precisely identify the unique needs of the customers in your market, and select those whose special needs you can meet, and who are large enough in numbers for you to be profitable. This gives you the edge over your competitors, and conserves your resources.

SOS (BAM)

A simple structure for developing a marketing plan is what we refer to as the SOS (BAM) model. This is a structure that can be followed, and when utilized properly, will give you an operational tool that is as handy as a pair of pliers or a screwdriver. The first 'S' in this planning model stands for Situation Analysis.

Situation Analysis

The Situation Analysis is the most important part of your marketing planning and requires careful thought. In this section of the plan, you look at your operation, the marketplace and customers, competition, and market potential. In other words, you analyze where you are right now -- your situation. It is here where you ask your customers what their needs are, talk to your buyers, talk to your neighbors, observe operations that are successful, bring into account articles and journals you've read that tell about trends in your area of business, and most importantly, analyze your market for potential niches.

Ask your employees what they think your operation's strengths and weaknesses are, get their input into where they think the opportunities in the market area are. You might be surprised at what they say.

Don't feel that you need to accomplish this analysis in one sitting. It may take a few periods of writing separated by intervals of thinking and information gathering. But, be advised an almost magical process begins to take place when you do a Situation Analysis. New ideas start to emerge. You'll start to discover a creativity in yourself and employees you may never have known were there.

Objectives

The next part of the plan is the Objectives section. This section is very simple. You put down on paper some specific, measurable objectives you'd like to achieve with your operation. An important thing to bear in mind about setting marketing objectives is that they must be measurable. Don't say, "I want to sell more watermelons," state, "I want to sell 10% more watermelons by August 31st." Good objectives are measurable and have a completion date. Another point to remember about objectives - make them attainable. Set objectives that make you stretch, but not objectives that are impossible to achieve and would only frustrate you and those with whom you work.

Strategies

The second 'S' in this model stands for strategies. It is in this part of your plan that you put down the ideas you have for increasing your business through marketing. This strategy section includes the marketing areas of product development, which involves packaging, branding, warranty and service. The product part of your strategies deals with designing and tailoring your product for the unique needs of your selected target market. It includes place or distribution decisions, which would involve whether or not you continue with your present buyers or maybe go direct to the consumer. Thirdly, it includes pricing decisions. Pricing decisions can involve raising your price, or asking for a premium price when others around you feel that they have to "take the price" they are given. And lastly, the strategy section contains the more traditional areas of marketing that we normally think of, Promotion. This involves activities such as personal selling, advertising, public relations and publicity; communicating to your customers that you can satisfy their needs.

The BAM in the model stands for Budget, Action Plan, and Measurement. Obviously, there has to be an economic justification for implementing the ideas that you are going to plan, that's where the budget comes in. An Action Plan simply states when are we going to start these various activities; and the Measurement is a means of evaluating your progress and monitoring if you are on your way to achieving these objectives.

A marketing plan is a road map and you cannot steer an organization of any size in the competitive market today without such a map. It is not an overwhelming task to do, and it yields some interesting results. Developing a marketing plan is a catalyst to new and innovative ideas. If you make the effort to begin the process, you'll find yourself thinking in directions that you never before considered.

Product Strategy

The single most important strategy for a successful small farm marketing program today is to produce the highest quality product that one is able to produce. Remember that a clever ad, shiny package, a sophisticated brand name or a persistent salesperson, will never compensate for a flawed product or product that doesn't satisfy the needs that it is alleged to satisfy. The oldest and least expensive form of promotion is "word of mouth", and that form of customer goodwill and support cannot be bought with flashy advertising.

With consumers becoming more quality conscious, and with the increase in the number of competitors, a logical product strategy for an agricultural marketer today is to shift from quantity production to quality production.

Having said that, it is important to remember that working twelve hours a day in the field to produce the highest quality product you can is not enough. Beyond the physical features of your products that you can see, and which you work so hard at perfecting, lies the realm of features that are less visible, yet are eagerly desired by your customers and often neglected by producers

Our customers view products (either consciously or subconsciously) as including such attributes as service, packaging, guarantees and even image and the brand name. Your customers are not simply purchasing material items with characteristics resulting from your combining soil and water, or genetics and feed. They are really purchasing a bundle of benefits and attributes, which are sometimes simply symbolic, and often a result of their perceptions.

The whole goal in a sound product development strategy is to take the resources you have and enhance, alter, reshape, or package them in such a way so as to better satisfy the needs of your target market, and to differentiate or separate what you are offering from all the other products in the marketplace. Marketers call this adding value, and the more value one can add to their product, the more profit margin one tends to have.

Opportunities for changing your product abound within the areas of service and warranty. Developing these two areas can go a long way in setting your product apart, and in targeting a unique marketing niche. An example of this is a certain Red Angus purebred breeder in Montana. For years, he has used a unique product strategy to market his purebred heifers. He used to guarantee these heifers to be free from calving problems when bought, and when placed in a buyer's commercial herd. If a rancher purchases one of these heifers and has such a problem with her, his money is refunded or he gets a new heifer. What are his customers purchasing besides a heifer? They are purchasing the security of knowing that they have minimized their financial risks due to calving problems. In many ways this rancher is like an insurance company selling "peace of mind."

Other ways to add value to your product might include such things as a special service phone number or hotline for customers to use when calling about problems or questions. Adding information and education to your product is always of high value to your customers One might consider seminars or workshops for customers that relate to the use of your product. Cooking it, processing it, delivering it, cutting it, vaccinating it, unloading it, or boxing it, are a few of the many options that may apply to your business and all add value to your product.

A simple way to differentiate your business and product is by using a brand name to create brand identity. The tendency for many of us is to pick a name we think is clever or has our family name as part of it. Generally speaking, that's a waste of a good marketing opportunity. Butterball turkeys, for instance, is a very marketing oriented name which may not say much about the farmer who grows the bird, but it certainly tends to get customers licking their lips, and that's what is important. When selecting a brand name, pick one that means something to the customer and creates in their minds an image of the benefits that they are seeking. Keep it simple to say, and one that you can legally protect.

Pricing

No doubt most of us obediently learned, in a basic agriculture class in high school or college, that "farmers are price takers, not price makers." And, although that has been true for the most part, it has tended to create an attitude amongst agricultural producers that there is nothing that can be done about their inability to control their fate.

If you are an agricultural producer, and you want to receive a higher price for your product, then you have only two alternatives: l) get the government to guarantee a higher price through price supports or subsidies; or 2) add value to, or enhance your product so that you can differentiate it against your competitors in the marketplace. The point here is that the product strategy discussed earlier, is the key element in your pricing strategy. In a mature market, which is what agriculture is, you need to be delivering your customers more value than your competitors, in order to ask a higher price, even if that higher value is merely a perception that your customers have.

Place/Promotion

If there was ever a time to be an Agrimarketer, the opportunities afforded to farmers and agribusinessman alike, make today the most exciting and creative time ever. The two strategic marketing areas that offer the most creativity to agrimarkets and ones which give them the most control of their destiny are the areas of distribution and marketing communications, or as the professional term them, Place and Promotion.

For decades, farmers were limited in their access to the final consumer because the farmers were in the country, and the consumers were in the city. Producers relied on the railroads, and vast networks of middlemen, such as brokers, wholesalers, grocery store owners, and small vendors to move their products. Feedback from the final user was slow and filtered through various people. Additionally, the user was usually sympathetic to the production problems of farmers, as earlier in this century most people had a close family connection to the farm.

But, as we all know, that situation has changed. Ninety-eight percent of the U.S. population is not on the farm and the lack of sympathy for how food is produced has created a relationship problem between the farmer and those for whom he or she spends long days producing food. One thing hasn't changed, the farmer is still busy working long days. But, simply being busy is no longer a valid excuse for not getting involved in the marketing process, and getting closer to the final customer. Technology has opened up many new methods of marketing for the producer. Communications and transportation advances have allowed the producer to become more aggressive in the marketplace.

Regardless of where one lives on this planet, a phone call to Tokyo, New York, Atlanta, or Hong Kong is instantaneous and costs only a few dollars. For the relatively small investment in a FAX machine, one can communicate globally for just pennies. Out of financial necessity, the battle cry of the innovative producer today is, GET CLOSE TO YOUR FINAL CONSUMER!

Going "direct", and bypassing traditional distribution channels has an attractive appeal. Nevertheless, it is important to remember that the sword which decapitates your "greedy" middleman is two-edged. An ill-planned strategy to go direct could overlook some vital functions which your middleman now performs, and which you may not be able to afford to duplicate. Developing the necessary contacts, and maintaining the retailer and jobber relationships in markets a long way from your operation, takes time and involves a significant expense. Having said that, we recommend that all producers open their thinking to the concept of getting closer to their final consumer.

If you are a small farmer, this can be approached through roadside stands, farmer's markets or developing relationships with local markets and restaurants.

Promotion

The last major category of marketing strategy is that of promotion, or marketing communications. It's that activity that an agrimarketer does to communicate to the marketplace or customers that he or she has the features and benefits to satisfy the needs of potential customers. The activities available to one in this area include advertising, personal selling, public relations and publicity, along with special promotional incentives.

When making decisions on how and if to advertise, it is important to ask yourself a simple question. What specific media does my target market read, watch, or listen to? Many folks have thrown away a good deal of money on advertising thinking that the mere act of placing ads in a magazine or on the radio will increase their business. Most reliable publications make available to potential advertisers a profile of their subscribers or listeners. It's free for the asking, and is important in helping you decide if that your target market.

Precisely reaching the largest number of people in your target market for your dollar is very important, and the method of mass communications you select should be governed by this principle. Because of this, direct mail offers an effective way of communicating your message.

Advertising has its place, but don't be mesmerized into neglecting the oldest, and by far the most effective, form of marketing communications, the personal sales call. People make buying decisions, and nothing beats the power of a person-to-person relationship between buyer and seller. A particular vegetable grower in the Bakersfield area makes regular trips to his buyers in the Los Angeles area just to say hello. He knows that a smiling face associated with his farming operation goes a long way towards differentiating his produce from his competition in the mind of his buyers.

Whatever your operation, there's always a place for strengthening your personal relationship with your customers. One rancher sends birthday cards to a very extensive mailing list of buyers that he has developed over the years. Another grower makes a point of calling some of his buyers on the phone regularly. The power of personal relationships in marketing today, and more specifically selling, lies not in the words that are shared between salesperson and prospect, but more importantly the non-verbal communication. Customers can sense when you are sincerely desirous of satisfying their needs. The world has become so computerized that a personal, "How can I help you?" from a producer who is willing to meet with his customers, will be a breath of fresh air that can give his produce the attention he wants.

When observing those who are successful in agricultural marketing, one notices a common thread throughout. These successful people stick to the basic, simple principles of the marketing orientation. That is, they are more concerned with what their customers want, rather than what they grow or have to sell. They are listeners and question askers. They think in the long-term, and are willing to forego short-term profits for long-term growth. They are usually very curious about the world, and hungry to learn. And finally, we have found all of these folks who are successful agrimarketers to be identical in one major area, they like people and they enjoy serving people--and serving people is really what marketing is all about.

Daniel W. Block, D.W. Block, Associates, P.O. Box 2720, Ventura, CA 93002. (805) 650-6399. FAX (805) 650-6564.

A MARKETING PLANNING MODEL FOR AGRICULTURE

SOS (BAM)

Situation Analysis - "Where are you now?"

- Market potential

- Customer needs

- Differential advantages of your product

- Competition's strengths and weaknesses

- Your operation's strengths and weaknesses

- Determine market segments or niches

- Industry trends

- Pick a target market

Objectives - "Where are you going?"

- Must be measurable

- Must have a completion time or date

- Must be specific

- Must be attainable

Strategies - "How will you get there?"

- What product does your customer want and what form will it be in

- How will you distribute/sell it to your customer

- What price should you charge

- How will you promote it (advertising, personal selling, public

relations/publicity or special incentives)

Budget

- What will these strategies cost

- What will be the financial return

Action Plan

- When should you do the recommended strategies

Measurement

- Are you making progress toward your objectives

- Did you achieve your objectives?