Developing an agricultural marketing plan
Learn how to develop a marketing plan. This technical information is for agricultural business managers.
ISSN 1198-712X, Published May 2016
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In today's consumer based marketplace, developing an effective marketing plan for your business involves understanding what the marketplace wants. It's not a question of what should I grow or produce to make money, it's what is the marketplace looking for that will result in profit for my business.
The psychology behind marketing is that human beings acquire and consume products and services. Therefore, marketing is about persuading minds as to what products and services to acquire and consume. Consumers have become cautious in their purchasing practices and try to avoid the following risks: monetary, financial, social and psychological.
A marketing plan is a vital component of your overall business plan and is often considered the most crucial, but often the most difficult to develop. A comprehensive marketing plan examines global and consumer trends; reviews the marketing mix of product, price, place and promotion; and provides details of how you will market your product or service over a certain period of time.
For those new to marketing, it is often described in terms of the 4Ps. The 4Ps affect every marketing decision you make from production to the end user and include:
Product: What is your product or service?
Price: What you will charge for it?
Place: Where will your product or service be offered in the marketplace?
Promotion: How will you let people know about your product or service?
Steps to a Successful Marketing Plan
Know Yourself, Your Customer and the Marketplace
Unless you are a large corporation who can afford to market to the masses, it is best to focus on a specific segment or niche market. How do you find your niche market? This is achieved by conducting market research which gives you knowledge to help leverage sales. Market research involves seeking out information and asking the following questions about your customer:
- Who will buy, or is buying and using my products or services?
- Do these customers share common characteristics (age, income level, background, etc.)?
- What benefits am I selling to the customer?
- What is the customer prepared to pay?
- What does the customer like?
- Where does the customer come from?
- How much does the customer need and how can I build market share?
Market research also involves seeking out information and asking the following questions about your competitors:
- Who is my competition?
- How does your competition attract customers?
- Why do people buy from them?
- How does your competition advertise and promote?
- What is similar and different when you compare competitors' products/services with yours?
Market research does not have to involve hiring a research firm as helpful information is often at your fingertips. You need to examine what information has already been collected - also referred to as secondary research data. Internally, the business owner can review sales reports and invoices, cash register receipts and other internal records in order to observe sales patterns, inventory flow and customer traffic to gain an understanding of what is selling, when it is selling and to whom.
External sources of secondary research may include government publications, statistical census reports and countless books and articles on demographic and market trends. Subscribe to industry blogs or newsletters to stay up-to-date on market trends and changes expected in the future. Business service agencies such as your local Chamber of Commerce, Business Enterprise Centre or Small Business Self Help Office also offer helpful information at the local level. This may include information on local household income, demographics, travel patterns and more. The Internet may also provide a huge inventory of information relating to your specific market segment or product. Secondary research is often the easiest and least expensive way to obtain market information.
A more detailed approach to market research involves primary research methods.
Primary marketing research is important when considering an innovative enterprise or a new and/or local market for which little published data exists. You may want to approach a local college or business school and present the information gathering as a golden learning opportunity. Primary research may include test marketing, surveys and observation. Primary research doesn't have to be complex or expensive. Data can be collected online through free survey tools or through social media. For a new food product, a farmers' market, food festival or community event can be a great way to share samples and solicit primary feedback from prospective customers.
The Marketing Strategy
Once you feel comfortable with the research results you have gathered, and have identified your target market, you need to develop your marketing strategy or strategies.
A strategy captures where your business is headed in a statement that will help guide you on your way. For example, a marketing strategy may include the following statement: Grow sales of my XYZ product to young families living in the city of XYZ and surrounding area.
Objectives to meet this strategic statement may include: Provide a quality product for young families and increase sales by 10% per year over the next 5 years to reach $250,000 in gross profit by 2015.
Your implementation strategy will be the most detailed and perhaps the most important part of your marketing plan. This is where you set out, step by step, exactly what you will do to meet the needs of your target customers and attract them to your product.
Through market research you can learn where and how customers want to buy your product or service. This will help you to develop your strategy for place (one of the 4Ps): Where will your product or service be offered in the marketplace?
How am I going to market and promote my product?
As stated earlier, the amount of time and money you dedicate to marketing will include advertising and promotional costs. Advertising is expensive; however, the avenue you choose to get your message out is critical to success.
Advertising Methods to Consider
Website and Social Media
In today's "connected" world, having a website for your business is critical! Make sure that it is kept up-to-date and has the capability for customers to converse with you. Social media channels such as Facebook, Twitter and blogs provide an important opportunity for two-way communication with customers. Although social media sites are free, it is important to allocate staff time to developing a strategy, building content and monitoring comments and activity. There are also paid advertising options through some social media channels.
Print may include brochures, business cards, newspapers, magazines, trade magazines, local tourism guides, etc. There are many opportunities for print advertising. If you are a new business test a few out, and be sure to include a 'call to action', which may include a coupon to see if the advertising is working.
This option is often more expensive but reaches a broader audience and includes television and radio.
If you place road signs, be sure to check with the local municipality/township and/or the Tourism-Oriented Directional Signing (TODS) program. Consider your vehicles as mobile signs promoting your business name and key contact information such as telephone number and website.
Direct promotion is a form of relationship marketing as you are focusing the message on known customers, not the broader public. It is often used to inform customers about upcoming events, specials, etc. If you are contacting customers through mail, phone, or most commonly email, be sure that you have permission to collect this information and are following relevant regulations. Direct promotion activities should have a call to action to know if your customers are looking at your materials. Example: If you email customers regarding a special event, include a coupon so if they participate you know they have read the material.
Coordinating and promoting a special event for your business allows you to target your advertising dollars even more. Becoming involved in a community event spreads the expenses and awareness. Examples: Farm tours, fall fairs, community BBQs, fundraisers for local charities.
Public relations is how you can reach customers and the media through a number of activities that require little or no direct spending on advertising. A public relations plan for your business may include activities such as speaking engagements at service clubs/schools/community events to share your expertise and, at the same time, promote your business. Example: The majority of the population is not familiar with farming or food production. Having the opportunity to share your story can be beneficial for your business.
Another popular public relations activity is working with media that are looking for unique story ideas and news tips. Example: Developing a press release or story about your farm and sending it to targeted media in your area may not be that effective. However, if you accompany your press release with a sample of your product (e.g., a pint of strawberries, along with a picture and a recipe to promote that pick-your-own strawberries are ready at your farm), the odds of a newspaper story may be improved. Some businesses have also had success engaging with media personalities on social media.
This is the most important marketing tool. Loyal customers or repeat customers represent 80% of your business. Loyalty equals growth and profitability. Complaints from loyal customers are your golden nuggets as they give you opportunity for improvement. Loyal customers help build your business and spend more money over time. A loyal relationship is built on knowing your customer. Never make assumptions regarding need and expectations. Therefore, building customer loyalty is a journey that involves reinventing and/or improving your product or service on a continual basis.
Word of Mouth
Once you have implemented your marketing strategy and you are experiencing a return on investment from your advertising efforts, happy customers will tell others about your product and service. Word of mouth remains the most popular form of advertising but it takes time to establish. Ensure exceptional customer service so the word being spread is positive and captures new customers.
Deciding what financial and management resources are needed to implement your marketing plan is crucial. Spending too little or too much of your money and time can be a very frustrating experience. The benchmark for most new businesses is to dedicate 10%-25% of total operating costs on marketing. The majority of this amount will go towards paid advertising of some form and the rest to promotional activities. Besides monetary resources, your farm property, buildings and other capital assets can be marketing tools. Example: Curb appeal or roadside appeal is an important marketing tool for farms open to the public such as pick-your-own, agri-tourism and direct farm marketing operations.
Developing a Marketing Budget
Table 1 shows a sample marketing budget over a 3 year period. As outlined earlier, most businesses dedicate 10%-25% of total operating budget to marketing. Therefore, the sample budget is based on 20% of an operating budget of $100,000 in years 1 and 3. Year 2 is based on 15% of the operating budget to show a variance from year to year.
Table 1. Sample Marketing Budget
Budget Allocation Yr 1
Budget Allocation Yr 2
Budget Allocation Yr 3
Total By Marketing Activity
Website and other social media:
|N/A in first year of operation||$2,500||$2,500||$5,000|
2 events at $3,500 each
Special Marketing Project:
Of the 4Ps of marketing, establishing a price for your product or service is important to ensure you are making a profit. Step 1 is to understand the costs involved in developing your product. This includes supplies, equipment, labour, packaging, shipping etc. Then you have to decide what price you need to charge to cover your costs and make a profit. This is known as your profit margin. Depending on the attributes of your product or service, you can sell at a premium and demand a higher profit margin. As a new business owner, be sure not to underprice your product or service as it will prove difficult to demand a higher price going forward.
Evaluate, Evaluate, Evaluate
Once you have put your marketing strategies in place you will be able to see if sales targets are meeting or exceeding your expectations. Experience and good records will tell you what advertising and public relations activities are not working and should not be pursued in the future. Examples of simple ways to evaluate your marketing plan: Look at sales records, customer surveys, redemption of coupons and other special promotions to determine what is working and not working and continually make improvements.
Your competition, customer and marketplace will continually evolve and if you can keep on top of such changes, you will be able to adjust your marketing plan to keep your business thriving.
Listed below are some of the many web links, publications and organizations offering business and marketing information to rural entrepreneurs.
Small Business Enterprise Centres: ontario.ca/page/small-business-enterprise-centre-and-community-based-provider-locations
Alberta Agriculture and Forestry: Identify Your Market: Right Buyer, Right Price (Step Three) - Agriculture Business Alternatives