Mastering Marketing - April 2016

A primary attribute often given for being self-employed is “I’m my own boss.” But, business guru Peter Drucker stated, “The purpose of a business is to have a satisfied customer”. So, whether you’re a farmer, producer, or other type of small business owner; who’s the boss in your business?  Is it you, your customers, or both?

►  If you’re a livestock producer, you may need the young stock to all be a uniform size and age. To achieve this, your breeding program will be seasonal and perhaps even the breed of livestock pre-determined. But, if you’re selling your meats, poultry, or eggs directly to consumers or institutions, you need year-round product inventory and that dictates producing a year-round, consistent supply and uniform cuts. So’s who’s the boss in these businesses?

►  If you grow produce or fruits, you may be marketing through wholesale channels that require larger volumes and specific varieties. If you’re selling through farmers’ markets or roadside stands, your customers are looking for small quantities, perhaps heirloom varieties, or the latest “super” veggie or fruit for a new health trend. So who’s the boss in these businesses?

►  If you operate a specialty food or beverage businesses or landscape and nursey operations, how much of the “traditional” stock should you produce or how many “new” blends, flavors, or plant varieties should you have in inventory? How much should you stretch your growing or production talents to meet the current “hot” items selling in your type of business? So who’s the boss in these businesses?

It would appear the “boss” of any business is both part owner and part customer. But, perhaps a better model to consider is to think of the producer as a driver of a truck loaded with his product and the buyer’s preferences and purchasing habits as the various roads the truck can drive down. It’s the producer’s choice of what, when, and how to produce his product. The choices of where to market his product is determined by why and where customers make their purchases.

Producers are completely “the boss” when it comes to producing quality products. When you can turn out good quality products in a consistent and sustainable quantity, then you can also be “the boss” when selecting the marketing paths best suited for your business.

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Mastering Marketing - May 2016

As the marketing and cropping season gets into full swing, there are always questions about product pricing, marketing costs, and decision on what to produce.  In the pricing module I use to teach the “Food for Profit” classes, we approach pricing by looking at both fixed and variable costs.  These are terms most business folks are very familiar with but don’t often set down and really pencil out for their operation. 

Most prices get set by calculating production costs and then adding a desired amount of profit per unit.  Seems like a pretty straight forward approach. But, it only gives you static data and not predictive data.  When in your sales cycle will you start making a profit? Or, of all your product offerings, which one has the most potential for growing you bottom line?  Determining the contributive margin of each type of products or profit centers will give you that kind of information.

In the “Food for Profit” classes I use the following example, provided in Penn State Extension’s curriculum, to give budding food entrepreneurs an example for calculating how much of a product they need to produce just to break even. 

First calculate all your costs, both fixed and variable.  Fixed costs are the things that don’t change whether you make one jar of salsa or 10,000 jars.  These costs include rent, basic utilities, insurance, salaries, and taxes.  Variable costs include such things as ingredients, packaging, labels, shipping, advertising, promotion, supplies, etc. Variable costs go up or down in relation to sales volume.

The sum of your fixed and variable costs is your cost of production. To find your cost of production per unit, divide the total costs by the number of units. Add the profit you want to the cost per unit of product.  This gives you your initial selling price.  This is only a starting place for pricing your product
(see examples below).

Knowing your break-even point is important and can provide the information you need to make the go, no-go decision to start a product or enterprise.  But knowing the contributive margin of a product also allows you to determine the scale of production you’ll need to reach to obtain your profit goalSELL

Paul Neiffer  (http://www.agweb.com/article/the-farm-cpa-contribution-margin-a-key-financial-metric-naa-paul-neiffer/) posted an excellent example of how farmers should determine the contributive margin to their cash flow when considering renting ground or adding production acres rather than simply calculating total costs per acre.

The bottom line here is to look at your total contribution margin and make financial management decisions, set prices, or look at possibly adding new enterprises based on this metric and not just per unit cost of production.

An excellent worksheet for penciling out your fixed and variable cost is available from Penn State Extension at http://extension.psu.edu/publications/uk178

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Mastering Marketing - June 2016

Who’s Your First and Best Customer?

Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Having a good grasp on your target market makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. It provides a focus to all of your marketing activities.

Targeting a specific market does not mean that you are excluding people who do not fit your criteria. Rather, target marketing allows you to focus your marketing dollars and brand message on a specific market that is more likely to buy from you than other markets.

Example of target market segments for locally grown foods or local services include:

• Health conscious food buyers
• Customers sharing similar purchasing values
• Community builders
• Seasonal products
• Retail, Wholesale, or a blend of both.

Test & Track

But simply identifying your target segments and hoping you’re reaching those customers may not be enough to guarantee your marketing success. Trying to guess at your marketing strategy and effectiveness is a guaranteed way to fail. People and market dynamics are just too complicated.

Everything you do in your business will be a test. When you try something that produces good results, you’ll keep it. When you do something that doesn’t produce, you need to stop doing it. Sounds simple, but a surprising number of businesses keep repeating a marketing strategy because it’s easier, or they don’t have another, or they’ve convinced themselves it’s a good approach with willful disinformation.

To grow your business effectively, it’s vital that you know what is working and what isn’t. There just isn’t enough time, energy, and money to waste on things that produce nothing for your company. Tracking is simply keeping track of what marketing efforts you are using, and exactly how many responses you are getting from each one. Ask customers how they heard about the business, collect coupons, code sales offers and mailing responses. Without this information, you’ll waste a great deal of time and money, and lose even more in missed sales.

Is Your Marketing on Target?

According to Mitch Levinson’s Guerilla Marketing concepts, you can be pretty sure you’re not marketing properly if any of these seven danger signals are present:

1. Your sales are driven mostly by price.
2. Customers cannot distinguish your products or services from those of your competitors.
3. You use disconnected sales gimmicks.
4. You do not have a unified plan for imparting your message  to your customers and to the trade.
5. Most sales leads come from your sales staff.
6. Longtime customers say, “I didn’t know you offered that.”
7. You do not have a customer or prospect database.

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Mastering Marketing - July 2016

Memorial Day and the July 4^th holiday are behind us and Labor Day will be here before we know it. This triumphant of summer holidays is just a prelude to the busy fall and holiday season ahead. These are your money-maker times and the pressure is on to push sales, manage additional workforce, deal with the whims of Mother Nature, and try to still find time for family and friends. You’re stressed and it’s easy to let everyone know it- family, customers, and your workers.

But now is the time to step back and consider this quote: “We can complain because rose bushes have thorns, or rejoice because thorn bushes have roses.” - Abraham Lincoln. You may have a good business, but it will always take hard work to keep that business viable and growing.

Your family is your support network. Keep communications open and share your problems and concerns, but don’t simply task them with more work. Workers want to be led by a boss that has a positive attitude during the day and gives them a sense of pride and accomplishment in their work. Hold them accountable for their work but, be generous with your praise when it’s earned. And, customers buy products from people they like, not from grumpy complainers. Sharing with customers some of the challenges of your operation such as equipment breakdowns and weather problems helps keep them engaged but, not when every story is negative.

As the season marches on, it’s also easy to become more lax about personal and business appearances. Make sure displays look fresh and clean, check the parking area for trash, clean the front door, and sweep the floor every day. People purchase food with their eyes and that includes the appearance of the point of purchase. Clean clothes, clean hands, and a pleasant greeting will go a long way in branding your product as safe and wholesome with your customers. “Never forget that you only have one opportunity to make a first impression - with investors, with customers, with PR, and with marketing.”  Natalie Massenet

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Some early varieties in many vineyards are just starting to bloom. This is a critical time for taking tissue/petiole samples to assess the nutritional status of your vines. The following are some timely considerations.

• Grape petiole analysis is recommended along with soil samples and visual observations as part of a complete nutrient management program.
• A three year cycle of sampling all of the varieties in a vineyard is typically recommended.
• Tissue/petiole analyses reveal the actual amount of nutrients in the vines.
• Tissue samples are needed when doing your mandatory Maryland Agricultural Nutrient Management Plan. (Please see link at the end of the publication for details)
• Spring tissue sampling is a good time to sample, as you can make nutrient adjustments to the vineyard that may influence this year’s crop quality.
• Nitrogen status is best evaluated with tissue sampling not through soil sampling.
• The time to take spring tissue samples is during full bloom of a particular variety.
• Bloom time samples may show more accurate levels of boron and zinc, but are less accurate indicators of potassium status. Where bloom-time analyses indicate borderline potassium nutrient levels, a second sampling is warranted in late summer (70-100 days post bloom).
• Some specifics on sampling:
• Each sample should be less than 5 acres; they should reflect major changes in soil or topography
• Sample different varieties and rootstocks separately.
• Samples should represent plants that are planted on the same soil type and are of the same age
• Vines should represent that portion of a block that is maintained under the same cultural practices, i.e. fertilizer, irrigation and vigor control practices.
• For example, irrigated blocks should not be combined with non-irrigated blocks.
• Do not sample vines on the border of the block or near dusty roads

For the bloom sampling period, sample the petiole of the leaf petiole OPPOSITEthe 1st blossom/cluster (see figure below and details on fact sheet linked below)

• About 50-75 petioles are needed from varieties with large petioles and about 75-100 petioles are needed from varieties with small petioles.
• Gently wash petioles with water and gentle detergent, pat dry and place in OPEN paper bag (lunch, #6 size) to dry for a few days.

 
Figure 1.

There are many labs that can analyze tissue samples (see detail on fact sheet and you will find a list of labs in link below). Call the laboratory to determine current pricing and submission information.

“Tissue Sampling for Vineyards” Information Sheet for more information:
https://extension.umd.edu/sites/default/files/_docs/programs/viticulture/TissueSamplingforVineyards060413.pdf

Comparison Soil Testing Labs:
http://extension.umd.edu/sites/default/files/_docs/programs/anmp/Soil%20Lab%20Comparison%208-5-2015.pdf

Agricultural Nutrient Management Program information:
http://www.extension.umd.edu/anmp

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Timely Viticulture is designed to give those in the Maryland grape industry a timely reminder on procedures or topics they should be considering in the vineyard. To view other topics you can go to the Timely Viticulture page that is located on the Grapes and Fruit website.

Mastering Marketing - September 2016

While the holiday season may seem a ways off, the line between when customers shop and when they take offense to holiday décor in stores is becoming a blurry one. The National Retail Federation reports that every year, about 40 percent of customers begin their holiday shopping before Halloween⁽¹⁾. 

For direct marketing farm retailers, that means determining your marketing strategies and channels before you’re done with pumpkins and corn mazes. If you wholesale a product to other retailers, you should start confirming your product inventory and customers’ orders now.

Here are several more tips for preparing for the 2016 holiday sales season:

1. Check out your industry’s buss words or what customers are talking about as likely hot sellers this year. Check out your industry’s website and publications for this kind of information. Pinterest is an excellent tool for seeing what types of “holiday” items consumers are pinning.
   
   
2. Perfect your local presence. Make sure your online listings are current and the contact information, driving directions, and store hours are correct.
   
   
3. Review last year’s marketing plan. What worked? What didn’t? Did certain activities draw more of your target customers?  What was a waste of time and resources?
   
   
4. Consider offering gift cards. The National Retail Federation’s Retail Holiday Planning Book notes that in 2015, two-thirds (63%) of shoppers purchased gift cards. 66% of Millennials believe gift cards limit identity fraud and are a safer way to make online purchases ⁽²⁾.
   
   
5. Develop a written marketing plan for your holiday sales season.

If you are overwhelmed by the task of turning your holiday season marketing plan from a “paper tiger” into a “well-oiled sales engine,” start by developing your own marketing calendar. Preparing to effectively implement your marketing plan helps you be more focused on how and where to spend your marketing dollars.

Here’s a checklist that will help you develop your own holiday season marketing calendar.

• Analyze your inventory.  Take a good look at all the products and services you provide. Are there any offerings that would be more useful with certain holidays such as Thanksgiving, celebrations of faith, or New Year’s events?  Organize all your products into specific groups according to their usefulness or tie-ins with specific dates. For example, if your sell items that could be used as Christmas gifts, put them in a special category. If you have other items that are in demand in the rest of winter, put those in a
  separate category.
  
  
• Buy a large desk calendar with lots of room for writing.  Take a colored pen and highlight all the upcoming holidays and any other special events or seasons you want to plan for in the upcoming months. Decide on target dates when you’d like to get an offer out to your current customer list or start a new marketing effort or promotion. Instead of promoting your items a week ahead of a certain holiday or event, you can begin a starter campaign two months before an event and escalate your efforts as the specific day draws near. Put this calendar on the wall of your office so that it is easily visible and can serve as a reminder.
  
  
• Plan your implementation.  Decide how you want to promote your items and build your campaign around your decision. If you find you have too many responsibilities to keep on top of your holiday marketing campaign, then assign the duty to someone else in the operation and check in with them regularly. There are 30 shopping days between Thanksgiving and Christmas this year and you shouldn’t miss sales opportunities on any of them.
  
  
• Record your results.  Keep a written record of sales, successful events, and comment for improvement for next’s year’s review.
  
  

⁽¹⁾  National Retail Federation. https://nrf.com/resources/holiday-headquarters/consumer-spending-research.
⁽²⁾ 2016 Retail Holiday Planning Book. https://nrf.com/resources/retail-library/2016-retail-holiday-planning-pl....

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Mastering Marketing - November 2016

Color is present everywhere and in many places simultaneously. People make up their minds about people or products within 90 seconds of their initial interactions with them. About 62‐90 percent of the assessment is based on colors alone. So, prudent use of colors can contribute not only to differentiating products from competitors, but also to influencing moods and feelings – positively or negatively – and therefore, to attitude towards certain products. Given that our moods and feelings are unstable and that colors play roles in forming attitude, it is important we understand the importance of colors in marketing.

Satyendra Singh, "Impact of color on marketing", Management
Decision, Vol. 44 Issue: 6, pp. 783 - 789

The Use of Color in Packaging

University of Maryland Extension offers a Food for Profit workshop for budding food entrepreneurs. During this workshop we emphasize that before choosing your package color scheme you need to determine what type of message the package/product should give. Based on the message, a color scheme that represents this message is chosen. This is why basic research is necessary, whether it’s using case studies or having a focus group. Not only should the color “make sense” related to the product message, but it should also “create an attention” to the product – so that it is easily noticeable to the consumer. In order to be one step ahead of the competition and consumers, a color scheme should be researched, in relation to the demographic of the target market. By determining the consumer demographics early in your process, you will be able to select appropriate colors for your package and gain an advantage over the competition.

Colors assist in:

• Creating readable /recognizable text.
• Attracting customer attention among the “clutter” and reinforcing a “brand.”
• Conveying a special meaning to a customer.
• Tapping into a memory or associated feeling with certain colors.

Consider how these “brand name” companies utilized color in their logos. What emotions or messages are they trying to connect with customers

Colors Use in Displays and Promotional Graphics

Remember that customers buy “with their eyes”. So, use colors and graphics that tap into established customer perceptions related to holidays and special events. The social media tool Pinterest is another good resource for color “ideas". Search the pin boards on that site with holiday titles for display and color combination ideas. Below is a list of holiday color sand associated graphics that Penn State Extension Agent John Berry shares in his retail marketing school. Ideas abound in this list.

Holiday Prop/Decoration Ideas

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Mastering Marketing - January 2017

Just before Christmas, the USDA released the results of its first Local Food Marketing Practices Survey. The survey asked about the marketing of food directly from farm producers directly to consumers, retailers, institutions, and a variety of local food intermediaries such as distributors and wholesalers that market and sell locally branded products. Information was asked on local food marketing practices during 2015, including items such as:

1. Value of food sales by marketing practice (i.e. farmers markets, CSAs, restaurants, roadside stands, food hubs, and more)
2. Commodity and value-added sales by marketing channel
3. Federal farm program participation

Indicative of the “buy local” trend, survey results concluded that more than 167,000 U.S. farms locally produced and sold food, including fresh and value-added products, through direct marketing practices. This resulted in $8.7 billion in revenue in 2015 (see table 1 for the top 5 states).

Neighboring Pennsylvania led the U.S. in the number of farms selling directly to consumers, with more than 6,000 operations engaged in direct to consumer sales. California led in sales, earning $467 million. The value of the total direct food sales in 2015 in Maryland was $84.3 million.

Survey findings support using locally targeted marketing efforts. Results revealed that more than 80 percent of all direct market food sales occurred within 100 miles of the farm, and that most farms selling to consumers were less than 20 miles from their largest grossing marketplace. Only 8 percent of farms selling directly to consumers across the nation did so via online marketplaces, though 73 percent of all farms using direct marketing practices had internet access last year.

Several options are available for accessing the 2015 Local Food Marketing Practices survey data. Data is available via a searchable database called Quick Stats. Additional formats of summary results are available. Visit www.agcensus.usda.gov to access the information online.

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