What we will cover today. Improved Local Meats Marketing. Matt LeRoux. Factors for market channel selection. Factors for market channel assessment.

Transcription

1 Improved Local Meats Marketing A Guide to Marketing Channel Selection Matt LeRoux, Marketing Specialist Matt LeRoux Marketing Specialist with CCE, Tompkins County. Recent Master s in Ag/Food Marketing from Cornell. Worked for 5 years for the New England Livestock Alliance & Heritage Breeds Conservancy. Started 2 brands of Natural & Grassfed beef. What we will cover today Factors for market channel selection. Factors for market channel assessment. Methodology for market channel assessment for meats. 1

2 Selling to a buyer who is not the end user. Selling directly to the end user. Packer Farmers Market Restaurant Freezer Trade Grocery/Retail CSA/Buying Club Distributor Farm Stand/Store Auction Web Institution/Food Service Things to consider when choosing marketing channels: What is your production like? Location & Local Population What do your customers want? What is your production like? In Scale & Diversity Diversity of products A B vs. Volume Produced 2

3 What is your production like? In Specialization The more specialized your product, the larger a market area you may need. How far are they willing to go to get it? How far are you willing to go to sell it? Location & Local Population What kind of customers are around you? How many of them are there? What is your visibility? What do your customers want? Local food buyers: Who are they? Try to understand your target customers to best serve them. Three Main Groups of Local Meat Buyers Foodie/ Locavore Enthusiasts- experience driven. Personal Health/ Social Cause Motivated- cause driven. Traditional buyers- price driven. Each has different: Needs Motivations Desires Buying habits 3

4 How do they buy & where? Foodies Adventurous. Least price sensitive. Seek authentic eating & shopping experience, story behind the source. Farmers markets, CSA s, on-line, Specialty stores, restaurants. How do they buy & where? Socially motivated Vote with your dollar! Moderately price sensitive. Seeking local foods for food safety, environmental sustainability, personal health, humane treatment, other. Want to learn how it was raised. At the farm, specialty stores, farmers markets, CSA, bulk. How do they buy & where? Traditional Price and value driven. Most price sensitive Experienced buyers, loyal. Canners & freezers. At the farm, u-pick, roadside stand, freezer beef. 4

5 Market Channel Selection: Opportunity is knocking Meat CSA Home-based Retail (farm store) Freezer Trade Farmers Market Restaurant Grocery/Specialty Store Regional brands How do you evaluate a market opportunity? Six interacting factors impact the performance of a marketing channel including: You can sell $500 worth per hour! Price & Profit It costs $300/day to sell there. Lifestyle Preferences Associated Costs and its only 1 hour per week... and it takes 12 hours to prepare... Sales Volume Labor Requirements and if it rains no customers come. Risk LMCAT Factors HCW Equivalent Price Whole carcass demand, % demanded Sales Volume Lifestyle Preferences Labor Required Risk 5

6 The Moving Target Which channel is best? One channel does well in one way, poorly in another so how do you know? Methodology Collect logs of all marketing labor (from trip to processor to final sale) for X # of head, for X # of weeks. Collect weights & prices of cuts for 1 typical head. Collect gross sales & mileage for the period. Collect ranking on lifestyle & risk. Methodology Use data to rank and compare channels: Profit/head HCW price % carcass demanded Labor hours required Sales volume Also use farmer ranking for : Risk perception (financial risk, lost sales, etc ) Lifestyle preference (enjoyment, stress aversion) 6

7 Sales Volume by Channel Total Gross Sales Volume Normalized Volume Units Watkins FM Restaurant IFM Saturday IFM Tuesday Corning FM CSA Marketing Channels Total Labor Hours Total Labor Hours Labor Hours Restaurant Watkins FM IFM Saturday CSA IFM Tuesday Corning FM Marketing Channels Simple Comparison of Labor & Sales Total Labor Hours Gross Sales Corning FM 24% Restaurant 5% Watkins FM 13% Watkins FM 5% Restaurant 6% IFM Saturday 11% IFM Saturday 17% CSA 45% IFM Tuesday 14% IFM Tuesday 23% CSA 18% Corning FM 19% CSA: 18% of weekly labor, 45% of weekly gross sales. Watkins Glen FM: 13% of weekly labor, 5% of weekly gross sales. 7

8 Profit Profit as % of Gross Profit Sales (with Owner Labor Valued) Profit as % of Gross Sales 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Watkins FM IFM Saturday IFM Tuesday Corning FM Restaurant CSA Marketing Channels Risks & Preferences: Labor requirements Price risk Customer turn-out Competition Buyer back-out Processor is booked People on the farm Dark Cutter, other discounts Ability to sell the whole carcass Customer interaction Time on the farm Setting up displays Rank & Compare Opportunities for Performance Factors Sales Volume Labor Hours Profit Margin Financial Risk Lifestyle Final Scores Unweighted Weighted Rank Rank Rank Rank Rank IFM Tuesday IFM Saturday Corning FM Watkins FM CSA Restaurant Based on 5 factors and farmer chosen weights. 8

9 Practical Application: Marketing Decisions Considering a marketing change, what should it be? Reduce participation in weakest performing channel. Increase participation in best performing channel. Strategic channel combination to maximize sales and reduce risks. Adjust channel pricing to improve performance. Channel Combination aids inventory management. High-Demand High-Value Cuts Low-Demand Low-Value Cuts Restaurant On-farm sales Farmers Market A Farmers Market B CSA Restaurant Marketing Channel Assessment Identify your goals and lifestyle preferences. Keep marketing cost & returns records, if only for snapshot periods. Rank & compare opportunities to maximize profits. Combine channels to max sales & reduce risks. 9

10 Seeking farms to participate in the Livestock Marketing Channel Assessment REQUIREMENTS: At least 3 different marketing channels. No more than 12 people working (including owners & family). Farmer Benefits: 1. Informed decision making 2. Increase in profitability, enjoyment of work. 3. Decrease in labor needs, stress, risk. 4. Benchmarking against similar farms. Publications Smart Marketing Sept. & Oct. 2010, Oct smart Guide to Marketing Channels pdf Contact information: Matthew LeRoux Agricultural Marketing Specialist Cornell Cooperative Extension Tompkins Co. 615 Willow Ave., Ithaca, NY mnl28@cornell.edu 10