Direct Marketing 101

Transcription

1 Direct Marketing 101 May 3, San Antonio, TX Dr. Marco A. Palma Assistant Professor and Extension Economist Texas AgriLife Extension Service Texas A&M University System

2 Outline Introduction: Horticulture Issues of Today The Economy and US Consumption DM Driving Forces Marketing Strategies Understanding the Customer Sales and Display 2

3 Issues Affecting Horticulture Industry (-) Stronger competition from less expensive imports Increasing consumer concerns about food safety Increasing Fuel/Energy Costs Availability of labor Economic and financial crisis 3

4 Issues Affecting Horticulture Industry (+) Increased demand for healthy foods, organic, environmental friendly and local produce Trade opportunities Positive health dimensions Horticulture outlook - compared to other crops 4

5 A Picture of the US Economy 5

6 Historic Economic Indicators Dow Jones S&P Nasdaq Source: StockCharts.com 6

7 Consumer Confidence Index Source: Market Harmonics 7

8 Spending During Recessions 8

9 So, What is a Recession anyway? 9

10 Definition The National Bureau of Economic Research or NBER officially declares a recession has occurred based upon: significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. ( 10

11 Illustration of a recession Source: John Penson, Dept of Agr. Econ, TAMU 11

12 Illustration of a recession The key question today is how long and Source: John Penson, Dept of Agr. Econ, TAMU 12

13 Illustration of a recession and how deep the recession will be Source: John Penson, Dept of Agr. Econ, TAMU 13

14 Recessions in the 20 th Century Dates of Recession Months Depression Recent Recessions Source: National Bureau of Economic Research 14

15 Recessions in the 20 th Century There have been 13 recessions since the great depression of 1929 a recession every 6 years A regular component of the business cycle Bubble of over-valuation of goods 15

16 Introduction Most business managers have heard effective marketing is the key to profitability But what is marketing? Tendency to associate marketing with selling or advertising and promotion

17 Introduction Marketing is the total system of business activities designed to (1)plan, price, promote, and distribute products that (2)satisfy the wants/needs of current/potential customers, while achieving the (3)businesses objectives.

18 Introduction The major emphasis is the customer What do we need to do to be the most successful business? Provide customers what they want, when and how they want it. It is easier to sell customers what they want to buy than selling them what we grow

19 The marketing Planning Process Perform Situation Analysis Determine Marketing Objectives Formulate Marketing Strategies Implement Tactical Procedures Evaluation And Control

20 The marketing Planning Process Perform Situation Analysis Determine Marketing Objectives Formulate Marketing Strategies Implement Tactical Procedures Evaluation And Control Gathers two types of Information: a. Internal b. External Target Market Selection a. Aim at the entire market (all segments) with a single marketing approach. b. Pursue several different segments with different marketing approaches for each segment. c. Focus on just one segment with a very direct marketing approach

21 Sources of Information State or National trade associations Landscape contractors and architects County extension agents and horticultural specialists Texas Department of Agriculture The internet Your customers

22 The marketing Planning Process Perform Situation Analysis Determine Marketing Objectives Formulate Marketing Strategies Implement Tactical Procedures Evaluation And Control Marketing objectives are typically set in such areas as profit, return on investment, sales volume, market share, pricing, advertising, and promotion Marketing objectives should be SMART Specific Measurable Achievable Realistic Time As market situations and competition change, so must the marketing objectives

23 The marketing Planning Process Perform Situation Analysis Determine Marketing Objectives Formulate Marketing Strategies Implement Tactical Procedures Evaluation And Control Examples of Marketing Objectives Increase overall return on investment by x% for the next fiscal year Increase X product sales by 10% for next fiscal year Introduce x new products by specific date Increase sales volume by x % in x region by this date

24 The marketing Planning Process Perform Situation Analysis Determine Marketing Objectives Formulate Marketing Strategies Implement Tactical Procedures Evaluation And Control Market penetration: fill the needs of an existing market Market development: find new markets for existing products Product development:develop new products for customers in the business's present markets Diversification:new markets with new products

25 The marketing Planning Process Perform Situation Analysis Determine Marketing Objectives Formulate Marketing Strategies Implement Tactical Procedures Evaluation And Control The marketing strategies must be transformed into a set of specific actions or tactics for accomplishing marketing goals These tactics are often referred to as the marketing mix. Product Decisions Promotional Decisions Pricing Decisions Distribution Decisions

26 The marketing Planning Process Perform Situation Analysis Determine Marketing Objectives Formulate Marketing Strategies Implement Tactical Procedures Evaluation And Control Performance of the plan must be measured Standards must be developed against which performance can be evaluated. Typically, the manager develops quantitative measures of overall planning performance such as the following: Comparing total sales and profits with figures from preceding years.

27 Direct Marketing

28 Marketing Margins

29 Direct Marketing Direct marketing involves selling agricultural products directly to the consumer (e.g. PYO, roadside stands, farmers markets, e- commerce, etc.)

30 Direct Marketing Driving Forces Dissatisfaction with low farm gate prices. Retail buyer consolidation. Urban sprawl. Consumer interest in food safety & origin. Increased emphasis on convenience and value added (less volume purchasing).

31 Direct Marketing benefits to producers Alternative income streams. Helps to preserve small farms. Outlet for organic/specialty niches. Capture greater share of consumer dollar. Able to be their own boss/do their own thing less dependent on wholesale.

32 Direct Marketing producer s concerns Knowing/dealing with consumers. Liability issues. Oversaturation. No benchmarks.

33 Direct Marketing benefits to consumers Perceived higher quality/freshness. Able to get back in touch with rural roots. Able to purchase in larger volumes. Engaged in the experience.

34 Pricing Strategies Crop Mix Know Your Cost

35 Pricing Strategies Crop Mix Know Your Cost

36 Pricing Strategies Crop Mix Know Your Cost

37 Product Life Cycle- $ Introduction Growth Maturity Decline Sales 0 Profits Time

38 Product Life Cycle- $ Introduction Growth Maturity Decline Sales 0 Profits Time

39 Pricing Strategies Crop Mix Know your Cost Know Your Cost Why is important to know my costs? Identify items with low cost -- Comparative Advantage -- GROW THEM Identify items with high cost -- Comparative Disadvantage -- REDUCE THEM Determine your Price Floor

40 Pricing Strategies Crop Mix Know your Cost Know Your Cost Costs are different for every grower because: Size of Operation Location Managerial Practices Time of the year Market Channel Volume of production

41 Pricing Strategies Crop Mix Know your Cost Know Your Cost Costs are different for every grower because: Size of permanent crew Availability of labor How quickly you pay suppliers Etc..

42 Pricing Strategies Crop Mix Know your Cost Know Your Cost Every firm has different costs, CALCULATE YOUR PER UNIT COSTS!!!

43 Pricing Strategies Crop Mix Pricing Strategies Know Your Cost How to differentiate your product? --remember-- real or perceived Quality image Name your cultivars Follow changes in consumer tastes and preferences Add value and let your consumers know

44 Pricing Strategies Know Your Cost Crop Mix Pricing Strategies Add value by adding service: Credit Delivery Special wrappings Special containers Cards Care tags Brand names etc

45 Pricing Strategies Crop Mix Crop Mix, What to Grow? Know Your Cost Meet your customers needs. Crop mix allows you to transform your marketing opportunity into customer loyalty, growth in sales and profits. Complex (number of varieties, etc.) Keep focus on the opportunities and be open to try new varieties.

46 Pricing Strategies Know Your Cost Crop Mix Crop Mix, What to Grow? Look into Industry Trends --identify opportunities-- The industry is becoming more diversified Also, consumers are willing to pay higher prices for desired services and features (real or perceived): Quality, uniqueness, convenience, locally grown products, organic, diversity, etc. DIFFERENTIATE YOUR PRODUCT!!!

47 Understanding the CUSTOMER Tastes & preferences Visiting patterns Demographics Eating/gardening habits Entertainment styles Price sensitivity

48 Understanding the CUSTOMER Customer Lifetime Value (CLV) Customer lifetime value is the net profit earned from sales to a given customer during the time that customer purchases from your business. CLV, as a sales focus, is about how the customer is treated over time. Lifetime value is a measure of customer loyalty.

49 Understanding the CUSTOMER Example: The value of a college student = $960 at a pizza parlor over four years in college, not $10 per visit $1050 at the hair stylist during four years in college, not $35 per visit $1872 at a gas station during four years in college, not $18 per fill-up $3000 at the bookstore over four years in college, not $75 per book or $375 per semester

50 Understanding the CUSTOMER Always have your image in mind. image: a mental conception held in common by members of a group and symbolic of a basic attitude and orientation; a tangible or visible representation; a commonly-held perception.

51 Understanding the CUSTOMER What Goes Into An Image? Physical appearance of the facility Cleanliness, Convenience, Capabilities Product selection, uniqueness & diversity Service and knowledgeable personnel Honesty, Sincerity, Truthfulness Value (price/quality ratio)

52 Sales and Display

53 Sales and Service TIPS YOU!!! Be neatly groomed Smile sincerely Keep the work area and surroundings neat Recognize the customer s presence immediately

54 Sales and Service YOU are important to Yourself Personal Success Personal Satisfaction Family Stability, security and enjoyment

55 Sales and Service Why customer s quit coming? 68 % - indifferent attitude of employee 14 % - product dissatisfaction 9 % - competitive reasons 5 % - other friends 3 % - move away 1 % - die

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57 Sales and Display Research trends, hot cash crops, chefs cooking in restaurants, magazines, etc Prepare yourself, your stage and your product Branding why are you different? Signs, business cards, your clothing, baskets, tablecloth, banners, styles - Everything

58 Sales and Display Gain Repeat Business The best in your zone help improve overall market Tell people about what s coming next week See you next week Frequent customer discounts Extra product Recipes and other services

59 Sales and Display The Stage Clean and color coordinated no green or red; yellow makes produce pop Multi layers Shade is important, also leave space to set down customer packages Display Farm signs, clearly marked prices Abundance of products

60 Sales and Display Signs Farm sign with your location Put fresh on signs Product description, recipes? Name TAG Website

61 The Bottom Line High quality product + the experience + the right marketing messages = An engaged customer! A satisfied customer! A loyal customer! A non-price conscious customer!

62 Horticulture Business Information Network

63 Questions Dr. Marco Palma Assistant Professor and Extension Economist Texas AgriLife Extension Service Texas A&M University System