Brainstorm
Begin by identifying all the possible products you could sell from your farm. The list I presented earlier under Alternative Marketing (see page 102) can provide a starting point, but try to think of other items as well, and break the list down into as much detail as possible. At this point, your objective is to come up with the largest laundry list of ideas you can; some may seem crazy or off the wall, but list them anyway. After you generate the ideas, you can begin to evaluate them individually — and sometimes a crazy idea turns out to be not so crazy after all.
Evaluate: Research and Critique
Evaluation is really a two-part affair. The first part is doing some preliminary research, and the second part is comparing the items against each other.
Consider Legal Issues. Research comes first, because much of what you find out will be incorporated into your comparison. For each idea, explore what kind of legal concerns may come up (see chapter 10 for details on legal research). Do you need a license to establish the business? Are you going to need additional insurance?
Survey Potential Markets. Finding out what potential customers want and need is another step in the research process. You need to understand your customers’ wants and needs even better than they do, and the best way to find out is to ask. Survey friends, family, and business acquaintances. Ask them what they like, how much they buy, what they’re willing to pay, and so on. When possible, avoid questions that result in a yes or no response; instead pose questions that dig deeper into people’s feelings — leave them open ended. Don’t say, “Do you like beef?” Instead say, “How do you like your beef?” and, “Which cuts do you prefer?”
If you’re considering selling at a farmers’ market, attend one some Saturday with clipboard and questionnaire in hand to survey the crowd. Say, “Excuse me, folks, my name is Janet Jones, and my husband and I own a farm about 20 miles from here. We’re thinking about starting a booth here at the farmers’ market to sell our [insert product name]. Would you mind answering just a few questions?” Ask why they come, and how often. Ask what items they think are missing from the market now. If you are thinking about eggs and chickens, then ask if they’d be interested in purchasing eggs from chickens that didn’t have to spend their lives in a square-foot cage. Most important, ask why they shop at the farmers’ market. If the bulk of respondents say they do so to save lots of money, your prices will need to be lower than grocery store prices — or your sales pitch will need to be great! If regular responses include things like supporting family farms, or obtaining extra-fresh or natural food, you can probably charge a premium over grocery store prices.
The same type of survey can be used for businesses that you think may be interested in purchasing or carrying your products. If you survey businesses, have your questions well thought out ahead of time. A busy manager or chef may spare you a few minutes, if you can ask pointed questions, but he or she isn’t going to spend large amounts of time with you. Surveying busy people is like fishing; your hook needs to be baited before you throw it in the water.
Understand the Competition. Understanding your competition is another important aspect of research. Who already sells what you are considering selling? What do they charge? Do they offer specials? Is there some way you can effectively differentiate your product from theirs? Study packaging and advertising.
At the farmers’ market, study the booths that do a booming business. What’s the difference between them and the booths that take home most of what they came with? How do the successful marketers display their wares? How do they interact with the crowd?
Matrix Analysis
Once you’ve done the preliminary research, you need to compare the ideas. An excellent approach to doing this is using a technique known as “matrix analysis.” Don’t let the fancy name throw you — the technique itself is easy. You are simply designing a graphic model that lets you easily assess each idea’s strengths and weaknesses. Table 9.2 shows a model matrix.
When using matrix analysis, you judge each idea against various criteria, with each criteria having a “weight” or a certain number of assigned points. You need to determine the criteria, and how to weight the responses within each criteria, but the following list should give you some ideas. (Again, to come up with the criteria, brainstorm, and talk about what’s important to your success and your quality of life.)
1. Current status. Is this something you are currently raising, something you could easily venture into, or something that would require lots of work to begin raising in the future? Weight: 10 points for an animal, crop, or situation you already have set up on the farm; 5 points for those that could be easily set up; 0 points for those that would be difficult to add.
2. Volume. Consider current and projected volume. How many head, dozen, acres, and so on, do you currently produce? Can production readily increase if demand warrants it? What is the maximum production you could realistically deal with? Weight: 10 points for items that you could begin marketing with current production volume; 7 points for those that would require only a slight increase.
3. Customers. Who might buy from you? Individual consumers, institutions, retailers, restaurants? Weight: If you are trying to start small, give higher weight to individual consumers. If you already raise 1,000 pigs per year that you market conventionally, then the opportunity to market to an institution might be worth more points.
4. Channels. Will customers come to the farm? Will you attend a farmers’ market, or will you sell to a small cooperative? Weight: If you enjoy company, you might score customers at the farm high, but if you like privacy it may score 0.
Table 9.2
5. Targeting. How will you reach customers? Can you meet the special needs of an ethnic group? We sold fresh ducks to the owner of a Chinese restaurant for his family’s personal consumption at holidays. He could purchase frozen duck at wholesale, but he was willing to pay for fresh ducks as a special treat. Can you get a specialty item into a local restaurant? A restaurant-bar near us had too high a demand for us to sell them meat for their regular menu, but we were able to sell them Polish sausage, which they served as a special in the bar during Monday Night Football. If you’re thinking of selling hunting privileges at your private pond, can you make arrangements with a chapter of Ducks’ Unlimited? Weight: If you believe you can easily target your audience (maybe the state director of Ducks Unlimited is a friend), give yourself a 100. If targeting will be hard, make it a 0.
6. Advertising ideas. Where will you advertise? Is word of mouth how you plan to grow, or do you need a campaign to reach people? Can you contribute, or sell at cost, ground beef to a civic organization’s food stand — say, the High School Booster Club, for burgers at football games — in exchange for the advertising? Weight: If your plan is to market breeding stock, and your adult daughter designs Web pages for a living, give yourself more points. If you live in a county in North Dakota with only 700 residents, and your advertising for on-farm hunting can’t just be an ad in a weekly local paper, give yourself a lower score.
7. Competitors. Who is the competition? Other farmers who are direct-marketing in your area, grocery stores? What does the competition charge? How can you differentiate your product from theirs? Weight: If you’re thinking about direct-marketing lamb, and you have a reasonably close, urban farmers’ market that no one is selling lamb at, you might assign 10 points for competition. On the other hand, if you want to sell eggs at the same market, but there are already three farmers selling eggs there, you might assign 0 points.
8. Time. Do you have the time to market this, or to raise additional animals? Weight: If you have plenty of time for this endeavor, give it 10 points. If you can do it, but your time is already limited, give it 5 points. You just don’t have the spare time you think this will take, give it 0 points.
9. Pricing. How much do you think you can charge? What is your cost of production? What is the ratio of price to cost (the ratio equals the price divided by the cost)? Chapter 13,
Financial Planning, will help you estimate your cost of production. Weight: When assigning points for pricing, give the highest weight to the item with the highest price:cost ratio, and the lowest points to lowest price:cost ratio.
10. Limitations/concerns. Does this require special licenses, a new building, or special equipment? Weight: In your weight system, these items may have negative weights. The need for constructing a new building might be –25 points, the need to purchase a new freezer might be –10, and the need to apply for an annual license from the county may be –5 points.
11. Labor. Will marketing this require additional help? Are family members and friends able to supply the extra labor, or is it going to require hiring employees? Weight: If you need to hire employees, this will probably be weighted with a negative number.
12. Special bonus points. Are there reasons to give this option extra points? Perhaps the customer surveys you did at the farmers’ market indicated that there was a void you would be able to fill. Or maybe you have always dreamed of opening a bed-and-breakfast, so this rates extra points for its dream value.
Now, to actually create the matrix, start with a large piece of paper (either a poster board or a roll of white freezer wrap will work well) and write each idea across the top, starting about 4 inches (10 cm)from the left side. Down the side, write all your criteria; then you’ll work across filling in all the boxes for each idea. As you fill in the boxes, you’ll add current and projected status, as well as comments and thoughts on the idea. In the lower right-hand corner of each box, write down the points. When you have filled in all the boxes, add the points to obtain a score for each idea. You now have a weighted evaluation of all your ideas. Several of those that scored highest may be worth pursuing in the here and now; those that scored lower may be worth pursuing in the future, but they aren’t at this time! Take the ideas that have scored high from a marketing-plan approach, and work through the overall planning in part IV with them.
FARMER PROFILE
Doc and Connie Hatfield, and Oregon Country Beef
The year was 1986, and with 10 years of operating their Brothers, Oregon, ranch under their belts, Doc and Connie Hatfield were disheartened: The ranch was going broke in a poor cattle market.
Connie and Doc began talking about markets and marketing. Then, on a trip to Bend, Connie got a wild impulse and went into a health club. The owner, “a twenty-something Jack LaLane by the name of Ace, came out and asked if he could help me,” Connie recalls. “I explained that I was a cattle rancher and wanted to know what he thought about beef.
“My first reaction was pleasure, when he said, ‘Oh, I recommend that all my clients eat beef at least three times a week,’ but before the smile could break my face, he said, ‘but I’ll tell you, it’s so hard to find Argentine beef anymore!’
“I was dumbfounded for a minute. ‘Why Argentine beef?’ I asked. Ace went on to explain the benefits of Argentine beef — lower in fat, no antibiotics, no hormones. Well, darn, I thought, we’re going broke, and there are people looking for the very thing we produce, but we’ve just never marketed it.”
Shortly before this, the Hatfields attended a holistic management meeting. “That meeting really helped us view ourselves as part of a bigger picture,” Connie says. And that meeting introduced the Hatfields to some other producers who seemed to share our values.
“We hosted a meeting in our living room,” Doc says. “Thirty-six folks (husbands and wives) were crammed in there, and we figured we had 10,000 mother cows in that room, so to speak.” The thirty-six folks were part of twenty-three families, from fourteen family ranches that spread out over eastern Oregon. Some came from the mountain areas, some from the high desert, but they all had interest in grazing well to take care of their land, and they all had interest in developing a closer connection to consumers. After the first meeting, each family agreed to provide one pen of finished steers, and Connie was appointed to try and market them.
“The co-op started with a clear vision and a written goal, and with that vision and goal has been able to build strong relationships,” says Doc. “We have a legal organization, but we have no contracts with anybody, and the organization doesn’t own much of anything. The co-op itself has less than $5,000 in capital assets — mainly a computer — but we have manpower and brainpower within the group to make things happen.”
And the group has made things happen. From a rather humble beginning of just five head for slaughter per week, the group has grown to butchering 120 head per week. And Oregon Country Beef, in its eleventh year, did over $4,000,000 worth of business, marketing their branded beef through grocery stores and restaurants on the West Coast and in Japan.
Traditionally, co-ops began by members purchasing a share. Then the co-op would buy the member’s product, add value, market the product, and pay members based on profits. But as Doc explains, “Buying shares doesn’t fit with our group’s goal. It creates a disconnect, where members aren’t directly responsible or accountable. Our members are committed to a long-term program and take responsibility for the quality of the product they put out, all the way to the dinner table.”
Each member of the co-op, beside putting cattle in for sale, agrees to do the following:
1. Attend two major meetings each year, spring and fall.
2. Attend Annual Appreciation Day in the summer, where customers are invited (store managers and owners, restaurant managers and owners, and individual customers from those businesses) out to one of the ranches for a picnic and tour.
3. Spend a weekend yearly in Seattle, Portland, or San Francisco doing in-store meat demonstrations and visit.
4. Commit to the Graze-Well Principles (principles of livestock management that lead to healthy land, livestock, and people).
The co-op’s success is due, at least in part, to Connie’s natural talent as a marketer. When she was first delegated by the group to try to find markets, Connie went to the city to study her potential clientele. “I’d first go into a store, on a reconnaissance mission. I’d walk around the store for a few minutes, I’d buy something to drink, and then I’d go sit in the parking lot and observe. I was looking for stores with an affluent clientele that would possibly support our natural beef at a price that would pay us our cost of production, a return on our investment, and a reasonable profit,” she explains.
When a store looked like it might fit her criteria, Connie would make an appointment with the store’s management and owners. “Store managers and owners generally allow 5 minutes for ‘vender meetings,’ as they call them: It’s the time they allow a three-piece suited salesman to pitch his product. I’d get in there, dressed in my denim skirt, and my 5 minutes would quickly turn into an hour. I wasn’t just a salesperson — I was a business owner just like them. And I cared more about my product than any salesperson ever could.”
Connie would always begin her contacts, not by trying to pitch what she had, but by inquiring what niche Oregon Country Beef could fill for the store. Store personnel gave her some guidance, and off she went to find a packer the group could work with. Another “5-minute meeting” with a packer turned into 45 minutes, and the group found the packer to handle their product. “We were off and running,” Connie says.
“We network with our packer, distributors, and customers. They are honorary members of the co-op and receive copies of all our reports, detailing finances and planning. We don’t have contracts with any of these folks, either — we don’t feel we need them. We want to be partners with them in getting a high-quality product to consumers who want it,” Doc adds.
“Our Japanese client, Kyotaru Co., taught us a lot about building relationships in our business. In Japan, there is a concept called Shin-Rai. It’s hard to directly translate Japanese language and culture, but the idea behind Shin-Rai is that two businesses work together for the benefit of both. This is a very different approach from the American ‘competition’ paradigm.”
Oregon Country Beef has grown slowly and stea
dily using its approach of partnering with other businesses to get a premium product to consumers, and by standing 100 percent behind quality at all steps in the process. But, as Doc tells me, it “hasn’t been all sweet. Other groups can do what we’ve done, but if during development of your co-op somebody isn’t cussing or crying, you probably aren’t going to get anything done.”
Pricing
Price is basically a factor of what the market will bear, or how much people are willing to spend for your product (Figure 9.5). Your earlier research should help you determine the price the market will bear, but here are some other points to think about when you set prices:
State the price carefully. Sometimes the way you state a price is the key to success. We marketed home-grown garlic at a local flea market for a couple of summers. At first we posted our price at $5.00 per pound. Customers screamed highway robbery. Then we changed our pricing to $0.75 per bulb, and the same customers thought it a good deal for our nice fat bulbs. But guess what: $0.75 per bulb was $5.00 per pound.
Figure 9.5. Set prices based on the market and the uniqueness of your products.
Emphasize the uniqueness of your product. “Fresh, Free-Range Eggs” in large print, “$2 per dozen” in small print. Break open one of your eggs next to a store-bought model, then explain to customers that your beautiful golden yolk comes from the extra vitamin A, vitamin D, and beta-carotene that your chickens get running around in a sunny yard!
Small-Scale Livestock Farming Page 20