Marketing, part 1

Building a Sustainable BusinessWeek 2

Mark Cannella

Re-Cap Session 1

One thing you learned about business planning or yourself?

Values – Vision – Mission – Goals - SWOT

5 P’s of Marketing

• Product• People• Price• Place• Promotion

Anytime one of these “P’s” changes, it should trigger a review of all the other “P’s”

ProductA bundle of attributes (features, functions, benefits, uses) capable of exchange and/or use

Products exist to satisfy an individual or an organizational objective

Know your audience and be able to communicate your “product” effectively

• Usage: the physical use of a product

• Service: an intangible benefit (can be measured but not easily)– The brand experience

• Some Examples of Each….

Satisfying Needs

Product Features• Taste• Color• Size• Raw materials• Style• Purpose• Value• Nutritional Claims• 3rd Party Acreditation

• Reputation• Social Value• Life cycle• Classification• Place of Origin • Quantity• Image

Place•What type of buyers do you

have the capacity to serve?

•Where are the buyers that demand YOUR product (how many do you need)

Place- Distribution Strategy

• Inventory Capacity: Can we store items with minimal shrinkage

• Distribution Alternatives– Direct to Consumer (by the unit) – Intermediary (cases, pallets, tons)

Place- Distribution Strategy

Successful Outlet

Selling Price Matches Cost to Serve

What is Missing?

Logistics (order,

delivery)

Product Match

Terms of Payment

Alignment with

Mission

Risk and Uncertainty

Investment Required

Promo Effort

Time/Labor to Serve

Sales Volume

Price• A variety of strategies can be used to set prices, “Are you a price maker or price taker?”

• Pricing must balance your internal costs and customers willingness-to-pay/market demand

Pricing Strategies1. Competitive Pricing: What are others

charging?a. Relative Pricing/Signaling: Setting above or

below similar products.

2. Cost Oriented: Know your costs

3. Penetration Pricing vs. Skimming a. Breaking into a competitive market: Penetration

b. No competition: Skimming

4. Examples Today: Carrot vs. Eggs vs Sheep Cheese

Pricing Strategies

3. Penetration Pricing vs. Skimming a. Breaking into a competitive market: Penetration b. No competition: Skimming

4. Examples Today: Carrot vs. Eggs vs Sheep Cheese

Strong Marketing Plan

-The 5 P’s need to be connected

-Common Pitfalls:- Overestimating “local” markets (over diversification vs.

competitive expansion)- The mis-match of “middle class” values and “upper-

class” products- Failing to recognize how your

operations/technology/systems impact on your capacity to serve certain markets

BroilersPlace Product Price Attributes

Direct to Customer

Whole Birds ? “family farm”Free-range?Hormone Free?

To Retail Boneless Breast

Parts

(Less than 20% poultry sold as whole birds)

“local” means more than “organic” from recent surveys

Fluid MilkPlace Product Price Attributes

Direct to Customer

½ gallon $7-$10/gallon

Raw

St. Albans Coop

cwt Variable$21.09 (Oct 2012)

Protein: $3.72Butterfat: $2.11Butterfat $0.43Cell Count PremiumsPPD:distance

Red PotatoPlace Product Price Attributes

Direct to Customer

Quart container

$3.99/each Pretty, well washed, “new potato”

Distributor .5 ton or 1 ton delivery:

$780/T Organic

Pricing Strategies Examples Today: Eggs

Market Research

• Paperword Ranks Highest• Perceptions on Plastic, right or wrong• Do it right! full size stickers or blank cartons

Market Research

Currently collecting responses from retail grocers in New England.

•Attributes that Matter•Whole Birds and Parts•Service Required•Demand and Price Considerations

Market Research

• 19 stores responding as of 10/12/12– Range from 900 sq feet to 33,000 sq ft– How they define local: in state or up to 30-100

mile radius – A good deal of variation between small and

large stores

Market Research

• Meat Chicken:- Cuts as a Percent of all chicken sales

- Whole (15%) , Boneless Breast (41%) , Legs and Thighs: 28%

- Average Number of Weeks Product Required- 15 - 20 weeks (range of 2 – 52 weeks)

- Demand:- 7 of 8 stores indicated a need for more local suppliers of chicken

parts

- Largest Constraints to Sell more Chicken- Price (7 responses) , Supply (4), Cooler Space (2)

Market Research

• Eggs:- Weekly Sales

- Range from 50 dozen to 2,000 dozen per week- 9 out of 12 stores sell farm run, ungraded eggs

- Average Number of Weeks Product Required- Range of 2 – 52 weeks, but the most common response was 10-15

weeks

- Volume required to be a viable supplier:- 50 dozen: this is for stores selling 400-900 dozen per week they

indicate- Some stores indicate 5-10 dozen (small stores)

Next weekMarketing, Part 2•Define target customer/market region•Define your competition•Market research – Primary & Secondary•Consumer trends to consider•Wrapping up the marketing chapter

Next weekMarketing, Part 2

Readings: pages 106-126

Worksheets: 4.1 – 4.8