Chapter 1: Planning the Farm Retail Market

Developing a Marketing Plan  

To begin a marketing plan, one must think through the process of how a product will be sold. Decisions must be based on profitability, not emotion or guesswork. Using a plan to establish a business or enterprise greatly improves the chances for success.

  When completing a marketing plan, a number of factors must be considered. They include options available for selling products, available resources, the target market (both in terms of demographic characteristics and demand for products), marketing trends in terms of consumer preferences, and price objectives necessary to achieve profits. This data will help decide whether to proceed with the enterprise.

  Elements for developing a marketing plan vary. Marketing plans can answer simple questions such as; whether a specialty crop should be added to the product mix. Marketing plans can also answer more complex questions such as whether a farm retail market should be established. A good marketing plan is flexible; adjustments may be necessary as the operator develops the plan or gains experience.

Steps in Completing a Marketing Plan  
(You might want to print the following worksheets to use a reference sheets) 

1. Determine the objectives. Objectives should be based upon the market operator's goals. It may be necessary to make adjustments later in the planning process (Worksheet 5: Objectives and Strategies - Section A).

2.  Determine the geographic size of the market area (trade area, natural area for commerce, census tracts, county, city). Evaluate the competition, using market mapping (Worksheet 1: Market Resources).

3. Determine customer characteristics and profile; demographics, income--present and potential, life style (Worksheet 2: Target Market Description).

4)    Determine the products and services demanded by various segments of the market (Worksheet 3: Existing Market Demand).

5)    Determine market demand by product group (Worksheet 3).

6)    Determine market trends that relate to the market demand by product group (Worksheet 4: Market Trends).

7)    Forecast potential market sales for the next 3 to 5 years. Where are the potential changes (Worksheet 4)?

8)    Estimate the potential market share and trend of market share (Worksheet 4).

9)    Identify market opportunities (See appendix: Definition of Market "niche").

10) Establish strategies for implementing the plan (Worksheet 5 - Section B).

11) Elect the product mix, market site, and market type (Worksheet 6: Product Mix, Market Site, and Market Type; Appendix A: Alternative Types of Farm Retail Markets).

12) Implement the plan / evaluate / make adjustments and remember a good marketing plan must be flexible.

Market Resources

A primary factor influencing a farm retail market's potential success is the competition in the area. Supermarkets, convenience stores, comer markets, farmers' markets, and roadside markets selling similar items within a certain geographic location compete for customers. To assess local competition, map the area, showing the location of each competitor. Clearly, an additional market in an already saturated area has a lower potential for success.

To be successful it is important to know the customer base. A study of population levels for surrounding towns and cities may show a large number of potential customers. In some cases, the area may be able to support a greater number of competitors. The opposite may hold true in less densely populated areas. Population figures for surrounding towns can be found in census data at the library or at city hall. Determine the distance of towns and cities from the proposed market. If the population centers are too far away, the number of customers shopping at the market may be limited.

The location of a proposed farm retail market is critical to its success. The volume of traffic passing the site will have a direct effect on the number of customers. Traffic volume also will be affected by the number of local businesses. Areas in which several businesses are situated along the same road indicates traffic intensity and greater potential. Conversely, if the proposed site is secluded, traffic may be scarce, limiting customer exposure. Traffic pattern information on specific roads can be obtained from studies conducted by the Department of Transportation (DOT). This information can be valuable to the success of the proposed market.

Traffic patterns around a site can either facilitate or hinder a market's accessibility to passing motorists. Markets located on a two-lane highway offer access to motorists going in either direction. One-way roads and the position of traffic lights also affect the number of people stopping at a market. For maximum usefulness, it is necessary to compile and organize all traffic data before reaching any conclusions. (Worksheet 1).

Target Market Description

While location and number of consumers in a market area are important, behavioral traits and characteristics of potential customers are equally important. A study of demographics such as age, income level, household size, location of residence and/or work place, ethnic group, and education level will reveal the level of diversity. From these characteristics, the population's life-style patterns can be determined. Are there common interests, beliefs, values, and behavior patterns for the demographic groups in the area? When the demographic traits are known, it becomes easier to predict what customers expect from the products they buy and from the places the products are purchased.

The traits of the target market and customer expectations will, to some extent, govern the type of outlet established as well as the variety of items stocked. The trend toward healthier diets, if reflected in the target market's attitude would  favor produce. Similarly, if the target customer expects convenience, a market that offers more than produce (ornamental and related items, impulse items, gift section) may be more inviting. General demographic information can help determine the profile for the target customer. Are the customers expected to frequent the outlet representative of the area's population? If so, the likelihood of success is greater (Worksheet 2).  

Existing Market Demand

Once the demographic profile of the target consumer is decided and the size of the target market determined, the next step is to estimate the total demand for produce in the market. The demand can be derived by multiplying the population in the target market by the per capita consumption of, for example, fruits and vegetables. Demand can be derived on an item-by-item basis. This is a particularly useful tool when considering a specific specialty crop. While consumption patterns may vary across the country, national estimates provide an excellent starting point for the analysis.

Product and or customer service differentiation will play an important role in the development of a marketing scheme. In any marketing venture, a comparative advantage needs to be established over other markets. This can be accomplished by offering a new product in addition to staple items. It can be further accomplished by adding value to the product, referred to as "value added," or by providing a customer service considered unique. Examples of product and/or service differentiation are wagon rides to and from fields for U-pick, a hayride to pick a pumpkin, and selling prepared jams, jellies, or pies.

The comparative advantage chosen should be based on existing target market characteristics. The most recent trends in consumer tastes and preferences will help to determine if the trends are reflected in the target market (Worksheet 3 and Worksheet 4).

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