Comparing Marketing Modalities

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Since I am often working with beginning farmers on their whole farm planning I am frequently thinking about markets.  The influx of new farmers is a great thing but what we are finding is that many of these newer enterprises are in competition with each other. As any successful business person will tell you, developing your niche is an integral part of your marketing strategy.  That being said, my colleagues and I sat down and made a rubric for different marketing channels where we described and then ranked each of the farm marketing modalities that we considered the most viable for beginning farmers.  Below is a summary of the results:

1.  On-Farm Sales:  This is number one on the list for a few reasons.  Although the startup costs can be high and there may be issues with parking or zoning, this modality provides engagement and brand loyalty with customers, garners retail prices, all with very low overhead and time requirements.  Many of the most successful farms that I deal with, in terms of financial wellbeing, are utilizing on-farm sales.

2.  CSA:  I was surprised by this one.  This model ranks high because the farmer is ultimately in control of the pickup and drop-off of product.  This allows the farmer to consolidate and combine multiple drop-offs, engage directly with customers, offer other items than what the farm produces, and collect the payout prior to the start of the season.  The only reason this did not make number one was because of the high staffing needs and the fact that the prices may be slightly reduced when compared to strict retail offerings.

3.  Online Sales:  This modality does require some overhead but it is generally less than utilizing third-party retailers.  This modality has an advantage in that you can choose where the pickup will be, which can save you time and staffing issues, and allows the farmer to personally engage with the customer.

It is at this point in the ranking that a divide becomes obvious.  The first three modalities are all pretty close in the ranking system.  The following three were also very close in their ranking but they were separated by the first three by a significant divide.  That means that the first three modalities are more effective overall but ultimately each famer must choose what works best for them.  For instance, I was recently working with a local beef producer who had been selling retail cuts at farmers markets and moving her ground beef through local restaurants at wholesale prices.  Eventually this farmer found that she could not sustain the farm with her full-time job.  Because she was not ready to jump into farming full time, she decided to move to a wholesale model to save time and to supplement her income.  Although this modality is not in the top three of this list, it worked well for her and allowed her to meet her farm goals.

4. Farmers Markets:  This is the modality that everyone pictures when they think of farm sales.  It provides a very high level of engagement and commands retail prices for most items.  Although this was ranked towards the bottom of the list, this is a great place to begin building your customer base.  The downside of farmers markets is the required travel time, product handling, fees, and staff coordination.  Travelling any distance is difficult when you’re dealing with vegetables and critical if you are transporting any type of perishable product such as cuts of meat.

5.  Third-Party Retailers:  These are basically companies that take your product and either deliver it to other customers or sell it at a central location themselves.  Retail stores and companies like Field Goods would fall into this category.  This modality has a much lower level of engagement than other modalities since you are not personally there to represent your product, you are not going to get full price for your product, and because you are not in direct control of your products.  No one cares more about the final product than the producer but this can be a great tool for surplus product or for farms that are just starting out.

6.  Wholesale:  This is a double-edged sword.  For most small producers this is the least efficient marketing modality.  It requires that you do all the same work for retail but are able to command a lower price.  For most premium products this is a severe disadvantage.  Wholesale can work well for enterprises that are at a large enough scale where selling retail either takes too much time or effort, or for surplus products.  It is common practice for ranchers to sell their premium ground beef at wholesale prices because it is at a surplus.
I cannot stress how each farm’s marketing plan will be a function of its location, goals, needs, and expenses, and this is by no means a comprehensive list of marketing modalities.  As an informal measure of potential success it is meant to get beginning farmers to think about how they are going to market their products.  Each business is a direct product of three factors of equal weight: the product, the marketing, and the people behind it.

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