UNDERSTANDING PRODUCE MARKETING FOR KENTUCKY'S DIRECT MARKETERS
Forrest Stegelin, John Strang, and Randy Weckman
Extension agricultural economist, Extension horticulurist, and Extension
communications specialist.
As suburban areas expand into traditional
farming areas, farmers are presented with the opportunity to grow and market
fresh fruits and vegetables. Marketing directly to consumers is an important
part of having a locally-grown fresh produce operation. Direct marketing,
however, is no guarantee of financial success if you do not draw customers.
This publication offers some suggestions on how to promote and advertise
locally- grown fresh produce.
Marketing can be thought of as four
Ps: promotion, product, place, and price. Promotion is any activity that
brings about increased sales of direct marketed fresh produce, including
the activity of advertising. When advertising, especially for agricultural
commodities, is handled by state agencies or commodity groups, its effectiveness
is questionable. The emphasis here is on promotion and advertising methods
that can be developed, encouraged, and used by the individual producer.
Observations about buyers
•Consumers demand top quality, which
includes eye appeal.
Consumers list produce freshness/quality
as the primary reason for purchasing directly from farmers. Quality includes
eye appeal as well as freshness. A 1989 survey on consumers' attitudes
about pesticide residues demonstrates the importance of eye appeal. Two-thirds
of the consumers surveyed said they were willing to pay higher prices for
pesticide residue-free fresh produce, but only one-third said they were
willing to accept cosmetic defects.
•Consumers have more money than time;
consumers are willing to pay for convenience.
Consumers run out of time before they
run out of money. An excellent example of the demand for convenience is
the growth in the number of convenient food stores/gas stations. Similarly,
consumers also desire convenience in shopping for fresh produce. The primary
reason consumers give for not buying fresh produce at a community farmers'
market is inconvenience.
•Consumers are not particularly concerned
about where food is produced, as long they are assured of its quality and
convenience.
There is no advantage to offering consumers
locally-grown produce if the quality is poor or it requires additional
effort to purchase. Surveys in the late 1980s found that supporting local
growers was unimportant in consumers'decisions about purchasing directly
from farmers. The freshness/quality of the produce was the big drawing
card.
•Consumers are willing to pay for enjoyment,
as well as travel for enjoyment.
Consumers' wants and desires go beyond
the basic needs of food and shelter. Some of these wants can be classified
as enjoyment, including the desire for relaxation, fun, recreation, entertainment,
and aesthetics. Successful marketers fill a variety of needs or wants simultaneously
with their product or service offerings. Roadside marketers need to look
beyond their basic offering of fresh produce and see what else they can
offer the consumers.
•Pick-your-own is the least preferred
form of direct marketing. Consumers prefer roadside markets and farmers'
markets, as farmers with both kinds of operations have found.
Picking your own fruits and vegetables
is hard work, time consuming, and inconvenient. Consumers express a preference
for fruit already picked.
Understanding produce marketing
Marketing includes knowing how much
you can sell of a given commodity. "Getting rid of the product at the best
offered price" is not marketing; it is selling. Marketing is the performance
of those business activities which direct the flow of goods and services
from producers to consumers. You will find that good marketing practices
pay, just like good cultural practices.
As a direct marketer you should consider
marketing during all stages of production, harvesting, packaging, and transporting.
This means that your marketing plans must be made early so you can grow
the varieties your market wants. Produce must be harvested at the proper
stage of maturity and then graded and packaged according to the desires
of the potential buyers.
Prices are market signals that link
producers and consumers. Consumers consider prices when making buying decisions.
If too many consumers decide not to buy, prices are likely to fall. If
too many consumers decide to buy, shortages will occur and prices are likely
to rise.
Producers use price signals in making
production decisions. If producers feel that prices are too low, they may
reduce production (this was the case with southern peas in the 1970s).
If producers feel that prices are attractive, they increase production
(this was the case with cucumbers in the 1970s).
This simple concept is complicated
because decisions are made without knowledge of actual supply-demand levels
until after the fact. During short periods, such as the harvest period
for Kentucky cucumbers, the level of consumer demand is fairly constant.
Most price movements are in response to short-term changes in available
supplies.
Growers plant acreage based on their
expectation of prices; however, weather plays a critical role, and unfavorable
weather may reduce volume. Increases in demand depend on the marketing
system. In some instances, demand can be increased through advertising
and promotion.
Markets may be local, regional, or
national (and perhaps even international). A market is an area within which
price-making forces operate. A market is not a building or facility; it
is a situation, and each market has an identity. Market identity can be
expressed in terms of the number of potential customers, their age, income,
gender, and other characteristics which may affect the demand for the particular
product. A marketing system brings together purchase decisions of consumers
and production decisions of producers. The marketing system must "tell"
producers what consumers want and consumers what producers have available.
As long as consumers get what they
want, where they want it and when they want it, and at prices they think
are favorable, they will make a market. However, producers must accept
the fact that consumers may not need or want certain products in the volume
producers wish to provide. Thus, growers who are not in tune with consumers'
demands may produce too much of a less desired product.
Market particulars
If you are a sophisticated grower you
will identify the market and then produce to meet it. Once the market has
been identified, you should try to determine what that particular market
wants in terms of variety, quality, grade or size, containers, volume needed,
and timing (when it's needed).
Variety
Consumers seldom can identify variety,
yet they are very familiar with the product characteristics. They choose
products according to color, size, and taste. The best yields are not always
obtained from the variety with the desired market characteristics. Smart
producers research cultural practices and variety selection to increase
yield without sacrificing desired product characteristics.
Quality
Variations in produce quality are reflected
in the price. The highest quality during the pricing determination period
receives the highest prices. Quality control should be practiced at all
stages of the marketing process, beginning with good production practices
and continuing through sale. You will make more money if you cull poor
quality produce throughout the production process.
Grading
Grading involves the separation of
product by quality and size according to expected market demands. This
pays both in overall price and in repeat sales. Consumers depend on grades
and grower reputation. If buyers do not provide the quality they expect,
they will buy elsewhere. Some markets can handle second grade quality and
most consumers know which markets will sell second grades. Sellers of nonuniform
quality are penalized by receiving discounted prices.
Containers
Produce containers provide key information
to consumers, including commodity, grade, weight, size/count, and origin
information plainly stated.
In addition to extending the shelf
life of a product or protecting it during handling and storage, properly
used containers can perform several selling tasks. They can: describe the
produce, tell how to use it, give the name and location of the marketer,
attract the attention of the customer, and add to the appeal of the produce.
Direct marketers use several types
of containers. One type may be used for harvesting, transporting, and displaying;
then the produce is placed in another container for the buyer to carry
away. Containers not usually released to the consumer include baskets,
hampers, field crates, buckets, and bulk bins. Some of these have considerable
rustic and nostalgic appeal if they are kept clean and in good condition.
Using such containers means labor is required on the sales floor to place
produce into "take-with" containers.
Consumers consistently complain about
buying produce in an attractive container that they are not allowed to
take home. To avoid such gripes, a sign should clearly indicate that the
container is not included.
A second type of container is designed
to be sold with the produce. Common types include kraft (brown) paper bags,
colorful shopping bags, plastic bags, paper boxes with handles, pulpboard
trays, and plastic or wooden berry boxes. Wooden baskets, cardboard boxes,
and mesh bags also are used. New baskets, while attractive, may be expensive.
Your local county Extension agent may
be able to help you locate a source of containers. Containers can be imprinted
with your name, address and logo, if you have one. If you decide to have
customized printing, you can expect a one-time charge for making a printing
die. Because there is some variation in the cost of these dies and the
containers themselves, it is important to do comparison shopping.
Timing (market window)
The time of the year that products
"hit the market" is extremely important to direct marketers. If your product
becomes available when other farmers are marketing ample supplies, there
may be a glut; this oversupply will cause depressed prices.
Since you have little control over
exact harvest dates, your best strategy is to determine which varieties
mature at the best market time. You should then select two or three of
these products to grow. Continue to produce these products annually (unless
production and/or marketing schedules change), rather than trying to guess
what will sell well in any particular year.
The time when product volume is low
or when prices strengthen is referred to as the market window. In Kentucky,
that window is often narrow. It includes the period when volume from the
Coastal Southeast is declining rapidly while volumes from the Upper Midwest
and Atlantic Bay are just beginning to increase.
Season of product availability
Because Kentucky has topographic and
meteorologic differences across the state, there is no one ripening time
for fruits and vegetables. Location is important in determining the typical
season of a product's availability. For the three general regions of the
state (western, central, and eastern) the accompanying table shows the
peak availability of selected fruits and vegetables.
Maintaining quality
Proper storage can help you market
a larger share of your produce by extending the time you have to sell it
before it goes bad. Refrigeration is one way to keep produce at peak quality.
Since different fruits and vegetables
have differing requirements for refrigeration temperatures, consult your
local county Extension office for specific recommendations. Request publication
number AEC-41, "Management of Roadside Markets."
Implementing marketing research
In today's fast-paced society, it is
imperative to manage future as well as the present-day activities. Before
you can manage the future, you must first have information upon which to
base decisions. Marketing research can provide you with the information
to:
•Determine and pursue the most profitable
markets
•Locate weak points in market coverage
•Select new products
•Discover why existing products sell
poorly
•Identify changes in market trends
•Improve advertising, product mix and
display techniques
•Plan realistic, attainable marketing
goals.
Although you may not realize it, if
you are like most operators you are already using some form of marketing
research. Direct marketers who do research rarely use all the information
they already have available, but conduct research only when they have a
problem (such as declining sales or reduced profits).
To be most beneficial, marketing research
should be an on-going process. The more common forms of marketing research
include:
•Customer surveys
•Coded coupons
•Raffles, games, and contests designed
to collect information
•Trade research publications
•Tracking in-store customers
•Government reports
•Scanner tape analysis
•Employee feedback.
Whatever research method you choose,
you should remember to keep it simple. Be sure you obtain only necessary
information for analysis. Here's a simple ten-step procedure to follow
when conducting marketing research:
1. Define the problem or situation.
2. Conduct a preliminary investigation.
3. Decide what information you need.
4. Determine the resources you have available for the research.
5. Plan the research method.
6. Gather the data.
7. Analyze the data.
8. Develop alternative courses of action.
9. Evaluate various pay-offs.
10. Take positive action.
Follow-up
A companion publication discusses various
specific methods of direct marketing, with special emphasis on such advertising
and promotion activities of direct marketers as signs, displays, special
or seasonal promotions, and media advertising.
SEASON OF FRUIT AND VEGETABLE AVAILABILITY
Ripening date for Central Kentucky*
FRUIT
APPLES: July 1 -- October 25
BLACKBERRIES:
Thorny: July 1 -- July 20
Thornless: July 15 -- August 15
CHERRIES: Tart: June 15
CURRANTS: May 25 -- June 15
GOOSEBERRIES: June 20
GRAPES: August 15 -- October 15
PEACHES: June 20 -- August 20
PEARS: August 15 -- October 15
PLUMS: August 1 -- September 30
RASPBERRIES: June bearing (Red, Black, Purple): June 20
Fall bearing (Red): August 15 -- October 15
STRAWBERRIES: May 17 - June 15
VEGETABLES
ASPARAGUS: April 20 - June 1
BEANS: Green: June 20 -- October 1
Lima: July 1 -- October 1
Pole: July 1 -- October 1
BEETS: June 1 -- November 30
BROCCOLI: Spring: June 1 -- July 15
Fall: October 1 -- November 15
BRUSSELS SPROUTS: June 1 -- November 15
CABBAGE: Chinese (spring): June 1 -- July 15
Chinese (fall): September 15 -- November 15
Green (spring): June 1 -- July 30
Green (fall): October 1 -- November 15
CANTALOUPE: July 15 -- September 15
CARROTS: June 15 -- November 30
CAULIFLOWER: Spring: June 1 -- July 15
Fall: October 1 -- November 15
COLLARDS: Spring: May 15 -- July 1
Fall: September 15 -- November 15
CORN, SWEET: July 10 -- October 5
CUCUMBERS: June 25 -- September 25
EGGPLANT: July 10 -- October 1
KALE: June 1 -- December 30
KOHLRABI: Spring: June 10 -- July 15
Fall: September 15 -- November 1
LETTUCE: Bibb, Leaf (Spring): May 15 -- July 1
Bibb, Leaf (Fall): September 1 -- October 10
MUSTARD GREENS: Spring: May 25 -- June 30
Fall: September 25 -- November 25
OKRA: July 15 -- October 1
ONIONS: Bulb: July 15 -- September 15
Green: April 15 -- July 1
PARSNIPS: October 10 -- January 15
PEAS: English: May 25 -- June 30
Southern: August 1
PEPPERS: Bell (green): July 15 -- October 15
Bell (red): August 15
Pimiento: August 15
POTATOES: Irish, July 1 -- October 30
RADISHES: Spring: May 20 -- June 20
Fall: September 15 -- October 20
RHUBARB: June 1 -- June 30
RUTABAGAS: October 15 -- November 15
SQUASH: Summer: June 10 -- October 1
Winter: August 15 -- November 30
SWEET POTATOES: September 20
SWISS CHARD: May 15 -- October 30
TOMATOES: July 10 -- October 15
TURNIPS: September 25 -- December 20
WATERMELONS: August 1 -- September 1
*Note that crops ripen approximately 5 to 10 days earlier in western
Kentucky and 5 days later in eastern Kentucky than the dates listed here
for central Kentucky.