By Dan Burden, content specialist, AgMRC, Iowa State University, firstname.lastname@example.org.
Written October 2009.
Produce what you can market and grow the market
Traditionally, marketing has been viewed as selling what you have. Modern marketing approaches, especially those adopted by successful entrepreneurs, take a very different approach; they concentrate on producing what you can sell.
This means that you need to do some homework. Your research should include finding where the market is, understanding its dynamics and thinking about how you can participate and then enhance your role within it. Be sure to look at “intangible” attributes that set your product apart from grocery store “fish.” For example, farm-raised, naturally fed, seasonal availability only; as well as value-added strategies (smoked, pickled, direct-to-consumer, gift packs) are all things around which you can build a product image.
Develop your marketing strategy by doing some market research that can be put into a marketing plan that considers where your product fits into the marketplace and how to communicate that to your customers. The classic “4-Ps of Marketing” (product, price, place (distribution) and promotion) are the integral components of any marketing plan. Think about what you are doing, with respect to your operation, and what you produce; then carefully study the “who” that is your customer. This is both the end user as well as any intermediary buyers within the value chain.
Fish-rearing facilities are built for food-fish production or for producing stocking-fish species for existing ponds. Food fish must be processed and are sold to area consumers at the farm, to a distributor or perhaps through local sales at venues like farmers’ markets. Food-fish species also often are sold as sport-fishery stocking fish for lakes and ponds. Some food-fish species are sold live or on ice at local markets to provide the fresh product desired by some ethnic consumer groups.
Ornamental fish are produced for hobbyists and tropical-fish enthusiasts. Ornamental fish require an understanding of the market with respect to pricing, local shows, on-line and published communication vehicles and similar strategies to get the product to the consumer. All strategies require specific, and perhaps costly, transportation considerations. Ornamental production usually requires access to a major airport from which oxygenated, bagged live fish in coolers can be shipped to waiting clients. Also, due to similar growing seasons, producers with seasonal outside production systems tend to sell fish at the same time. This can create an oversupply and adversely affect prices. It is important to be aware of the level of competition in your area, as well as peak seasonal supplies and demands.
In all of the situations mentioned above, a fish farmer must know how and where to sell a product appropriate to either a broad market need or a targeted niche market. This product could be food fish, small fish for stocking programs, bait fish for sports shops or ornamental species for aquarists and pet shops. For every example and situation, there are distinctly different markets with different production, quality assurance and communication needs.
There are effective and ineffective strategies for marketing any product or product groups. Some involve “targeted consumer response” (directed product lines and communications based on consumer focus groups or retail survey data); others look to boldly take a unique high-quality or high-volume product to center stage through strategic alliances with high-volume distributors and their retailers. With respect to fresh-water aquaculture, both approaches have been proven to be effective.
Before any marketing strategy can be determined as a proper course of action, the producer or producer group should develop a concerted list of market-research priorities. In a best-case “money-is-no-object” scenario, this would be done under the guidance of a public or private, national or regional, professional marketing consulting firm. Supporting data would include relevant world- and national-market data, consumer-product preference and sales, consumer demographics and critical distribution-(supply)-chain data. The result would be a strategic marketing plan. Again, this would be the best-case scenario. This is how Apple Computer, General Electric or Boeing would go about marketing product if they were in the fish business.
For most producers, this sort of investment is out of the realm of financial reality. However, that does not mean that a producer can’t understand and employ the same principles and tactics to successfully product marketing used by big corporations and successful start-up entrepreneurs. In general, it has often been repeated in books, magazines, Internet articles and university MBA classes, that there are six basic steps to successful product marketing. Actually, it is better to consider them as stages or logical progressions within a formal marketing plan that is part of a of a dynamic (revisable) business plan:
- Define your market.
- Learn about your market.
- Know the benefits of your product to your market.
- Advertise to your market.
- Teach your market about your product (advertise the benefits of your product).
- Capture your customers and keep them coming back.
The justification for sound market research is simple: Producers competing in a global economy need to be responsive to consumers. Producers face increasing global supply, competition in increasingly free-trade arenas, mature demand (and established supply chain relationships) for many traditional seafood products and oftentimes, falling market prices and increasing cost-of-production resulting from any number of factors.
Once producers know what the end-user consumers tend to want and what the “topography” of the market is, the decision-making on what to present (product differentiation) and how to target the market or markets becomes increasingly clear. Additionally, by creatively reviewing the market-research data, it may be possible to see where a novel product introduction (example: California’s domestic caviar industry); communication vehicle (example: directly interfacing with chef’s schools to familiarize potential high-end users); or placement strategy (example: holiday smoked trout or salmon sold through a huge national mail-order outdoor-product retailer) could have high-value returns.
Producers may have several advantages that should be considered in any market-development strategy. These include:
- Local origin and origination-quality-assurance labeling (currently a hot topics in the expanding “buy-fresh, buy-local” community) can be a plus when entering most sales venues and distribution chains.
- Large population bases of affluent consumers who can be educated to try specific products using point-of-purchase advertising and similar low-cost communications.
- Well-established wholesaler networks for both the hospital and hospitality markets, as well as restaurants and large food-distributors.
- Additionally, wholesalers and distributors are increasingly looking toward adding products uniquely suited to the preferences of specific ethnic or regional communities (example: catfish, tilapia, “fish-fry” perch).
Restaurateurs are looking for unique high-quality fresh product for innovative entree specials to appeal to the large disposable-income “food-educated” sector of the consumer base willing to sample new cuisine. Products differentiated by local-origin and quality-assurance labeling have enhanced restaurateur-to-consumer sales appeal, and these consumers tend to discuss and communicate news of the product purchases they like and restaurant experiences they enjoy to their peers. They also tend to be extremely quality conscious and brand-reputation loyal.
With respect to value-added product development, various levels of value addition apply to aquaculture, but the benefits may not justify the full costs of the value addition, so any strategy should be thoughtfully considered and carefully test-marketed. The most cost-effective value-addition system is where the consumer comes to the point of production to directly harvest, transport and process the fish (pond-side sales, fee- or preserve-membership fishing). In this case, the value addition is in the form of savings of time and money spent on processing and storage. All succeeding levels of production complexity involve harvest and transport by the producer. Most small aquaculture producers also process, package and freeze small batches of fish, so they require this infrastructure and its associated costs.
Product-oriented value-addition strategies usually involve further processing: smoking, canning, roe harvest, special cuts, decorative or gift packaging and co-packing with related products. All should include some sort of business planning that looks at the feasibility of launching these products and how to get them into the supply chain in ways that place them in front of consumers willing to pay for them. Value addition can also occur when a food product becomes an “improved” food product by increasing its shelf- or freezer-case storage life (canned, smoked, dehydrated, preserved or ingredient products) and may result from access to entirely new markets.
Transportation costs and any other cost linked to the price of imported petroleum are increasingly problematic issues throughout food value chains. Value additions that require several transportation steps or a great deal of handling should be streamlined or critically evaluated against “worst-case-scenario” economics.
Cooperative marketing and business associations or strategic partnerships should be examined if they have not already been tried or adopted. If they failed, why did they fail? Modern cooperatives offer many benefits to their producer-members. Cooperative business models can focus on processing, storage and transportation; undertake extensive market research; develop or contract for targeted communications; and develop and market-test new products on behalf of producer-members. Through cooperative structures, producers are able to collectively hire the management and technical expertise that they could not individually afford; develop market infrastructure supply-chain connections they need but could not individually supply; or access cost-effective labor, equipment and storage as a shared and perhaps outsourced expense. In addition, many large cooperatives have their own financial lending, insurance, retirement and succession planning, and similar member-benefit programs.
In summary and to stimulate your thinking, here are a few more brief food and general-product marketing ideas and rules-of-thumb to consider:
- Develop marketing strategies that educate the consumer about the superior quality and intrinsic value in supporting your e product.
- Create a concerted and prioritized list of marketing and market-research objectives.
- Understand the regional processing capacity. Can this be streamlined and what is the infrastructure’s short-, medium- and long-term outlook; will this immediately or eventually impact you as a producer?
- Develop some “cold-calling” market surveys of local or regional distributors and wholesalers: What (where) is the market and what does it demand? Get the names of people who may be interested in your product, then visit the best prospects within the next week to show them your product.
- Determine the specific marketing messages that trigger consumer response (purchases) at the point-of-purchase.
- Consider specific marketing messages that trigger consumer response (purchases) by differentiated consumer groups (health-conscious shoppers, vegetarians, ethnic-specific shoppers, sport fishermen and recreational “outdoor cookery” enthusiasts).
- Develop marketing strategies that key into “differentiated” identity/origin-preserved products.
- Compile a list of “differentiated” value-added products,” their markets and potential value: then consider the cost benefit of the value addition.
- Examine cooperative business structures and strategic producer partnerships.
- Consider ways to creatively supply the hospitality industry and farmers’ markets.
- Consider a survey of markets outside the region and feasible ways in which to enter them (survey of key regional distributors and highly visible “buy-fresh” outlets).
- Partner with award-winning restaurant and hospitality programs to develop dishes and outreach/feedback vehicles for the industry (wine, beef, vegetable and fruit producers have very successfully done this); ornamental producers should consider reputable retail chains.
- Partner with the local-produced wine and food initiatives that are directed toward tourist and agritourism to develop new distribution chains that accentuate the high-value local and regional “identities.”
- Consider a production standard and certification system (ISO-9000 for agriculture) that ensures ever increasing product quality and efficiency of production, and that can be used as a label identifier and marketing tool.
- Consider value addition through co-product product development (using waste material or out-of-date product for “gourmet” pet foods, animal feed supplements, starters for municipal waste treatment plants or for enzymatic digestion to recover specialty proteins and oils for pharmaceuticals, nutraceuticals or cosmetics.
- Evaluate the pros and cons of different levels of horizontal integration (coordination with other producers or expansion to acquire needed services) with respect to long-term growth.
- Identify product preservation and waste issues. Is there a chance for value addition here by increasing efficiency (cost savings) or selling a co-product? Does this require different or additional handling, packaging, labor or product presentation costs?
Interpersonal Communication: Marketing and Networking
Marketing hinges on logistics: finding buyers and communicating with them and assessing the needs of the client, customer or intermediary buyer. Go for a field trip into the heart of the marketplace. Observe shopper’s attitude and behavior at fish counters and study their purchase patterns. Check out how and why sellers promote some products over others, note the prices and packaging and don’t forget to survey the bulk frozen products in the freezer case that may be the hot store specials of the week. You just learned a lot about your retail competition: the fresh-product point-of-purchase sale and the discount special.
You should have some thoughts and questions based on what you observed. Now it is time for some targeted “human engineering.” Find some contacts within the seafood-business supply chain in your area. Contact them and honestly explain that you are looking at developing a product for a specific niche (this is your most cost-effective way to compete within the greater market) and ask them what they think about pricing, competing products and general market trends. Thank them for their time and ask them if you can get back to them in the near future to show them your product and get their thoughts on it. Finally, consider the consumer demographics and shopping options in the immediate area. Are there high-value, high-quality outlets (farmers’ markets, restaurants, food co-ops) or a direct marketing option that may be more suited to your product than conventional food distributors or retail stores?
Once you have assessed the needs of the buyer, determine how you can help them and then arrange a meeting and communicate how you can provide them with a quality product that meets their needs. Be prepared to discuss your margins, their processing and packaging needs, and be prepared to talk price. Remember, transportation, packaging, additional handling, storage and similar supply-chain issues all cost money and time; discuss them and place a value on them. Discuss payment and payment schedules and any other accounting-related issues. What will your contract look like; can you obtain a sample? If you are in a strategic relationship with a particular distributor, should they be contributing some financing “upfront,” partial payment for the product as partial risk mitigation? Avoid getting yourself entrenched with a single outlet for your product. A classic model for business-risk mitigation is to have a diversified customer base for the product.
When negotiating, if there appears to be a hurdle caused by an issue, don’t be afraid to let it go and come back to it later. Be sure to address it with a cool head. It may be possible that by rethinking the nature of the problem, for example, lowering a production cost or more efficiently addressing a different issue along the supply chain, that common ground can be reached. Also, this may not be a relationship that is in your best interest at this time; however, it may be more amenable in the future. Continue to regularly communicate; always be open, friendly and professional. Remember, you are raising fish to make money. Always keep an eye on your bottom line: production costs, improving “efficiencies,” changes in the supply chain and potential competition.
Demonstrate that you care about your product and your customer
Communication is critical to your success. You are in a competitive market. Demonstrating that you care about your customer is about marketing you and your product, and is essential to retaining customers.
Above all, always remember that you are there selling the fact that you are meeting their need for a quality product and quality service. They need your product, and you are there to work with them to provide the very best product. If you are not enthusiastic about your product and seeing it at the forefront of the marketplace, whether that marketplace is an individual consumer, a single restaurant or a national distributor, why should anyone else be excited by it or in any way interested in purchasing it?
Maintain communication through occasional mailings, phone calls or e-mails to thank your customers for their patronage and keep them abreast of improvements in your product or operations. If your operation deals with the public, remember that you are selling an experience as much as a physical product and that reinforcing the positive impression of the event or experience is extremely important in bringing that customer back to you. This is where promotional mailings and e-mail newsletters and websites can really help a business.
Consider some type of “public option” for your business if you have not already done so. This could be a fee-fishing venue or “field day” event or perhaps an educational session for local school 4-H or FFA groups. This is where you meet your customers and get to learn from them. This is your chance to learn what they like about your product, why they purchase it and how they prepare it. They get to learn about your operation, you as a producer and the care that goes into the product they purchase.
Reliability and friendliness are hallmarks of outstanding customer service. If your customer has a problem, you have a problem. You are building a reputation for your product that is completely based upon a reputation of quality. If your customer likes your approach and is comfortable with you product, they are less likely to actively search for an alternative, and if they do, you will be the benchmark upon which they gauge the competitor’s product. In planning your long-term marketing strategy, decide what will be your keystone attributes. Use these to create your brand and your company operating policies. This is not about slogans or fancy labels; it is about the strength of your product and its role in the marketplace.