Transcript Compost Mrkt Dev.-Noble - Association of Compost Producers

The Compost Solution
Workshop
COMPOST IS HEATING UP. ARE YOU READY?
February 28, 2007
Building Valuable & Sustainable
Organics Markets
Dan Noble, Executive Director
“We Build Healthy Soil”
Topics
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Marketing Principles
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Why Recycled Resources are Different
Organics Market and Brand Building
ABC’s of Organics Market Channel
Development
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Strategy Development (including branding)
Relationship (public/private relationship branding)
Collective (state and local market development)
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“We Build Healthy Soil”
Why Recycled Resources are Different
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“Negative” Source
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Recycling is NOT a big end-user value
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Flush it away, the “yuck factor”
Causes disease if not “sanitized” – must be “bad”
Cost control, NOT value added – pay to get rid of it!
Reused, recycled is NOT “new” to the end-user
But it IS “value added” to the community (resources managed)
And it IS “value added” when remanufactured, e.g. compost
“Biosolids,” “Residuals”, “Waste” is NOT a brand
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Only re-names a substance (e.g. sewage sludge, green waste)
Why a valuable resource? What’s the category of value?
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Marketing Principles
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What’s a Market?
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Marketing is solving a problem for someone!
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Marketing = Giving people what they want; vs.
Sales = Giving people what you have
Requires thinking from the end-user backwards (What do they want?)
Give them what they want = you provide value to them
Actually deliver it to them, build or use a “market channel”
Marketing is NOT education (giving people knowledge to solve the
problem themselves)…. You’re not giving them knowledge, you’re delivering
a solution (does entail some information… but not much)
Therefore, all markets are local AND personal; and it’s NEVER “FINISHED”!
Marketing is becoming known, BRANDED, for delivering value
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Value = price minus cost (“value added”, “profit”, “bonus”)
Every thing and action has a “value” – category of value
Your commitment to values IS your “Identity” (Brand)
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“We Build Healthy Soil”
Branding = Trusted for Value
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Categories of Value
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First in, can “Own” a Category
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Everyone’s values are different, i.e. “market diversity,” multiple
categories and sub-categories
Create new categories, e.g. cola, PC’s, cell phones, co-compost, etc.
Subdivide an existing one, e.g. diet cola, thin laptops, reliable
phones, turf grass topping, etc.
Kleenex owns facial tissue, Xerox owns copiers
Brand trust adds value to a commodity = price >> cost
Brands, like culture and mind, are never static
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Changing (product life cycles)
Solid brands can have long lifecycles in stable categories
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“We Build Healthy Soil”
Unique Characteristics of
Soil Amendment Markets
Public Agencies Have Valuable Resources, However……
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Historically Not Used to Developing/Investing in Markets
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Production of Raw Materials Happens Independent of the State
of Market Development
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Markets Not Viewed as Assets (Like a Landfill is)
Dialogue and Actions Not Focused on Trust, Market Development, Creating
Strong Brands and Public Perceptions
Products Can Be Viewed as a Waste Management Solution
Resource Suppliers Can’t Go Out of Business
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Must Move the Material
Traditional Market Economics Don’t Apply
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Organics Market Sectors
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Residential/Retail Landscape – High value, low
volume bagged market (move to curbside service?)
Commercial/Wholesale Landscape – Higher
volume, medium value
Environmental – Remediation, Stormwater & Erosion
control
Agriculture/Forests – Based on crop and soil needs
Bioenergy – Direct energy, conversion to fuels and
using or selling power
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“We Build Healthy Soil”
9-12 Generic Compost Niches
Ag
Commercial
Residential
Tier 3: Between Communities – “True Market”
Environmental
Tier 2: Community, Municipality, Agency – Barter,
“Give Away or Subsidized Market”
Tier 1: Residential, On-Farm - “Do-it-yourself Market”
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No one niche is “right,” correct or “the best.”
Generating agencies are typically involved in all at the same time.
Compost Market Development Strategies and Tactics must work
synergistically to build compost value and volume.
This is still a goal to which all our members are
actively working.
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“We Build Healthy Soil”
Investing in Markets
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Have You Heard this Question?
Is There a Market?
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Markets Do Not Exist By Themselves
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Markets Are Built By Companies Investing in Solving Unsolved Problems
Relationships Between Producers and Marketers Always
Includes Market Investments
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Part of Gross Margin
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If Not - No Profit - No Expanding or Stable Markets
Releasing More Product into an Existing Market Without
Addressing an Unsolved Problem will Drive Prices Down
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Better to Look at Finding New Customers - Invest!
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In Our Case - Loser Can’t Cut Back Production of
Raw Materials
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Compost Market Structure
HEALTHY SOIL
MARKETS
$/ton
$/ton
ORGANICS
GENERATOR
Collection &
Transfer
Compost
Marketer
COMPOST
PRODUCER
Retail
Soil Amendment
Transporters
Commercial/
Municipal
MULCHER
Chipper/
Grinder
LANDFILL
ADC
Mulch
Agriculture
ENERGY
Water/Irrigation
Agencies
Residuals
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Big Questions for All Players!
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Does every contracting relationship openly and
explicitly build market assets?
(If not, why not?)
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What’s the Market Development Investment
Strategy and Tactics of the Organics Generator
and Water Agencies?
(the main investors in the soil/water connection)
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Why are you investing the way you are?
Is it working for both your ratepayers and the environment?)
What’s an appropriate Investment?
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Depends on how much people WANT the product!
Can be 10-100% of facility investment/year!
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“We Build Healthy Soil”
ABC’s of Organics Market
Channel Development
$
COMPOST
PRODUCER
ORGANICS
GENERATOR
Mass
A
Autonomous (I)
$
$
Retail/
Commercial
Compost
Marketer
Mass
Markets:
Mass
Agriculture
Erosion Control
B
Buddy (I-thou)
C
Collective (We)
A. Strategy: Make Appropriate Organic Market Channel Investments
B. Pilots: Develop Market Pilot Programs with a Channel “Buddy”, and
C. End-Users: Participate in Collective Market Expansion
Programs
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Investing in Market Channel
Development
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A. Strategy: Positioning Yourself for Advantage
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Planning & Forecasting: What is the current and potential market need?
Modeling: Craft flexible, quantitative models.
Pro-active channel management: Is the channel developed or
underdeveloped?
B. Channel: Processing and Distribution
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Are the channels existing, or must we build them?
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Facility size, investment & siting: permitting and public acceptance
Product Fit, Offering, and Brand
How sophisticated are you (and them) at market development
C. End-User Markets:
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Do they exist? What is the competition?
What is the brand status?
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“We Build Healthy Soil”
ABC’s of Organics Market
Channel Development
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A. Organics Resource Portfolio Strategy: Market Channel
Development Planning by Generator Agencies
B. Individual Public/Private Marketing Pilot Programs: Focused
on expanding and investing in specific market channel development
activities
C. Joint/Collective Programs: To develop new (or expand) markets
“Good, Better, Best Priority” to Build Organic Market Channels
C is Good that we’re working on “C-Collective Programs;”
B is Better to be intensively building markets via “B-Specific
Channel Case Studies;”
A is Best if generators also have “A”- coherent and
comprehensive organics reuse investment
strategy w/ specific plans.
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Market Channel Development:
Standards and Tools
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Channel Development Requires Setting Standards – for Make it,
Sell it, and Count it!
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Make it! Product & Manufacturing Standards
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Seal of Testing Assurance (US Composting Council STA Program,
www.compostingcouncil.org)
ACP Compost Use Index (Developed with UC Cooperative Extension Scientists)
Sell it! Marketing Standards – Next slide and Handout
Count it! Investment Standard – Needs to Be further Developed
Tools Must Be Developed
A. “I” -- Strategy Development Tools – Audit and Strategic Considerations
Outline
B. “I-Thou” -- Pilot Study – Program Outlines
C. “We” -- Collaborative Programs – Specific to each Program/Market
D. “Integrative” – Local Organics Advocacy & Marketing (LOAM) Tool Box
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Critical Marketing Standards
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DON’T
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DO
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“Dump” product in compost markets (erodes price & value)
Fund marketing partners to compete for share in same market
Invest in brand building (strong brands build market value)
Target and invest in new markets
Create “fail safe” markets (inventory management standards)
Build long term, mutually beneficial partnerships (specific market
development and brand building)
Other Important Standards
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Healthy Soil Standards, Compost Product Standards
Capable Manufacturing Process Standards
Application Process Standards
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“We Build Healthy Soil”
A. “I” Identity and Strategy
Requires A “Top Down” AND A “Bottom Up”, & “Outside-in” AND
“Inside-Out” Approach … in a word … INTEGRATED
1. Identity (Brand) = Commitment To a Set of Values
2. Market Channel and Capacity Assessment (“market intelligence”)
3. Strategy Development – Ever More Integrated
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Horizontal: Interagency, Inter-stakeholder and Interdepartmental: Solid waste, Air,
Water, etc.; Private sector, Enviro & Citizen Groups; solids, water, energy, etc.
Vertical: Local, National, International; Values, Strategy, Operations, Tactics/Actions
4. Tactical Implementation – Matches the Integration and ongoing
relationship development of your Strategy
Two Recent (partial) Examples in So. Calif.
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Orange County EMS Identity:
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Developed Identity (Brand) that relates directly to it’s EMS value commitments.
Developed comprehensive market portfolio plan for biosolids
Working with ACP to develop the Local Tool Box for Orange County
County of San Diego: Through public process –
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Developed an organics management policy (strategy) outline.
Working on Tactical Plan Development
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“We Build Healthy Soil”
B. “I-Thou” Specific Projects
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Orange County Market Expansion: Increase specific markets in
Orange County via specific new member partnerships between OCSD,
OCIWMD, Western Organics and Synagro.
LA City Quality Enhancement: Raise value of curbside collected
green material LA City and a potential new member private contractor.
This will entail fully understanding the private contracting methods and
how these can be reworked to create higher value feedstocks.
Curbside Residential Delivery: Kellogg Garden Products looking to
team with compost blowers and their customer stores (e.g. Home
Depot) and go beyond the “five bag limit.”
Commercial Market Expansion: More compost used for top dressing
each year; Engel and Gray and a potential new agency member in the
Santa Barbara area.
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“We Build Healthy Soil”
C. “We” Collaborative Projects
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ACP – CIWMB - Caltrans
Agriculture Specifications
Compost Labeling and Use Rules
Center for Sustainable Organics Management
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Erosion Control BMP
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Develop with US EPA, CIWMB, UCCE, SDSU and ACP a “center of excellence”
devoted to organics management
Compost is not widely used by California developers to control erosion and
for stormwater management.
ACP is co-sponsoring a program with Filtrexx International to change that.
Water Efficient Landscape Solutions
(www.waterconservationsummit.com)
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Branding, Outreach and Public Education
Ordinance Development
Industry Collaboration
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“We Build Healthy Soil”
ACP’s Main Challenges
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Weak Demand for Building Healthy Soil
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People (farmers and landscapers) aren’t seeing a big need
Weak Support for Building Healthy Soil
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No focused vehicle for investing in building healthy soil
Solutions:
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ACP Membership and Investment in building Markets
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Public and Private Sector Industry Collaboration (Membership)
Create Healthy Soil Market Expansion Programs
Local Organics Advocacy & Marketing Tool Box
Team with Water Districts
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To create water use efficiency programs by building soil w/ compost
Water and sanitation agencies work with the private sector to save massive
amounts of water
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Association of Compost Producers
Building Healthy Soil Though Local Partnerships
Questions?
Comments?
Discussion …
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