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Marketing, part 1
Building a Sustainable Business
Week 2
Mark Cannella
Re-Cap Session 1
One thing you learned about business
planning or yourself?
Values – Vision – Mission – Goals - SWOT
5 P’s of Marketing
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Product
People
Price
Place
Promotion
Anytime one of
these “P’s”
changes, it
should trigger a
review of all the
other “P’s”
Product
A bundle of attributes (features, functions,
benefits, uses) capable of exchange and/or
use
Products exist to satisfy an individual or an
organizational objective
Know your audience and be able to
communicate your “product” effectively
Satisfying Needs
• Usage: the physical use of a product
• Service: an intangible benefit (can be
measured but not easily)
– The brand experience
• Some Examples of Each….
Product Features
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Taste
Color
Size
Raw materials
Style
Purpose
Value
Nutritional Claims
3rd Party Acreditation
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Reputation
Social Value
Life cycle
Classification
Place of Origin
Quantity
Image
Place
• What type of buyers do you have
the capacity to serve?
• Where are the buyers that
demand YOUR product (how
many do you need)
Place- Distribution Strategy
• Inventory Capacity: Can we store items with
minimal shrinkage
• Distribution Alternatives
– Direct to Consumer (by the unit)
– Intermediary (cases, pallets, tons)
Place- Distribution Strategy
Logistics
(order,
delivery)
Terms of
Payment
Risk and
Uncertainty
Investment
Required
Alignment
with
Mission
Selling Price
Matches Cost
to Serve
Product
Match
Sales
Volume
Successful
Outlet
Time/Labor
to Serve
What is
Missing?
Promo
Effort
Price
• A variety of strategies can be used to set prices,
“Are you a price maker or price taker?”
• Pricing must balance your internal costs and
customers willingness-to-pay/market demand
Pricing Strategies
1. Competitive Pricing: What are others charging?
a. Relative Pricing/Signaling: Setting above or below
similar products.
2. Cost Oriented: Know your costs
3. Penetration Pricing vs. Skimming
a. Breaking into a competitive market: Penetration
b. No competition: Skimming
4. Examples Today: Carrot vs. Eggs vs Sheep Cheese
Pricing Strategies
3. Penetration Pricing vs. Skimming
a. Breaking into a competitive market: Penetration
b. No competition: Skimming
4. Examples Today: Carrot vs. Eggs vs Sheep Cheese
Strong Marketing Plan
- The 5 P’s need to be connected
- Common Pitfalls:
- Overestimating “local” markets (over diversification vs.
competitive expansion)
- The mis-match of “middle class” values and “upper-class”
products
- Failing to recognize how your operations/technology/systems
impact on your capacity to serve certain markets
Broilers
Place
Product
Price
Attributes
Direct to
Customer
Whole Birds
?
“family farm”
Free-range?
Hormone
Free?
To Retail
Boneless
Breast
Parts
(Less than
20% poultry
sold as whole
birds)
“local” means
more than
“organic” from
recent surveys
Fluid Milk
Place
Product
Price
Attributes
Direct to
Customer
½ gallon
$7$10/gallon
Raw
St. Albans
Coop
cwt
Variable
$21.09 (Oct
2012)
Protein: $3.72
Butterfat: $2.11
Butterfat $0.43
Cell Count
Premiums
PPD:distance
Red Potato
Place
Product
Price
Attributes
Direct to
Customer
Quart
container
$3.99/each
Pretty, well
washed, “new
potato”
Distributor
.5 ton or 1 ton
delivery:
$780/T
Organic
Pricing Strategies
Examples Today: Eggs
Market Research
• Paperword Ranks Highest
• Perceptions on Plastic, right or wrong
• Do it right! full size stickers or blank cartons
Market Research
Currently collecting responses
from retail grocers in New England.
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Attributes that Matter
Whole Birds and Parts
Service Required
Demand and Price
Considerations
Market Research
• 19 stores responding as of 10/12/12
– Range from 900 sq feet to 33,000 sq ft
– How they define local: in state or up to 30-100 mile
radius
– A good deal of variation between small and large
stores
Market Research
• Meat Chicken:
- Cuts as a Percent of all chicken sales
- Whole (15%) , Boneless Breast (41%) , Legs and Thighs: 28%
- Average Number of Weeks Product Required
- 15 - 20 weeks (range of 2 – 52 weeks)
- Demand:
- 7 of 8 stores indicated a need for more local suppliers of chicken parts
- Largest Constraints to Sell more Chicken
- Price (7 responses) , Supply (4), Cooler Space (2)
Market Research
• Eggs:
- Weekly Sales
- Range from 50 dozen to 2,000 dozen per week
- 9 out of 12 stores sell farm run, ungraded eggs
- Average Number of Weeks Product Required
- Range of 2 – 52 weeks, but the most common response was 10-15 weeks
- Volume required to be a viable supplier:
- 50 dozen: this is for stores selling 400-900 dozen per week they indicate
- Some stores indicate 5-10 dozen (small stores)
Next week
Marketing, Part 2
• Define target customer/market region
• Define your competition
• Market research – Primary & Secondary
• Consumer trends to consider
• Wrapping up the marketing chapter
Next week
Marketing, Part 2
Readings: pages 106-126
Worksheets: 4.1 – 4.8