August 2008 Department of Applied Economics and Management Cornell University Ithaca, NY Wen-fei Uva Senior Extension Associate Develop a Marketing Plan for Your Direct Marketing Activities Modified by Georgia Agriculture Education Curriculum Office June, 2002

August 2008 Marketing is: Marketing is EVERYTHING you do to promote your business, from the moment you conceive of it to the point at which customers buy your product or service and begin to patronize your business on a regular basis. »Jay Conrad Levinson (“Guerrilla Marketing”) The key words to remember are everything and regular basis.

August 2008 Basic Elements of Marketing 1. Research 2. Analysis 3. Strategies and Tactics Marketing 4 Ps: Product, Price, Promotion, Place (& People, Process, and Presentation)

August 2008 Strategies you will utilize to achieve your goals. Budget Calendar Responsibilities Deadlines List of tools Media List Events / Activities A Marketing Plan is a Road Map Products PricePlace Promotion Target Market

August 2008 Five Steps of Developing a Marketing Plan (SWOT Analysis) - 1. Strategic planning to identify marketing opportunities (SWOT Analysis) - look at the big picture and a longer time-horizon 2. Select target markets -- only the segments that you can satisfy in a superior way 3. Develop a marketing mix (4 Ps) to support the product’s positioning 4. Implementing the marketing strategy 5. Control phase

August 2008 Set Goals and Objectives Translate the plan into quantifiable and measurable terms -- so you can evaluate it Real Goals and Objectives What is it you want to achieve? +This year? +Over the next 3 years? +Over the next 10 years? How reasonable are those goals? Don’t set yourself up to fail!

August 2008 Determine Your Target Markets Products PricePlace Promotion Target Market

August 2008 A Target Market focuses A Target Market is a group of customers (people or firms) at whom your business focuses its marketing effort.

August 2008  The target market consists of the individuals or businesses that you identify as the MOST DESIRABLE CUSTOMERS -- Not whoever is now buying or will buy your products  Determining a target market can help identify a COMPETITIVE ADVANTAGE for the firm in the market. Choice of target market will determine your marketing strategy not vice versa

August 2008 Know Your Target Market Demographic The psychological determinants & social factors Market Segmentation - consumers and competitors Determine why customers buy your product or service for each market segment  Who are your most profitable customers?  What is important to them  When, where, how and what do they buy?  Read what they read..

August 2008 ¢Convenience - On-the-go foods, meal solutions, and functional packaging ¢Wellness - Fear about aging, declining health, and increasing medical costs; Look for products offer health benefits ¢Food Quality and Safety- Quality is the basic ¢Gratification - I am worth it, Help them succeed 4 Primary Motivators 4 Primary Motivators of Today’s Consumers

August 2008 Choose Your Marketing Position and Differentiate Yourself Your strength and weakness Your competitors’ strength and weakness Find out your position in customers’ mind –The Best Product –The Best Total Costs –The Best Solution - best product mix, best service, convenience, customization Make Sense of Your Position

August 2008 Product Strategies Products PricePlace Promotion Target Market

August 2008 What are your products and/or services +Sell the benefits not just the product +Give your customer a REASON to buy your products Agricultural products and services are often generic. -- Differentiate your products and service is the ONLY way to enhance sales and prices.

August 2008 Physical Characteristics: features, performance, durability, packaging Ways to Differentiate Your Product Value-added, Convenient

August 2008 Something Bigger or Better

August 2008 Something Unique

August 2008 Availability: stores, by phone, fax or internet, diversity Product Diversification

August 2008 Service: delivery, installation, guarantee, training, maintenance, repair Think for your customers

August 2008 Think like your customers

August 2008 Share your knowledge

August 2008 The teachable moment

August 2008 Image: symbol, event, media, information Make the image tangible

August 2008 Something for the kids

August 2008 Make it close to home

August 2008 Make it fun

August 2008 Price: from very high to very low Ways to Differentiate Your Product - cont. VALUE “VALUE” to consumers = Quality + Service + Information + Price Pricing Strategies

August 2008 Pricing Questions How much do your competitors charge? How much are customers willing to pay? Does your product or business have additional value/image for which price may be raised? What is your cost to produce the product? -- Pricing for profitWhat is your cost to produce the product? -- Pricing for profit

August 2008 Profit Cost Accounting 101 Variable Costs Fixed Costs Price (Revenue) Contribution Break-even (fixed costs are items that do not vary with production) (variable cost are items that vary with production )

August 2008 Profit Equation = VOLUME (PRICE-COST) PROFIT Unit Costs ($) = Fixed Costs ($)Variable Costs ($) + Units Produced (lbs, dozens, bag) (Don’t forget to take into account shrinkage)

August 2008 Price-Lining - Feature products at limited prices Single-pricing - Charge same price for all items Everyday low price - a value image Some Pricing Strategies

August 2008 Odd-ending pricing $.99, $.49 endings How about $.50 ending? Not for Farmer’s Market

August 2008 Volume pricing - 1 for $2.50; 2 for $4.99 (or $5.00) - No real discount

August 2008 Quantity discount pricing - One for $2.00 and three for $ Encourage people to buy more

August 2008 Cumulative pricing - Base on the total volume purchased over a period of time - Incentive for return purchases

August 2008 Trade discount/Promotional allowances - Reduction in price for marketing function buyers will perform Cash discount - Encourage buyers to pay their bills early/on-time Seasonal discount

August 2008 Price clearly More Pricing Reminders Lowest PriceHaving the “Lowest Price” in the town image can’t get you higher prices for higher quality.

August 2008 Place Strategies Products PricePlace Promotion Target Market

August 2008 Place/Distribution Strategies Depend on the target market’s needs & wants, and where you have a competitive edge. 4Farmers markets 4Pick-your-own farms 4Farm stands/ Value-added products 4Entertainment farming/Agri-tourism  Community supported agriculture (CSA) 4Cooperatives 4Mail order/ Internet 4Wholesale: supermarket, restaurants, brokers, etc.

August 2008 Direct Marketing Methods

August 2008 A New York survey shows that direct marketers utilized an average of 2.3 marketing channels More Than Just Retailing

August 2008 Promotion Strategies Products PricePlace Promotion Target Market

August 2008 Five Promotion Tools 1. Advertising +Paid communication - TV, radio, newspaper, etc. +Change mind don’t change behavior +Select the appropriate media -What do they listen to? What do they read? 2. Sales promotion +Coupons, in-store displays, trade shows, samples, in-store demonstrations, and contests. +Change behavior - Most recalled advertisement +Supplement and coordinate efforts in the advertising and personal selling efforts.

August 2008 Five Promotion Tools - cont. 3. Public relations +Non-paid communication presented by the media. Publications, Events, News, Community involvement, Identity media, Lobbying activity, etc. +Create a positive image 4. Direct marketing/mailing +Most Targeted +Database marketing 5. Personal selling +Employee is your most important asset +Don’t forget training

August 2008 Design a Multi-Media Promotion Strategy Target market demographics +age, gender, location, education, occupation, income level, household type, marital status Be conscious of psychographics (motivators) +needs, values, buying styles, cultures, interests Consider your differentiation marketing position Be Small but don’t Look Small Communicate & Celebrate +Don’t forget your customers and don’t let customers forget you!

August 2008 Effectiveness of Marketing Tools

August 2008 “Word of Mouth” Promotion -- Need to Generate Publicity Ability to Write Press Releases Anyone can write a press release - Will it get printed? Key elements of a good press release: +Title – Who - What When - Where +Utilize the first paragraph to summarize the entire release. +Add the details starting with the most exciting. +Closing statement to encourage participation. +Let press know more information and photos are available. +At least one press release per month and work your way up to two.

August 2008 When to Promote? % of Surveyed Direct Marketing Sales, by Month

August 2008 Marketing Budgets

August 2008  Processes  Processes- B usinesses need to develop orderly, efficient processes to take care of customers, 3 Additional Ps - in the Experience Economy Easy In; Easy Out

August 2008

e. g. U-pick operations need to design a systematic way to handle customers- parking, containers, assigning rows or areas to pick, and handling the cash register.

August 2008

 People  People- personnel expenses represent the largest category of cash expenses. It was identified by New York Direct Marketers as the number 1 barrier to success.  Especially important for businesses with a service component

August 2008 Your Staff is the Most Important Marketing Asset Friendly, courteous and knowledgeable staff They are a reflection of your business even more so than your signs, your displays and your products, because they talk. Fact: Customers will return to your business if they are unhappy with a product but will not return if they are unhappy with an employee. Fact: Customers will patronize your business if they are treated pleasantly even if your prices are higher. Fact: Customers will remember your business by the person who took care of them more than by the product they purchased. Put your grumps in the back!

August 2008 Employees Training 101 Some of Simple Customer Service Techniques +Double check +Pretend it’s you +Get involved +Stay focused and Listen +Ask questions and Listen +Do something extra +Smile - show your teeth +Use a complete sentence +Care +Laughter

August 2008  Presentation  Presentation- This could be considered as the “PACKAGING” of a business. Customers often form opinions of a company and its service on the basis of the presentations.

August 2008

Implementing and Control Phase Evaluate Goals & Objectives Budgeting +In addition to financial budgets +Time: Good marketer spends % of his/her time marketing +How many of us can afford to spend this much time marketing? +The real question is…how many of us can afford not to spend this much time marketing?

August 2008 Implementing and Control Phase Action Plan and Timeline: +Who is responsible? +What tasks are they responsible for? +When the tasks are to be completed? Monitor, Evaluate Don’t be Shy to Revise the Plan

August 2008 Identify New Markets/Diversification + Product mix, other enterprises/mktg channels, new buyers, expand season + Purchase to resale Add Services + Delivery, quality, add hours More Marketing + Promote local family farm reputation, image, and tradition + Building strong customer loyalty/relationship

August 2008 Become more efficient + Reduce input use holding price and product quality + Become a cost leader + Exploit quality differences to increase revenue more than costs (size, color, taste, variety, etc.) Strategic alliance and collaboration Reduce Risks -- crop insurance, self insurance, estate planning