Page 1 of 3 New Food and Farming Ventures - Resource Manual Sept. 2003
Chapter 3  Marketing
The Four P’s of Marketing1
Successful businesses need a strong focus on marketing. A starting point is an understanding of
the “Four P’s of Marketing.”
The Four P’s of Marketing:




Product – what to produce to satisfy the wants and needs of customers
Promotion – how to promote products to create demand among potential customers
Place (distribution) – where to sell products, including the marketing channels through
which products are distributed to customers
Price – what to charge for products
Product
A product is anything offered for acquisition that satisfies a want or need. Products can be
physical objects or services. Products should be thought about on three levels:
1) The actual product - its features (i.e. size) and attributes (i.e. organic)
2) The core product – needs that are met or benefits that are received (i.e. better health)
3) The augmented product – measures taken to help customers put the product to sustained use
(i.e. recipes)
Success in product development hinges on two considerations. One is developing products that
consistently satisfy the needs of customers while providing them with direct and valuable
benefits. The other is differentiating products by developing features and attributes that make
them better than competitors.
Promotion
Promotion is any communication that helps make a sale and build customer relationships.
Examples include brochures, newspaper ads, and providing product samples. Promotion is
marketing in the purest sense of the term. Successful promotions increase consumer perception
of value, thereby increasing consumer demand and willingness to pay the prices set for products.
The best way to increase consumer perception of value is by promoting the unique differences of
products from those of competitors. Creating perceived differences helps products be less price
sensitive. It also makes products harder for others to effectively compete against. If promotional
activities do not adequately differentiate products, the supplier will simply be another “me too”
company forced to compete based on price to gain or maintain markets.
1
Adapted from The Specialty Cheese Market. October 2001. Prepared for the North Central Initiative for
Small Farm Profitability by The Food Processing Center, University of Nebraska-Lincoln. Full report
available at http://www.foodmap.unl.edu/report_files/The_Specialty_Cheese_Market.pdf.
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Chapter 3  Marketing
Differentiating one’s company is also important. What is the company’s image? Is the company
a discount seller or a gourmet producer? It is important to decide on the company’s image and
make sure promotional activities accurately portray that image.
Place (Distribution)
Place (distribution) includes activities that make purchasing products convenient for target
customers. Examples include farmers’ markets, roadside stands, restaurants, or grocery stores.
Place involves the geographic area to be covered. Place also involves the number and types of
markets served. Both impact a key aspect of marketing, which is physically transporting product
from where it is produced to locations where customers make purchases. Transportation of
products utilizes what are known as distribution channels. The three common distribution
channels include consumer direct, retail, and foodservice.
Consumer Direct Distribution
Consumer direct channels include selling to the customer at a farm, at a farmers market, through
mail distribution via catalog sales, or through other avenues such as weekly produce deliveries
during the growing season (known as Community Supported Agriculture).
The advantage of selling direct to consumers is that profits are not split with anyone outside the
business. The farmer controls who they market to and how. They are able to tell their story on
how the product was produced to each customer via their interactions and their promotions.
The disadvantage of selling direct is that the farmer is responsible for all of the marketing,
invoice collection, advertising, and transportation functions. The growth of the business is
dependent on how much time they can put into marketing their product.
Retail Distribution
Retail distribution involves various types of retail stores that sell products for home use. Retail
stores vary greatly in the flexibility they have in selecting products to carry. With some retailers,
decisions are made at corporate headquarters where buyers, merchandisers, and category
managers make all decisions, which are passed down to the individual stores. In these situations,
suppliers attempting to gain entry into the market must work directly with the corporate office.
Other retailers give individual stores a great deal of autonomy in making decisions relative to
product selection, pricing, and promotion. A supplier attempting to gain entry into this type of
retail market would work with individual stores on product introductions. After a product has
established a successful track record at the individual store level, then corporate may take an
interest and work with the supplier.
. . . and justice for all
The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color,
national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited
bases apply to all programs.) Many materials can be made available in alternative formats for ADA clients. To file a complaint of
discrimination, write USDA, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW,
Washington, DC 20250-9410 or call 202-720-5964.
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Chapter 3  Marketing
Foodservice Distribution
Foodservice distribution involves any facility that serves food to people. The foodservice
industry is extremely fragmented, with each segment filling different consumer needs. In
general, foodservice can be partitioned into two sectors: the commercial sector and the noncommercial sector.
The commercial sector includes independent and chain restaurants, delis, hotels and professional
catering. Menus in these facilities are shaped by the fact that consumers can choose where to eat
and what to purchase, which means these facilities are more responsive to consumer demands.
The result is that the commercial foodservice sector may be the most lucrative non-direct market
for specialty products. Indeed, there has been an increase in the use of these products by
restaurant chefs, especially those working in independently owned high-end restaurants.
The non-commercial (institutional) segment includes hospitals, nursing homes, schools, and
prisons. This is a “captive” market where consumers typically have limited choice in menu
selection. Because this is a captive market, they can be less interested in specialty products,
although there has been some success in selling products to colleges and universities.
Price
In the narrowest sense, price is the amount of money charged for a product. More broadly, it is
the sum of all the values involved in a product. Increasing customer perception of value through
differentiation and effective promotion increases demand for products; premium-priced products
not supported by customer demand will fail due to insufficient volume.
Price is the only element in an organization’s marketing functions that produces revenue; all
other elements represent costs. Price is also one of the most flexible elements of the marketing
functions. Unlike product features and distribution channels, price can be changed quickly.
Pricing and price competition is the number one problem facing food and farming ventures. A
common mistake is setting prices without considering all marketing functions. For example,
promotional costs, such as advertising expenses and time spent making sales presentations, need
to be built into price. Another significant cost is distribution, or physically moving the product
from its place of production to the place where customers make purchases. Costs can also come
from broker fees, spoilage, and revenue collection. Any cost involved in the production,
promotion, distribution, and servicing of products should be built into prices set for products.
It is important to guard against under pricing for another reason: price lends a value to the
product in the mind of the customer, and under pricing can lead the consumer to believe the item
is of little value. When pricing products, suppliers place a value on their product and company.
They are not just selling a product. They are selling a package that includes the unique features
and benefits of the product, company, and customer service.