Direct Marketing
NickAugostini
Marketing Specialist
NCDA & CS
What is Direct Marketing
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Direct marketing includes any method by which farmers sell their products directly to
consumers.
Justification for establishing a direct marketing outlet is based primarily on the producer’s
desire to increase the financial returns from farm production.
This opportunity for increased returns stems from
1) opportunities
to reduce marketing costs (and capture
profits) attributed to intermediaries (middlemen)
in the supply chain.
2) consumer desire to buy (and willingness to perhaps pay a
premium for) riper, fresher, higher-quality fruits and vegetables. These two factors combined have often
generated substantially higher net returns for producers.
3) Operators of small farms may find that direct marketing translates into additional
income when there is insufficient volume or product selection to attract large processors
and/or commercial retail buyers. Thus, direct marketing may be the only viable marketing
alternative for small farmers. A substantial number of producers use direct marketing
channels to augment sales to wholesalers, retailers, and processors to reduce the risk of
relying on a single market channel.
Direct Marketing
Advantages
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Greater control over marketing
Producer sets price
Satisfaction in selling to the people
who enjoy your produce
Use of family labor
Cash payment
Greater profit potential
Customer feedback
Less stringent packing
requirements than wholesale
Disadvantage
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Limited volume
Must deal with all kinds of people
Need for greater variety of marketing
skills
Greater time & resources spent in
marketing
Types of Markets
• Pick-Your Own
U-Pick
Pick-Your-Own
Advantages
• Reduced need for seasonal
harvest labor--transportation,
grading. Washing, packing,
packaging,and storage cost are
eliminated
• Average purchase per customer
is larger than at other direct
market outlets; and
• Lower capital needed to get
started
Disadvantage
• Customers may damage
produce or plants
• Increased cost for insurance
• May need alternate outlets
• Need for large parking areas
• Increase cost for sales and
supervisory labor
• lowest prices
• Long hours
• Bad weather may reduce
customers
Types of Markets
• Pick-Your Own
• Roadside Markets
Roadside Markets
Roadside Stands
Advantages
• Reduced marketing costs
such as transportation,
shipping containers and
commission charges
• Chance to use family
labor; and
• Attractive displays and
variety of produce can
help draw customers.
Disadvantages
• Higher operating costs
• Sales labor needed for
operating stand
• higher cost for advertising,
promotions and consumer
packaging materials; and
• zoning and planning
restrictions
Types of Markets
• Pick-Your Own
• Roadside Markets
• Farmers & Tailgate Markets
Farmer Markets
Farmers & Tailgate Markets
Advantages
Disadvantages
• Minimal marketing startup
costs
• exemption from standard size
and packing regulations
• Little or no packaging,
advertising and promotion costs
• Prices substantially higher than
wholesale
• Limited volume-need for other
outlets
• Greater time involved
• Weather can keep customers
away
• Rules, policies and politics you
have to deal with
• Volume per sale smaller than
wholesale
Types of Markets
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Pick-Your Own
Roadside Markets
Farmers & Tailgate Markets
CSA’s
CSA’s
CSA
Advantages
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CSA's direct marketing gives farmers and growers the fairest return on their
products.
CSA keeps food dollars in the local community and contributes to the
maintenance and establishment of regional food production.
CSA encourages communication and cooperation among farmers.
With a "guaranteed market" for their produce, farmers can invest their time in
doing the best job they can rather than looking for buyers.
CSA supports the biodiversity of a given area and the diversity of agriculture
through the preservation of small farms producing a wide variety of crops.
CSA creates opportunity for dialogue between farmers and consumers.
CSA creates a sense of social responsibility and stewardship of local land.
CSA puts "the farmers face on food" and increases understanding of how,
where, and by whom our food is grown.
CSA
Special Challenges
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Educating consumers about the delights of eating in-season produce
Management-Don’t over commit
Management-People skills are needed to deal with the variety of consumers
Customer turnover 30%-50%/year
Need for continues marketing
Types of Markets
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Pick-Your Own
Roadside Markets
Farmers & Tailgate Markets
CSA
Restaurants
Restaurants
Restaurants
Advantages
• Steady market throughout
season
• Advanced orders
• Premium pricing
• Greater flexibility in products
grown
Disadvantages
• Not practical unless you are
near large population centers
• Requires frequent deliveries
• Limited volume may not justify
direct delivery
• Product liability insurance may
be required
Types of Markets
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Pick-Your Own
Roadside Markets
Farmers & Tailgate Markets
CSA
Restaurants
Retail Chains
Retail Chains
Retail Outlets
Advantages
• Small capital investment to get
started
• Potential for large volumes
• Upscale markets may be willing
to pay top prices for specialty
items
• Potential for brand name
product identity
Disadvantages
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Increased transportation costs
Increased delivery time and cost
Increased packaging costs
Dependence on the retailer’s
ability to sell the product
Growing and Marketing for
Quality
• Quality builds repeat customer business; it’s
quality and taste that brings them back for more
• Quality brings higher prices
• The most important ingredient for good taste is
freshness
• Don’t mix premium products with lesser grade
products
• Have an outlet for your seconds
Preparing To Sell
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Know yourself and your product
Ask yourself: Why should buyer buy from me?
Have a price list ready
Know what your production and transportation
costs are
• Never ask a buyer what the best price is he can
pay
Satisfying Expectations of the Buyer
• Communications
Communicate
Satisfying Expectations of the Buyer
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Communications
Liability Insurance
GAP’s
Constant flow of product: e.g.:Scheduled plantings
for that customer.
• Post harvest handling.
Post Harvest Handling
Satisfying Expectations of the Buyer
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Communications
Liability Insurance
GAP’s
Constant flow of product: e.g.:Scheduled plantings
for that customer.
• Post harvest handling.
• Proper packing and labeling.
Satisfying Expectations of the Buyer
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Communications
Liability Insurance
GAP’s
Constant flow of product: e.g.:Scheduled plantings
for that customer.
• Post harvest handling.
• Pre-cooling.
Pre-Cooling
Satisfying Expectations of the Buyer
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Communications
Liability Insurance
GAP’s
Constant flow of product: e.g.:Scheduled plantings
for that customer.
Post harvest handling.
Proper packing and labeling.
Pre-cooling.
Trucking.
Trucking
Satisfying Expectations of the Buyer
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Communications
Liability Insurance
GAP’s
Constant flow of product: e.g.:Scheduled plantings
for that customer.
Post harvest handling.
Proper packing and labeling.
Pre-cooling.
Trucking.
Marketing and promotional materials.
Marketing materials
• POP materials, signs,
recipes
• PLU or UPC’s
• Boxes
www.ams.usda.gov
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Pricing
Packaging
Wholesale Market Reports
Farmers Market Reports
Auction Market Reports
Ornamental Crop Reports
Publications
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The Packer
Produce News
Produce Merchandising
Produce Business
American Fruit Grower
American Vegetable Grower
In Conclusion
• Marketing research and planning should be done prior to planting.
• Marketing is knowing what your customer wants and needs and filling
them on a consistent basis with a quality product.
• Promotion is a part of marketing and helps to identify and create
demand for your product with the buyers.
• Communication is a key ingredient of success.
• Building buyer confidence is not an overnight thing.
• Your not only selling your product-your selling yourself and the
reputation of your business.
Questions ?