#40 Direct Marketing Options
Benefits of Direct Marketing
The main attraction of direct marketing, compared with selling through traditional wholesale markets, is that you receive the full share of the consumer dollar and have more control over the price you receive for your products. Additionally, you have ample opportunity to tell the story of your product to the purchaser and for the to learn from you. But with direct marketing, you’ll also incur extra costs – not the least of which is your time. Be sure to evaluate each option carefully as part of a farm business plan.
Farmers markets are a good place to develop your marketing skills. Start by visiting markets in your area. Inventory what’s available and note what does not sell out by the end of the day. Don’t grow what doesn’t sell unless you can clearly differentiate your product and have assessed it has a market.
Get a copy of the market rules. Some markets have strict rules as to what types of product can be sold, the distance products travel to market, if a farm owner must be present at each market, and many more. Determine if your business plans and goals match the market rules.
Be sure to study the customers. How many are there? What is their ethnicity? Are they young or old? Are they families or single buyers? Affluent or bargain shoppers? Ask shoppers and vendors what they like and don’t like about the market.
To be successful, you need to enjoy interacting with people and be willing to invest the time it takes to pick, pack, transport, set up and sell. To maximize potential returns you need to sell for as long a season as possible. For produce vendors, this means growing a wide variety of crops. Farmers’ markets sales alone may not generate enough money to make a living, requiring you to look at additional marketing strategies, but they can be a good place to start a business.
To find New York farmers markets near you, contact the Farmers Market Federation of NY at (315) 400-1447 or http://www.nyfarmersmarket.com/ or visit the NYS Department of Agriculture and Markets’ website at http://www.agriculture.ny.gov/FandMSearch.html.
On-farm sales can both enable urban farmers to incur a profit as well as to attract visitors to their urban farm sites, subsequently fostering increased visibility and community engagement.
To be successful, you need to enjoy having lots of people at your farm. Risk management and liability insurance is a must. Building loyal clientele is key, and may take many years. Your business plan must be based on realistic customer numbers and sales projections.
Keep in mind that some municipal codes and zoning ordinances prevent the sale of fresh produce and other farm products from residential and other districts. Be sure to check your city’s ordinances before pursuing any on-farm sale endeavor.
Internet and Mail-Order
If you develop unique, high-value products that are easy to ship, this strategy can complement your other direct marketing efforts. Packaging and shipping costs need to be considered but for products that are not bulky or heavy, this can be a profitable strategy. One easy option for getting started with internet marketing is to list your farm on the following free sites: www.localharvest.org or www.nyfarmersmarket.com/.
Community Supported Agriculture
Community Supported Agriculture (CSA) operations typically provide a weekly share box of produce to customers who pay for their shares at the beginning of the season, and the up-front money reduces financial and marketing risks for farmers, and customers share in production risks. CSA operations also increase public visits to, and the visibility of, an urban farm. For more information about running a CSA operation in an urban environment, see Factsheet #42.
Many chefs are looking for fresh, local products to feature in their menus, and urban farmers can benefit from the wealth of restaurants in urban centers. You will find that chefs are as busy as farmers. Develop personal relationships with chefs, find out what they want and what they are willing to pay. Grow those products for them for as long a season as possible. You need to offer consistently-available, high quality, clean products that are delivered on time. Restaurant sales need to be an intentional strategy, not a way to dump surplus product. Drawbacks include the need for small quantities of some items. Watch that delivery costs and time don’t eat up profits, and be clear on payment terms. Once a relationship is solid, less face-time is needed.
Sales to Food Retailers
Increasingly small food retailers are interested in sources of locally grown food. One option is to contact retail farm markets in your area. Many do not grow all they sell. Also, check out food cooperatives, natural foods stores, and independent groceries. Most will only pay wholesale prices found at regional markets.
Non-independent retailers, from convenience stores to super-centers, have purchasing requirements unique to their business. Some purchasing decisions are made at the local store level, but most require higher-level. Start with local store managers and head buyers of relevant departments.
Food retailers expect local prices to be in line with wholesale prices. Understand buyer expectations and prices before agreeing to delivery. Some may reject product on quality or because they have a better supply and price elsewhere. The advantage of selling to retailers is that you can move more volume to fewer buyers, reducing your marketing costs. The disadvantage is that it can be a fickle, price-driven market. Be sure to spread your risks.
Institutional Food Service Sales
Some schools, nursing homes, hospitals, prisons, and other institutions can purchase local products. Many are part of a buying consortium and have a single goal: keep costs low. Meals can be pre-prepared or ready to serve, with few fresh items. Institutional food sales also come with institutional barriers, including regulations and requirements that dictate their purchasing practices. One way to tap institutional markets is to go through the distributors who sell to them. This adds a middleman and reduces returns. High quality, volume sales, standard packaging, and reliable delivery will be necessary to make this type of customer relationship viable.
For More Information
For more information on direct marketing, contact the North American Farmers’ Direct Marketing Association online at http://www.farmersinspired.com/.
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