Marketing Plans for Farms Catering to Niche Markets

Final Report for ONE04-032

Project Type: Partnership
Funds awarded in 2004: $4,580.88
Projected End Date: 12/31/2004
Region: Northeast
State: New Hampshire
Project Leader:
Seth Wilner
UNH Cooperative Extension
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Project Information

Summary:

This project addressed the marketing aspect of agriculture and sought to build capacity in farmers and farmer educators in developing marketing plans. Many farmers have recognized the need to build their skills in the areas of marketing. They have requested education that goes beyond the basics and results in a product they can follow, modify and update. Working together with four farms, this grant sought to build the skills and knowledge of 10 farmers and a county Extension educator through individualized, in depth work with a marketing consultant.

Of the four farms participating in this project, three farms had been operating for two decades or longer and one farm was relatively new, operating for four years. All farms direct marketed to the public and offered value added products. In addition, two farms had a wholesale outlet for some of their products.

Two private consultants were hired for this project to compare and contrast their styles, skills, and approaches in developing marketing plans. Each consultant worked with two farms, spending between nine and fifteen hours on each farm and an additional six to 10 hours working off farm on this project.

This project resulted in the development of four marketing plans, some portions of which were implemented this past season. The bulk of these plans will be implemented during the 2005 growing season and the impacts will be measured over the course of the next year. Already though, two farms have increased their profits and all of the participating farmers have built their skills in direct marketing.

In addition to the skills in marketing, all participants also built their skills in enterprise analysis and enterprise budgeting. This proved to be a critical step in developing a marketing plan. Likewise, farm goals defining the desired economic situation, quality of life, environmental conditions and land uses were also helpful precursors to a marketing plan.

Introduction:

This project is part of a larger effort to help increase the sustainability of small farms by increasing the consumption of local agricultural products and services. This effort is taking shape at the town and county level in Sullivan County, yet it such efforts are also happening throughout the northeast region. Organizations and agencies such as State Departments of Agriculture, Community Involved in Sustaining Agriculture (CISA), Cooperative Extension, The NH Coalition for Sustaining Agriculture, Vital Communities, and others are spearheading efforts to develop markets, reduce barriers to direct farm sales, and educate consumers about the benefits of purchasing locally produced goods and supporting local agriculture.

This project contributes to that larger effort by building the capacity of farmers to effectively market their products and services. This focus is the next step in supporting sustainable agriculture, as farmers have expressed a desire to improve their marketing skills.

The outcomes of this project include the development and implementation of four marketing plans. Data will be collected on the economic impact of implementing these marketing plans at over the course of 2005. Data will also be collected about changes made in terms of farm management and any effects on the farmers’ quality of life.

Data collected this past year includes the time involved in developing a marketing plan, the processes and steps used by two consults, the benefits of the process expressed by the farmers, and the survey tools used to collect customer information.

Project Objectives:
Objectives/Performance Targets:

The farmers involved in this project desired to:

Build their marketing skills
Expand their current markets to increase their customer base.
Increase the amount of sales per customer.
Be able to analyze the profitability of their different enterprises.
Learn how to collect customer information to guide marketing efforts and products sold.
Potentially develop new markets.

The Extension Educator involved in this project desired to:

Build knowledge about the methods and techniques used in developing marketing plans.
Learn how farmers best gain the skills to develop and implement marketing plans.
Learn what information farmers should collect to develop and monitor marketing efforts.
Learn how to use farm records for enterprise analysis.

Cooperators

Click linked name(s) to expand
  • Paul Brown
  • Lisa Ferrigno
  • Chris and Amy Hemmingway
  • Leo and Jane Hunter
  • Fred and Norma McDonough
  • Ben and Becky Nelson

Research

Materials and methods:
Materials and Methods:

Original Planned Approach:

The original approach to this project was to use a “train the trainer model” in which a marketing specialist would train 10 farmers from four farms to develop and implement marketing plans. The project was then going to shift to a “farmer to farmer” second phase in which the farmers who were trained would work with other farmers and teach them how to develop and implement a marketing plan.

This approach was changed over the course of the project for two primary reasons: 1) developing marketing plans required more know how and skills than simply learning a method and being able to go out and teach it to others and 2) the farmers did not feel comfortable enough with their skill level to work directly with other farmers.

Instead, the participants (the four farms and the county Extension educator) decided to collect data about the process and impacts of developing marketing plans and share this with other farmers and farmer educators. The partnering farmers and I will share our information and experiences at workshops, organization meetings, and with other growers over the course of the next two years.

Actual Implementation:

Two private sector marketing consultants were hired to work with two farms each. Their approaches and techniques were compared, as were the resulting marketing plans, educational impacts and time and effort required on the part of the farmer.

Consultant One: Charlene Andersen, Kamigo Marketing LLC, 54 Garland Road, Nottingham, NH 03290. Charlene worked with Beaver Pond Farm and Hartfield Farm. Beaver Pond Farm involved four farmers, Norma and Fred McDonough and Ben and Becky Nelson. Hartfield Farm involved two farmers, Lisa Ferrigno and Paul Brown.

Both consultants drove to Sullivan County and worked directly with all the farmers. For most of the visits all the participating farmers were present at the meetings.

Charlene Anderson’s approach involved four on-farm visits, ranging in time from two to four hours and averaging three hours per visit. The farm visits were held in three consecutive weeks to develop the plan. In addition to the on-farm work, Charlene put in another 5 hours at her office. Once the plan was completed and the farmers had time to review it, a final farm visit was scheduled and occurred one month from the last visit. Charlene’s approach also required five hours of homework from each farm.

Charlene’s first visit was spent getting to know both the farmers and the farms. She focused on learning about the farmers’ goals, current situation, farm history, and about the farm’s products and enterprises. At the conclusion of the first visit she requested some information including Profit and Loss statements and other financial reports.

Prior to leaving, she also left the farmers with a homework assignment. The farmers were to fill out a questionnaire entitled, “Market/Sales Analysis for Market Plan Development”. This questionnaire had the farmers provide information about their current marketing capabilities, products, existing markets, product sales and pricing information, as well as information about what makes their products special. The questionnaire also asked for information on farm’s competitors, seasonality of sales, distribution networks, county demographic information and customer characteristics.

The second visit was devoted to working with the farmers on a SWOT analysis, determining the farm’s internal an external strengths, weaknesses, opportunities, and threats. A discussion on strategies to take advantage of strengths and opportunities and mitigate threats and weaknesses followed the SWOT analysis. The strategies were later translated into action plans for each farm. Charlene also assessed core competencies for each farm and helped the farmers understand how their farm differed from their competitors and how they could take advantage of these differences.

The third visit utilized another homework assignment in which the farmers provided data on the sales from the previous year and their desired sales for the next two years for each product line or enterprise. During this third visit, Charlene developed sales objectives, target markets, and marketing objectives. A process called position mapping was also used. Each product line identified attributes and these were mapped against the farm’s competitors. This tool was very useful in helping the farmers determine where to focus their efforts in terms of marketing and expanding their customer base.

Charlene synthesized all the information from the farm visits and homework at her office and sent the farmers a completed marketing plan, action plan, and a report capturing the essential information from the visits and homework. Her marketing plan included a section on monitoring and measuring so that the farmers could collect data to see if they were making progress on their goals.

Charlene’s fourth visit was spent reviewing the plan, answering any questions the farmers had, and stressing the importance of monitoring the plan to see if the farmers are achieving their desired goals.

Consultant Two: Suzanne H. Withee, Farm Business Consultant, First Pioneer Farm Credit, 2 Constitution Dr., Bedford, NH 03110-6010. Suzanne worked with Hunter’s Acres and Hemmingway Farm. Hunter’s Acres involved two farmers, Leo and Jane Hunter. Hemmingway Farm involved two farmers, Chris and Amy Hemmingway.

Suzanne Withee’s approach involved two farm visits ranging from two to three hours and averaging two and half hours each visit. An additional five hours per farm was spent working in her office. Each farm also had three hours of homework to complete.

Prior to the first visit Suzanne called each farm and got to know a little about the farm and the farmer she spoke with. Suzanne followed up the phone conversation with a letter requesting that the farm send her the following information: 1) A copy of their 2002 and 2003 Schedule F, or their Profit and Loss Statement, 2) A copy of the farm business’s marketing brochure, and 3) The completion of a Marketing Evaluation Scorecard.

The Marketing Evaluation Scorecard asked the farmers to rate their skills (using a 1 to 5 scale) in the following areas: market research, image amplification, customer relationships, pricing strategy, market appearance, advertising, community awareness and service, new products and enterprises, professional improvement, dollars and time committed to marketing, and monitoring skills.

After receiving this data, Suzanne collated it and used it to prepare for the first visit. The first visit was devoted to working with each farm to define their marketing goals and strategies, learning about the farm’s competition, product lines, barriers to market penetration, and opportunities to increase marketing penetration.

Suzanne took notes and went back to her office, collated the notes and sent a letter out three weeks later. The letter captured the essential information from the previous farm visit, phone call and homework assignment. It identified strengths of the farm, some financial analysis, the stated farm goals, and included a customer survey Suzanne designed as well as a homework assignment.

Each homework assignment was specific to both the farmer and the farm. The assignments were not the same for each farm. One assignment asked a farmer to brainstorm and write down different ways the farm could grow gross sales with the least amount of capital expense, another assignment for a different farmer was to go through the previous year’s receipts (or year to date receipts) and determine the average sales per customer, and the number of customers per year broken out by each month. Another assignment was to gather prices on custom processing work. Another assignment asked for enterprise budget numbers.

I helped conduct a customer survey at one farm, spending three hours during one of the peak sales days in mid August. I collated the information and sent it to Suzanne Withee and Hunter’s Acres.

After receiving the farms’ information, Suzanne processed it and then scheduled a second visit. This visit was scheduled seven weeks after the letter and homework assignments were sent. This visit began by summarizing all the previous information to date and then moved into an action planning exercise on different marketing strategies. Suzanne answered the farmer’s questions and gathered any remaining data she needed to draft a marketing plan.

A final marketing plan was sent to each of the farmers Suzanne worked with five weeks later. The marketing plan began with a goal statement, followed with strategy statement, listed the main product lines, and then followed with an implementation section. The implementation section identified barriers to increasing marketing penetration, followed by opportunities to increasing marketing penetration, and concluded with a specific action plan, including a due date and a lead person. The marketing plan concluded with a monitoring section.

Research results and discussion:
Accomplishments/Results and Discussion

The concrete accomplishments include the development of four marketing plans, financial analysis of four farms over the past year, and a host of learning outcomes which are discussed below.

The first two marketing plans were completed by May 14, 2004. This was the beginning of the growing season and as such the farmers had little time to read, process and implement the plan to any meaningful degree. The second set of plans was not completed until November 5, 2004 and thus the farmers were unable to implement many of the action items.

The strategies and actions laid out in the plans will be implemented over the following growing season (2005) and the impact data will be measured after the season is complete and after the fiscal year is over to determine economic impacts.

Learning outcomes:

Extension Educator

From my perspective as an Extension educator, I learned a great deal about how to develop a marketing plan. Participating in this grant reinforced the importance of beginning all farm management endeavors with a farm goal to guide the management decisions. Numerous times throughout this project, the economic, family and farm goals were pivotal to moving forward. Choices were presented that had obvious differences in terms of economic impact, labor, time, and on the farmers’ quality of life.

Additionally I learned that financial analysis and record keeping were also core aspects of developing a marketing plan. Each of the consultants requested and utilized farm tax records and financial information on sales, gross profits, overhead costs, and expenses and income for each enterprise or product line. Those farmers that were able to generate this information were far more knowledgeable about their business than those who struggled with this.

I also learned the different steps to developing a marketing plan and several processes that were used. I now feel capable of teaching farmers and small business owners the general steps and ways to go about developing a marketing plan.

Finally, I learned about the importance of monitoring in terms of marketing and modifying a marketing plan. I learned some specific methods to measure the impacts of various marketing approaches too.

Farmer

Only a cursory assessment has been made regarding the farmers’ learning outcomes. Those who worked with Charlene Andersen cited great benefit from the formal processes they engaged in. Including the homework assignments, two of the primary farm managers (one from each farm) said they learned a great deal about the profitability of their different enterprises.

Five farmers said it helped them to understand their farm better, including the goals of the others farmers on their farm, both in the present and the future.

All the farmers said they increased their knowledge about pricing and three farms raised the price on at least one item.

Two of the farmers said they could repeat many of the steps in the future to modify their marketing plan, demonstrating that they learned a great deal from the process.

Five farmers stated they increased their ability in farm stand set up, understanding where to place different goods to increase sales.

At least one farmer from each farm increased their understanding of methods to monitor various marketing actions.

Discussion

Two very different approaches were used by the two consultants, illustrating that there is not one way to develop an effective marketing plan. One consultant had a much more formal, structured approach that required almost twice the total time. This structured approach utilized more face to face time which seemed to increase the farmer’s understanding of the processes and their ability to repeat the steps and augment the plan on their on. Although the length and intensity of the meetings left the participants tired, they said they gained a great deal and that it was well worth their time.

The second consultant spent less time on the farm, which required less time on the part of the farmer. This consultant had a great deal of skill feeling out the farm situation and understanding the farmers desired goals and how to get there. This second approach was far less structured, yet still effective in producing a marketing plan that will serve the farm well. The farmers did not build their capacity in developing marketing plans as much as those who had a more formal structure and utilized specific processes.

The different approaches and the resulting outcomes increased my understanding about the importance of having farmers understand what they want from a marketing consultant. Some farmers simply want a plan that they can follow and do not wish to necessarily build their skills in developing a plan. Other farmers desire to build their skills in developing marketing plans and want to be able to repeat the processes that were used. I am sure each of the consultants could have met either need, we as participants did not know enough to ask for one or the other though. So we increased our knowledge in this area as well.

Another observation in terms of the different approaches used was that it appeared to be valuable to having consecutive weekly meetings. This allowed enough time for the farmers to do their homework and also kept the momentum going. The farmers who experienced weeks between visits or contacts lost their momentum and forgot what occurred at the previous meeting.

The initial steps to developing a marketing plan were very similar to developing a general business plan. Farm goals were identified, current farm conditions, including assets were assessed, financial analysis was performed at some level, usually at least at the enterprise level. From here though the marketing plan had the farmers look at their farm and compare and contrast it against their competitors. In one form or another, using various methods, the farmer then really compared and contrasted strengths, weaknesses, opportunities and threats. Based on these, and the farm’s goal and capabilities, an action plan was formed. This action plan outlined the marketing approach.

Both consultants spent significant time underscoring the value of monitoring the impacts of the plan. Clearly, monitoring is an important component of marketing, which makes a great deal of sense.

Action Outcomes

Three farms raised their prices on at least one item.
Two farms researched custom operators for some labor.

Other action outcomes will be measured over the course of the upcoming growing season.

Discussion:

The timing of developing marketing plans seems important. It appears that the off-season may be the most ideal time to spend developing the plan. This is when the farmers have the time it takes to work with someone or spend the time themselves. It took each farm between 11 and 21 hours to develop a plan. Most farms do not have this time during their prime seasons.

Yet a drawback to developing a marketing plan in the off-season is the inability to survey customers, this is important information used in the development of a marketing plan. If a farmer is considering developing a marketing plan or augmenting an existing one, they may want to survey customers during the season and then wait until after the season to process the data and develop a marketing plan.

Research conclusions:
Impacts and Outcomes

One farm raised their price of turkey by $0.70 per pound increasing their profit by close to $1,500.

One farm raised the price of their eggs by $0.50 per dozen.

Other impacts will be measured at the end of 2005.

Participation Summary

Education & Outreach Activities and Participation Summary

Participation Summary

Education/outreach description:
Publication/Outreach

In our grant proposal we had identified our public outreach to include farmers training and helping other farmers. This proved to be naïve with regards to the skills and experience necessary to develop a marketing plan. Working with a consultant to develop ones own plan does not build their capacity enough to teach others. As such, farmers will not be teaching others how to develop a marketing plan. Likewise, given that marketing plans involve assessing your farm against that of your competitors; the farmer to farmer approach seems ill-conceived now.

With that said, I observed all of the sessions on all of the farms, as well as received copies of the materials the consultants used. As I am not a consultant, but an educator, I intend to produce two workshops on developing marketing plans and share the information about the processes used and the outcomes achieved by the farmers who participated in this process.

One workshop will be offered this February, and the other in February of 2006. Additionally, this report will be shared with county growers and legislators. Excerpts from this report will also be used in newsletter articles.

Project Outcomes

Project outcomes:

Due to an incomplete data set, this section will need to wait until next year.

Farmer Adoption

As a result of the time the marketing plans were completed, farmers were unable to implement any significant amount of the plan this year. Next year I will measure farmer adoption as well as economic and social impacts and outcomes.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.