22 September 2009

3 minute read

One of the biggest mistakes made in running a business is producing a product without researching if there is an actual market for it. Success comes in finding ways to encourage the market to choose the product been produced first. Marketing is an ongoing process of understanding the customers/buyers needs and striving to fulfill those needs better than competitors. Marketing is everything that happens before and after the sale that facilitates both current and future sales transactions with the customer/buyer. Unless the producer has a good knowledge of the sector they operate in, and how their product fits into that sector, it is difficult to focus on anything other than production. Changing consumer demands, local and global competition and other market forces have resulted in the business of agriculture moving from being focused on production to being market focused.

Understanding the marketplace is the first step in positioning a successful product for profit. Market research or an analysis of the marketplace is vital before starting a new business, introducing a new product, maintaining your existing business, or discovering why the demand of a product is declining. Knowing and anticipating the customer's/buyer's needs is important. The challenge for producers is to stay ahead of the curve to anticipate and prepare for marketplace changes.

Through the market planning process, the five P's of marketing need to be considered. The task is focusing on the answers from the marketplace/customer to the various questions posed. The opportunity becomes establishing a customer relationship as opposed to just making a sale. Here are the five P's with some sample questions for cattle or beef being the product:

Product - How does the product satisfy the customer's needs?

Positioning - What is unique about the product compared to competitors and how does this create a target market?

Place - What is the place or distribution channel that makes the product available to the customer? Are there alternatives?

Price - The price of the product must balance the value or benefit to the customer with profit or return to the seller and be competitive with the competition. What are the price risks and are there opportunities to manage price risk?

Promotion - What information and methods can be used to promote the product?

Marketing should focus on the objective(s) the producer wants to achieve in their marketing plan. Market planning will consider what and how much is produced, when it will be available to market, where it will be sold, and the cost to produce it. Understanding the strengths and weaknesses of the marketing channels available is a key step in market planning. These factors impact the business plan through the cash flow. A marketing plan is like a road map since it provides the details, responsibilities, and actions for marketing cattle or beef. This minimises the guesswork and emotion when making key marketing decisions.

So what can be done to facilitate marketing? Besides the prior items discussed, the following list has seven action points to consider:

• Develop and maintain an understanding of the market trends, impacts, and how it functions
• Explore and evaluate alternative market opportunities
• Assess the marketing skills and abilities to define the training needs
• Determine the cost of production and profit margin
• Foster and build relationships within the value chain
• Develop a network of market information resources and services
• Benchmark and monitor the marketing plan