Marketing Strategy

I'm taking a farm business course put on by Everdale Organic Farm and Environmental Learning Centre. A question from one of the students (Monique, who is one of the interns at Whole Circle Farm) is about how much to spend on marketing.

My answer posted to the class discussion site as follows:

Monique’s question and Dave’s comment hit on a lot of issues concerning the creation of a marketing strategy and how much of the budget should go toward marketing. The objective of marketing consist of four steps. They are, to figure out: 1. who are your customers; 2. How to attract your various types of customer; 3. How to satisfy the customers; and; 4. How to retain them. These are four distinct things. Answering these steps will answer how much resources, be it money or otherwise, to go toward a marketing campaign.

In the case of how to retain customers, a good illustration was when I had an office job, in the good old days. On the way to the office every day I had the choice of buying my coffee from two street vendors. Their coffee tasted the same, and one vendor was more conveniently located than the other. So the conveniently located vendor was able to attract me to his stand (Step 2 above), but he wasn’t able to satisfy or retain me as a customer (Steps 3 & 4 above). The less convenient vendor was able to retain me as a customer for ten years. Why? Because he gave me and all his customers a big smile. The conveniently located vendor looked like he’d swallowed a mouthful of sand. So, at $1.25a cup every day for ten years, the convenient vendor lost out on almost $4,000in gross revenue from me. His smile would have been worth $4k! And that’s just for one customer. The smiling vendor figured out who his customers were, and was able to satisfy them with a cup of coffee, which had a cost to produce, and a smile, which cost him nothing.

Like the smiling coffee vendor, knowing who your customers are will help to determine how to develop your product, including how well to process it, how to price it, how to package and present it and, how to advertise. A Loblaw’s purchasing agent, as we know, won’t be influenced by a big smile.

Through her research Monique might find that customers love honey produced on a biodynamic farm, and are willing to pay a higher price for it. If she has a fairly limited supply this would influence her marketing strategy, especially, how much to spend on advertising. She could make a virtue of the limited supply, by advertising through word-of-mouth that each batch is a “limited run,” and by providing numbered honey jars. Or, she could inexpensively advertise to the customer base of the farm where she’s producing her honey. Monique’s customers could be made to feel that they are part of a special exclusive club, and will be retained season after season.

I agree that selling out is a mixed blessing. That’s why it’s important to have a way to measure the success rate of your advertising campaigns, which by the way, is part of Step 2 - How to attract customers. For example, if you distribute flyers to advertise your product you can measure how many customers you’ve attracted. You could also figure out how many customers you retained. Lots of businesses do this by including a coupon with a flyer. Suppose you distribute 10,000 flyers with a coupon included. If 500 customers buy your product using your coupon, you’ll have a measure of the attraction rate of your flyer campaign. ([500 customers divided by 10,000 flyers] x 100 = 0.5% success rate). If you keep track of the sales you made to those 500 customers you can also figure out the success rate, in dollar terms, of your flyer campaign. You could also measure how well you retained those customers, that is, the customers who bought once and then came back. If you have a low retention rate you should ask yourself: Did they not like the product? Was the customer service bad (should I smile more!)? Was the customer later attracted to the competition? Etc etc. You could find this out through customer surveys, or simply by chatting with customers, especially the ones who complain. A complaining customer is a valuable source of information. Flyers with coupons are one of many types of advertising campaigns, and there are many other ways to measure the success rate of your campaigns.

Back to Dave’s point, by the practice of measuring the success rate of your advertising campaigns you’ll get a better sense of the level of increased demand caused by each campaign, and you’ll hopefully avoid the situation of creating more demand than your supply will allow. If you produce something that stores well and inexpensively you could have a lot of stock on inventory, in case your advertising campaign is wildly successful. If you run a farm CSA you’ll have a limited supply of shares – you’ve already planted your crops weeks before - and therefore should be more thoughtful about the extent of your advertising.

The inherent limitations of your product might dictate who your customers are. For example, the garlic I’m growing might be of two types: premium garlic, and industrial garlic. The premium garlic will have an appealing look, with well shaped bulbs. The customers for this are likely personal consumers. The industrial garlic might taste just as good, but it won’t sell to those fussy personal consumers (that’s another debate). So it makes sense to find a different customer for the industrial garlic, and figuring out how to process the garlic for this group. This can include making jarred minced garlic; and garlic infused cooking oil, etc. It could mean you’ll fetch a different price if you have to sell it to a processor instead of to a personal consumer.

In farming, the soil conditions of the farm may determine which products to grow, and their quality. Knowing this will help to figure out who are your customers. It’s not like building a factory where you can pre-determine the type and quality level of your products.

Marketing costs will be determined to some degree by your distribution model, and distribution will be determined by who you figure out will be your customers. Are they personal consumers? If so, which type? Are they the fussy type who won’t appreciate a rustic farm store? Or, are they truly appreciative of what you’re doing? Depending on where they are on the spectrum of personal consumers will affect your decision about how to reach them, and the cost of reaching them. Or, is your customer another farm which has agreed to include your produce in their CSA? If so, than your marketing costs are negligible.

I’m very interested in critiques of this from the group, as it will help me to create my own marketing strategy, including how much to spend in the first year.

Profit vs Altruism at the Farmers' Market

 A farmer friend of mine, let's call him Henry, has been selling lettuce mix at a price of $4 for an 8 ounce bag at a farmers' market in Toronto. On 20 bags his gross for the day is $80. Whole Circle Farm and another farmer I know charge $7 per 8 ounce bag. Another farm, The New Farm, charges almost double this price. Why is he charging such a low price?

Henry wants to provide some of his produce to customers who’re in a lower income bracket, hence the lower price. It fits with the philosophy of many farmers, that everyone should have access to healthy food. The challenge is, how to pursue this worthy objective and also get a fair price for their produce.  Henry claims that other vendors at his market also charge $4 per 8 ounce bag, making it difficult for him to change his price even if he wanted to.

This got me to thinking about what Henry or any market vendor could do to make sure they  fetch a fair price. Here are a few ideas:

• Know Your Costs: The most important thing is to understand the cost to produce your products. Two good resources for this are "Organic Farmers Business Handbook, by Richard Wiswall. It explains how to do cost analysis. Another great book, Crop Planning for Organic Vegetable Growers, by Daniel Brisebois, explains how to break down production cost to bed foot per crop;
• Set Price Based on The Value of Your Product: Don't necessarily set price solely on what other farmers or vendors at your market are charging or, on the price charged by supermarkets. Perhaps the other farmers are following each other's lead, a likely scenario, since many farmers are price followers and takers, not price makers.  Henry could consider discussing price with the other vendors. However, discussing price with your competition may be contrary to the Ontario Business Practices Act. So I can't officially encourage anyone to do that. Henry could simply point out to his fellow vendors that their market is priced well below other farmers’ markets;
• Sell Your Products and Yourself: Do a good job of explaining to customers the value they are getting: organic, local, freshly harvested. Whatever it is, talk it up. Having good signage on your table is important. Giving away samples of your  vegetables is a good idea. Our Hakurai Turnip sold like cupcakes after customers had a sample from our market table.

Henry has the additional challenge of wanting to provide discounted lettuce for his lower income customers while at the same time charging a higher but fair price for the other customers.

An option for Henry would be to set a two tier price: If he brings 20 bags of lettuce mix to the market he could sell 15 bags x $7 bag = $105 gross. For low income customers he can offer them at a $3 discount. In other words, 5 bags at $4 each = $20. Henry’s gross for the day would be $125, $45 more than what he earns with his current pricing.

How would he know which customers to charge the $4 price?  He likely knows them, and can offer the discount to them. However, that could be tricky if nearby customers see that they’re not getting a discount. Another solution would be to charge $7 for all bags sold at the market, and at the end of the day, give away 5 bags through a food bank. Other deserving families will get lettuce, and Henry, bless his charitable heart, will have more revenue at the end of a long day at the market. On 15 bags at $7 each his gross would be $105, $25 more than he currently earns, and $550 more for the season.

Here’s a summary of some possible pricing scenarios Henry could follow while still being true to his philosophy of providing food for everyone regardless of their income:

Suggested Pricing Scenarios	Price Charged per bag of Lettuce (20 bags weighing 7 oz each)	Gross Sales per Week	Gross Sales Increase per Week over the Current Pricing	Total Gross Sales in a 22 week Season
Current Pricing	$4 each bag	$80	n/a	$1,760
Two Tier Price	15 bags x $7 ea  and 5 bags x $4 ea	$125	$45	$2,750
One Price	15 bags x $7 ea and 5 bags donated at end of the day	$105	$25	$2,310

 Whatever Henry does, it would be easier to implement any changes before the new season starts.

Distribution Models

One of the most important things for farmers to consider is their distribution model. Who is going to eat your vegetables, beef, pork, chickens, mushrooms, strawberries, preserves, yoghurt, etc etc.

Some Distribution Models:
Consumer Supported Agriculture (CSA) - Community Supported Agriculture (CSA) has become a popular way for consumers to buy local, seasonal food direct from a farmer. The consumer pays the farmer at the beginning of the season and then receives a basket of food once a week throughout the growing season. The farmer has the security of knowing who his customers are before the crops are planted, and the consumer is assured of getting fresh local food through the season, weather permitting. At the core of the CSA model is the relationship between the farmer and each customer, and the "story" behind the farm. At Whole Circle Farm, for example, virtually all the 200 CSA customers know Abhi, the garden manager. And many are aware of the ebb and flow of the farm either through our newsletters or, through conversations with Abhi, Johann, Maggie, or the farm interns.

As part of their relationship with the farm it's important that CSA customers understand the complexities of growing food. They'll be more understanding if there is a bad crop or, if the carrots are not perfect shaped or have a little dirt on them. It would help if prospective customers are screened before being accepted. They'll want ever more to be your customer when they find out that joining the CSA is not simply a matter of mailing a check.

Advantages: Get paid in advance, demand is guaranteed, so you know how much to grow. customers share in the bounty, and accept if there is a less bountiful season.

Disadvantages: Lots of responsibility. Consistent hard work every week during the CSA schedule. Problematic if the soil is susceptible to compaction say, when it rains, and harvest has to be done in time for the CSA delivery. It's best to avoid trudging through wet fields.

Farmgate - Farms situated on a busy road can do well through selling at an on-farm store. Ideally the store would have a weigh and pay honour system, where customers leave their money in a jar.

Advantages: Low maintenance and labour cost. A great way for customers to get familiar with your farm.

Disadvantages: People coming to your farm means you need parking, and have to be mindful of kids running around.

Farmers' Markets - They're great, if you can find a good one. The problem is that there are more farmers than there are farmers' markets. Good farmers' markets have a waiting list of vegetable and other produce vendors. I'd not want to start a farm based solely on the assumption that I'll sell my produce at a farmers' market.

Advantages: Can be great source of income. Inspiring to see people excited about your food.
Opportunity to see what other vendors are selling.

Disadvantages: Getting up early on a weekend. Long drive. Weather dependent. Unsold food may spoil.

Wholesale - This seems to be potentially the most price sensitive model. it includes selling to retail stores and large supermarkets with organic produce departments. Based on feedback from some farmers I've talked to, some of them with hundreds of acres in production, and some of whome are growers, distributors and wholesalers of organic produce, the purchasing departments of the major supermarkets are focussed mainly on price.
Whatever claims they make about supporting Ontario or Canadian local agriculture are not necessarily confirmed by their purchasing departments. Protective Covenants.

Advantages: Can sell large volumes.

Disadvantages: Fickle, manipulative buyers. Might require large storage facility. Possibly low price per item. No chance for face-to-face contact with end consumers.

Some combination of all these models is possible. And there are many other scenarios which build on these models, such as farmer coops which combine produce into one CSA product.

Impressions of the Season

I did it.
Eight months
five million weeds
five miles of bed
18 tons of cow shit
2,000 gallons of maple syrup

Or something like that. The only thing I know for certain is the time spent at the farm.
As time goes on my farm stories will take on Bunyon-like proportions

What I liked the least: milking. The cows at Whole Circle are magnificent. But there was something about milking those hairy beasts that disturbed my psyche.

What I liked the most: Meetings in the common room, running after escaped cows, feeding the pigs, using the farmall (to weed), managing the harvest (when I was left to my own devices), eating ice cream at the Acton market, transplanting, building stuff with Johann, watching the chickens come out of the back of the bus at 6 am.

The Business of Farming

Now that my eight month internship at Whole Circle is over I'll have time to think more about some farming issues that have nagged at me:

- Farm product distribution models
- Pricing
- Getting farmers to appreciate the need to do cost analysis
- Getting consumers to appreciate the value of local produce
- The importance of time management

In the meantime, I'm going to drink my last glass of Whole Circle milk, and get out and finish mulching my garlic.

Building The Cathredral

With help from Everdale farm we put up our latest greenhouse. We call it the cathedral.
It will hold enough passive energy to grow some greens for the CSA members when they come for their winter pickup.

Our Farm Safety Manager...

Final Harvest Days

Garlic Marketing Strategy

Local garlic growers and vendors in Ontario tend to undervalue their product.



The areas where there is room for improvement and which I plan to address:

• Garlic is sold by the pound, like a commodity;


• Vendors often don't know the variety of garlic they are growing;


• There is limited or no information on the characteristics of various varieties, such as taste, and the culinary dish a particular variety is best served in;


• There are other profit making areas connected to garlic, to be researched

In 2011 I'll do a limited sale of garlic, to test the market. I'll also refine the harvest and planting methods, and test using a more mechanized approach. Most of the 10,000 plants planted this year will be replanted in 2011 - approximately 5 cloves per bulb, giving me 50,000 cloves to plant in 2011. In 2012 I'll make more sales, based on what I learn in 2011. I also plan to plant thousands of garlic bulbils in 2011.

Garlic bulbils are garlic seeds produced from the garlic scape. They are disease free and produce a more robust flavour. But they take 1-3 years to produce a mature bulb.

Ninety-five Hundredth Garlic Planting

This is my own garlic crop of 9,500 cloves, separate from Whole Circle's garlic. It includes the 1,100 plants I grew at Farmstart last year, and harvested this past summer, plus, assorted varieties from other sources.

Many thanks to Paul Pospisil, the "Garlic Guru," and Editor of the Garlic Newsletter; and Bob Litke from Seeds of Diversity and Warren Ham of August Harvest for their garlic donations; Matthew Bulmer for giving me space to grow garlic; and Johann and Maggie and Abhi at Whole Circle for giving me land in the back garden; and Daniel Hoffman of Cutting Veg for advice. And Deborah for her unbending encouragement.

More later on my plans to develop a garlic marketing strategy.


























Whole Circle colleagues Heather, Andrew and Yana helped plant almost 10,000 cloves in the past week. I'll plant another 1,000 cloves at friend Matthew Bulmer's farm in Puslinch - I want to compare how they grow in his more sandy soil.

Time-motion studies in the garden

A neglected aspect of farming, in my opinion, is studying how to do repetitive tasks in the most efficient way. For example, finding how to shave a half second off a one and a half second movement that's repeated thousands of times in the course of a morning task would be helpful. Trickier still is getting people to share what they learn, and for others to adopt the improvement.

Between Whole Circle Farm and myself we've planted 20,000 garlic cloves in the last ten days (10,000 each). We clocked our rate (# of cloves per person hour), and found that it ranged from 300 cloves per hour, to 500, and as high as 1,000 cloves planted per person per hour.

In a recent garlic planting competition in the back garden Andrew aka "Pinchy"
hand-carved a wooden stake for his planting implement
(above right).

While Heather and myself threw down garlic in the assigned rows, Yana, Pinchy and Abhi braced themselves at the starting line. Pinchy started out strong, wielding his wooden stake with masterly strokes. He maintained the lead for the first 2/3rd of the 420' bed. But the effort of stabbing the soil to plant each clove tired him out, and by the end Yana pulled ahead, with her flat trowel. She finished ahead of Pinchy and Abhi with a comfortable margin, convincing the panel of judges that her planting modality is worthy of further study.










Below - Abhi and I working on another garlic bed.

Washing the Hundred Thousandth Bok Choi

Cracking Garlic (and cracking up)

Between tasks we cracked garlic bulbs, to loosen the 3 to 5 cloves inside. The cloves are the seed that gets planted in the Fall, and grows into a garlic plant, including the bulb, which we harvest next July.

Best Thanksgiving Turkey I've Ever Had

Last Day at Acton Farmers' Market

Post Dinner Moment

Not In My Parking Lot

A local resident complained in a letter to the Editor of the Independent that the Thursday afternoon Acton Farmers' market (where I manage the Whole Circle table) blocks her parking spot, and that because they sell hot dogs and popcorn it's not even a "genuine farmers market." In response, the market manager, Josey, put together a basket of products from the various vendors which she later presented to the complainer.

I wrote a letter to the editor of the Independent:

Dear Editor,

Regarding Lynne Simon's "Market Blocks Access" letter to your office
this week, I invite her to stroll among the fresh food vendor tables at
the Thursday Acton Farmers' Market, where she'll discover a variety of
fresh vegetables, fruit, meat and bread. This is indeed a genuine
farmers' market, for which support and attendance from local residents
is appreciated.

Regards,

Peter McClusky
Apprentice Farmer
Whole Circle Farm
Acton

Rural Romp

Lasts April I volunteered to be the farm tour guide for the September Wellington County Rural Romp. I had no idea what one does in a romp in the rurals, and had given no thought to what I would say, until today, when the first of about 110 visitors arrived at Whole Circle.

"Hi, thanks for coming. My name is Peter, and I'm going to give you a romp in the rurals; I mean, um, let's start our tour of Whole Circle Farm, shall we?..."

It was a great day. It helps me to understand why I'm here when I'm explaining to visitors what we do on this farm, why it's different from most modern farms, and why all the parts of the farm - cows, chickens, pigs and vegetable gardens are all connected through the soil, and why the soil is the most critical aspect of the farm.