INTRODUCTION TO FOOD MARKETING 3116

1. INTRODUCTION TO FOOD MARKETING3116 Steven C Seideman Extension Food Processing Specialist Cooperative Extension Service

2. INTRODUCTION • To many people, “MARKETING” means either selling or advertising of your business. • Jay Levinson in his book “ Guerilla Marketing” defines marketing as “everything you do to promote your business from the moment you think of the idea until the customers buy and begin to do so on a regular basis”.

3. THE GOAL OF BUSINESS • Two theories on what the goal of business is; • The goal of business is profit, and profit means the firm survives and has a chance to grow. • The goal of business is to get and keep a customer. Profit is implied because if you don’t make a profit, you will not be around to keep your customer. You choose which goal you want to accept. The bottom line is that a profit must be made.

4. SELLING vs MARKETING • SELLING asks the question “ How do I get the customer to buy my product?” • MARKETING takes a broader view and asks “What does the customer want to buy ?” The business owner needs to attract new audiences, study the competition and develop his or her product or service so that it appeals to a highly discriminating audience.

5. MARKETING AS A PROCESS

6. MARKETING AS A PROCESS • The successful marketing process includes; 1)Determining what the customer needs and wants. 2)Developing a product or service to meet those needs or wants. 3)Understanding the competition and what they offer. 4)Linking with the customer as a source for fulfilling his or her needs and wants. 5)Doing all of this at a price that provides a profit so that the business can continue to grow.

7. Determining What the Customer Needs or Wants • A successful business owner analyzes the market. He or she defines the particular market segment most likely to purchase their product or service. The owner then determines the specific benefits desired by the customer.

8. Developing a Product or Service to Meet those Needs or Wants • Upon understanding what benefits are wanted, the owner develops a product or service, the features of which provide the customer with the requested benefits. Marketing is selling these benefits rather than the features. • A feature is any prominent or distinctive aspect, quality or characteristic. A benefit is what that feature gives the customer. • An example would be a reclosable package. The feature is reclosable: The benefit to the customer is that it can be reclosed and stored for later use.

9. Understanding the Competition and What They Offer • Customers face a large marketplace. A successful business owner is able to define a target market and distinguish his or her business from the competition. • Walk down an aisle in any food store, look at all the different brands of a particular type of product and see how each brand tries to provide benefits to the customer.

11. Linking the Customer as a Source for Fulfilling His or Her Needs and Wants • The successful business owner must let the customer know he or she is in business. The owner must also tell the customer how they can meet their needs, a function known as advertising. • Types of advertising include radio, TV, newspaper and magazines, flyers, billboards, web-advertising, etc. • The business owner must figure out the most cost effective way of getting to the target audience.

12. Doing All of this at a Price that Provides a Profit so the Business can Continue • This implies a price of products or services that allows both the customer and the owner to feel good about the transaction. • The business owner must make a profit so that he or she can stay in business to continue providing that product or service.

13. MARKETING ACTIVITIES

14. Marketing Activities • There are basically 4 major categories of marketing activities known as the 4 P’s: 1)Positioning 2)Production 3)Pricing 4)Promotion

15. Positioning • Positioning is defining the purpose of your product or service as it benefits a potential customer. Positioning is finding a market niche. It creates a perception of special value and benefits in your product or service. Developing one’s position is one of the major goals of the marketing process. • An example of positioning is the fast food chain’s hamburger businesses positioning themselves as low cost versus another that features customer choice (“Have it your way” ).

16. Positioning • Place (where the goods or services are marketed) and packaging (how the goods or services are displayed ) are extremely important. If a product or service appeals to walk-in traffic, your location must be where such traffic occurs, not in a limited traffic area. If you are developing a product for an upscale market, the packaging must reflect the image you are trying to attain.

17. Production • Successful marketing achieves business growth. The owner must have anticipated and planned for this growth in the production process. The inability to fill orders can quickly strangle a firm’s growth and even cause the firm to go out of business.

18. Courtesy of USDA

19. Pricing • Pricing is a key factor to business success. • Pricing can be done as a “wild guess”, based on what the competition charges or as a cost-buildup process. • I strongly prefer the cost buildup model whereby you list all your costs (raw materials, processing costs, packaging, promotion, salaries, distribution, etc.) and then add a profit margin. • Go to another module to learn the cost buildup details.

20. Pricing • Look at what the competition charges as compared to your cost. How can you do it cheaper or better than the competition? • Are people willing to pay that price for your product or service?. • How about running promotions on your product or services so people will try it - buy one, get one free, coupons with a certain amount off ? • Most new entrepreneurs tend to underprice their products and services.

21. Promotion • This addresses the question “How will people know about my product or service ?” • Promotions include paid advertising such as radio, TV, newspaper, etc, and unpaid publicity such as press releases, etc. Promotions may also include trade shows, mailings, internet, in-store demos, etc. • Promotional efforts must occur in the media that your perspective customers use. • Successful promotional efforts focus on the benefits of your product or service • Benefits can be convenience (precooked, reclosable packaging), fun, good health, etc.

23. Promotion • Customers do not buy a product or service for its features.They buy it for what it can do for them. • Learn to romanticize your product. Watch TV ads– wearing certain brands of trousers make you more appealing to the opposite sex. Laugh? It works. Watch some TV ads- what is the message they are sending? • Brand loyalty; brand-conscious society • Develop sales literature- price list, catalog sheet, product information sheet, point of purchase info.

24. Your Company IMAGE • Although not traditionally thought of as marketing, I am a believer in how customers perceive your company’s image. • Your letters and correspondence- Professional. Are your telephones answered professionally ? • Are your salespersons ethical? Is your receptionist cheerful, optimistic, properly attired ? • What about your business facility- people like to work with professional organizations and your office and facilities tell them about your professionalism.

25. Your Company IMAGE • Business owners must remain aware of the customer’s perception of the business and move quickly to correct any negative images. • Do you contribute to the community or show any concern for the environment. • Do the people within your organization project the image of the company in a favorable way?

26. Service After the Sales • Effective Marketing must continue with the product or service after the final sale. • This support includes service, assistance, warranties, returns and refunds.

27. Service • Advertising is expensive. It gets the customer to try your product or service. It is a good start but remember, the goal is to have customer’s repeat business. • Over time, you will notice that 80% of your sales will come from just 20% of your total customers.

28. MARKET RESEARCH

29. Market Research • Before one starts a business and even periodically while in business, one should conduct market research. • Market research is an organized process to gather, analyze, interpret and utilize relevant information about the business environment for the purposes of making accurate business decisions. • Market research focuses on potential customers, existing customers, the competition and the business environment .

30. Market Research • The ultimate goal of market research is business success. • The objective of market research is to; 1)Identify potential target markets. 2)Identify customer needs and wants. 3)Determine if the product or service meets customer needs. 4)Determine the best promotion technique for each market. 5)Examine the competition.

31. Market Research • The purpose of market research data is to help the business owner make better decisions. • Using market research, the business owner can develop an accurate understanding of the potential customer. • The goal of market research is to reveal unfilled needs in the form of a market niche, customer’s needs, a competitor’s weakness or an unused marketing strategy. The ultimate goal is to increase the business’ sales and profits.

32. Doing Market Research • Anyone can do market research to some extent. • Basically, you want to gather information about; 1)Your customers or potential customers 2)Your competition 3)General market information Let’s go through each in greater detail.

33. About your Customers or Potential Customers • General demographic information such as – age, where they live, where they work, race, gender, marital status, income, number of children, education, home ownership, lifestyle • Needs, wants and desired benefits • Past and future purchases (What, when, why, where, how much) • Products and services that compliment or substitute • Use of various media (radio, TV, newspaper, magazines, etc.)

34. Warranty Cards • Whenever you buy any appliance and certain goods, you are requested to fill out a warranty card. If you fill out the warranty card, the product you bought will be under warranty for some specified period of time. Note how much the information on the warranty card parallels the demographic information on the previous page. • Warranty cards serve as a prime method of collecting marketing information.

35. About the Competition • Who are they? • What products and/or services do they offer? • What is the price range of products and services? • What are their policies on returns, credit, warranties, etc.? • Are there any special services? • If they are a store-type business, what is their staff like (experience, customer respect, customer focus)? • What kinds of promotions/ advertising do they do? • What is their company image like to the average customer?

36. General Market Information • The physical/geographical area (traffic flow, development plans, history, growth pattern). • The industry as a whole. • The economy as a whole.

37. Analyzing Market Research Data • Once you have collected as much data as you reasonably can, you need to organize it by the SWOT format; • S = Strengths • W= Weaknesses • O= Opportunities • T= Threats

38. SWOT Grid My Business Its Environment

39. The SWOT Grid • In the grid, you evaluate your business or business potentials and its weaknesses. • When you evaluate the environment, where do you see chances for growth and what might slow your business ?.

40. Marketing Research • Where we can get market information; -The Internet brings information to your finger tips. -Visit a food store and just look around not only in the area that you want to enter but other food groups ( e.g. what are the dairy foods people doing that I can adopt?). -Talk to people in the business from entrepreneurs to store owners, brokers, sales representatives, etc. Most people like to help others and will tell you more than you ever dreamed.

41. Market Research • Market research identifies the available market, discovers the best method to reach the target market and asks what the customer needs and wants. Market research is a simple, structured, objective way of learning about people- the people who will buy your product or service.

42. RESOURCES • There are 2 keys sources of information 1)A book entitled From Kitchen to Market by Stephan F Hall. Sold via Amazon.com for about $20- A complete, easy to understand book on taking a food product to market. 2)The Arkansas Small Business Development Center in Little Rock (501/324-9043) has a resource library that contains many references and a brochure entitled Market Designs that will help.

45. CONCLUSIONS • This module should have made you think about the purpose and goals of marketing and how to do market research. • Marketing is probably the single most important aspect in starting and maintaining a food business. • Whether you are starting a new food business or maintaining an existing business, it is important that you constantly monitor your marketing efforts.