By Larry E. Lund Real Estate Planning Group Chicago

1. “Paying Attention to Your Customers”National Produce Market Managers AssociationDallas March 27, 2010 By Larry E. Lund Real Estate Planning Group Chicago

2. It’s All About Customers • Markets have two Kings • Vendors • Consumers • Ultimately the Public is King Real Estate Planning Group

3. A Theory of Shopping • Shopping Demonstrates Social Relationships – What do we care about? • Shopping is a Devotional Rite – Pleasing others • Shopping as a “treat” - pleasing oneself • Veblen – “Conspicuous consumption” • Shopping as “thrift” • Hegelian dialectics – household interests (saving money) vs. community interests (Green). Shopping as a moral act • Shopping as Personal Identity Source: Daniel Miller writings Real Estate Planning Group

4. Four Behavior Patterns You Need to Knowwith Fancy Names Real Estate Planning Group

5. Law of Convenience • Every additional step that stands between people's desires and the fulfillment of those desires greatly decreases the likelihood that they will undertake the activity. Real Estate Planning Group

6. Zipf’s Principle of Least-Effort • This Principle predicts that most people, most of the time, are turned back by modest hurdles that they know could be overcome, with effort. To be habitual, an action must be relatively effortless or carry a particularly LARGEPSYCHIC REWARD. And in what constitutes a "large reward," opinions and motivations vary widely across individuals. Real Estate Planning Group

7. Nash’s Equilibrium Theoremthe Principle behind Markets • In Game Theory, two vendors selling the same merchandise will maximize their locational advantage by locating right next to each other at the mid-point: where half their consumers are located John Nash won the 1994 Nobel Prize in Economics for his theorem. Beautiful Mind was the 2001 film about his schizophrenia. Real Estate Planning Group

8. Reilly’s Law of Retail Gravitation • Reilly's Law of Retail Gravitation states that larger retail offerings will have larger trade areas than smaller ones, meaning people travel further to reach a larger retail offerings. Real Estate Planning Group

9. Trade Area by Surveying Customers Real Estate Planning Group

10. Competitive Market Analysis Real Estate Planning Group

11. Drawing Power Real Estate Planning Group

12. Market Share

13. Market Potential vs. Realty Real Estate Planning Group

14. Marketing 101Three P’s of Marketing • Product • Place • Price • Promotion Real Estate Planning Group

15. Produce Market Upside • $47.1 Billion in Fresh Produce Expenditures for at home consumption (BLS 2007) • 2007 Census of Retail • Produce: • 2,908 Produce establishments with employees • $3.413 Billion in sales avg. $1.173 Million/store • 8,274 Sole Proprietors produce establishments • $487,636,000 in Sales, avg. $58,935 annually • 3.9 Billion or 8% of produce purchased at Produce est. Real Estate Planning Group

16. Changes in Expenditure Share Real Estate Planning Group Source: BLS

17. How is your Diet?

18. Organic Farming • 14,540 farms & ranches certified organic • 20% organic farms are in California representing 36% of organic sales • U.S. Organics $3.16 B -- $1.94 B in crops, $1.22 B livestock, poultry, etc. • 83% organics sold to wholesale channels • 10% organics sold direct to retailers • 7% organics sold direct to consumers ($221.2 M) Source: 2008 Organic Production Survey, USDA

19. Local the New Organic?

20. Public Markets Finding the Opportunity • 92 Percent of Americans do most of their Food Shopping at Supermarkets – So Where is the Market’s Niche? • Choice/Assortment • Internal Competition • Costs High Margin/Low Margin • Quality • Organic/Local Real Estate Planning Group

21. What Does Market Research Do? • Research is sometimes about Reducing Risk • Research sometimes Tests Hypothesis • All Research is about answering a Question • Research is not a Product, it’s an Interactive Process Real Estate Planning Group

22. General Overview of Research Opportunities • Assess your Market’s Potential • Help Identify Best Customers • Improve Adjacencies • Indexing to Norms • Importance/Performance • Market Segmentation • Behavioral Mapping Real Estate Planning Group

23. Focus on Core Customers Pareto’s Principle • 80/20 Rule states that for many phenomena 80% of results stem from 20% of the effort. • In other words, focus on those who buys more at the Market. Real Estate Planning Group

24. Core Customer • Geographic Origins • Market Segmentation • How do you Reward your Core Customer? Real Estate Planning Group

25. Core Customer Benefits Real Estate Planning Group

26. Geographic Market Segmentation Real Estate Planning Group

27. Cross Vendor Shopping Matrix • What Vendors are Customers Shopping? • What Type Vendors are Attracting Customers? Real Estate Planning Group

28. Across: 27% who Ate In bought Produce/24% who bought Produce Ate In

29. Real Estate Planning Group

34. Grocery Market SegmentationSpending and Trips Real Estate Planning Group

35. Grocery Market Segmentation Cluster Analysis • Care for Family • 27% of spending 19% of trips. • Trust and High-Quality, Fresh Products • Smart Budget Shopping • 18% of spending, 15% trips • Value for Money, sales important • Efficient Stock-Up • 16% of Spending, 13% trips • Ready to eat meals Real Estate Planning Group

36. Segments Continued • Bargain-Hunting • 10% of spending and 13% of trips • All about saving money travel different stores. • Discovery Buyers • 9% of spending and 7% of trips • New items, selection and atmosphere • Specific Item • 9% of spending and 11% of trips • Mission and Convenience driven Real Estate Planning Group

37. Segments Continued • Small Basket Grab & Go • 5% of spending and 9% of trips • Same as Specific Item, but buy more items and want other services like banking, video rental • Reluctant Buyer • 4% of spending, 8% of trips • State of mind, not like shopping, self-service • Immediate Consumption • 2% of spending, 5% of trips • Convenience, snacks, eat in store Real Estate Planning Group

38. Farmer’s Market Segmentation Real Estate Planning Group

39. Farmer Segments Continued • Enthusiasts – 32% • Professionals with high education and incomes • High Quality Fresh Products Organics and want full market experience • Basic Shoppers – 30% • Educated with medium-high incomes • High Quality Fresh Products • Doesn’t need to be at farmer’s market Real Estate Planning Group

40. Farmer Segment Continued • Serious Shoppers – 18% • Have Children at home and likely younger • Variety important enough to over inconvenience of shopping at Market. • Low-Involvement – 11% • Highly educated and high incomes • Male shopper, not primary shopper • Recreational – 9% • Younger, less educated, lower incomes • Enjoy Market events and non-produce products Source: Consumer Segments in Urban and Suburban Farmers Markets, April 2010 Real Estate Planning Group

41. Behavioral Mapping • How long at Market? • How many vendors do people visit? • What vendors are anchors? • What is your geographic syntax? Real Estate Planning Group

42. Focus Groups • Qualitative research • About Listening to Customers • Can lead or follow Quantitative research Real Estate Planning Group

43. Knowledge Can Transform Your Market • Use Different Techniques for Discovery • Customer Surveys – Sample Size/Correlations (Quantitative) • Focus Groups – Memories (Qualitative) • Behavioral Tracking – Memory vs. Reality • Watch the Cool-Aid Real Estate Planning Group

44. Thank You Larry Lund Real Estate Planning Group Chicago 312-751-1250 Larry@REPG-Lund.com