What is Cause Marketing? Part 2

By Dr Kathy Kelley, Professor of Horticultural Marketing and Business Management, and Dana Ollendyke, Extension Associate

The first installment in this series can be found here.
With so many local, national, and international causes already being supported by your customers’ generosity, how can you compete with them and the businesses that sponsor them?  Consider the following, which could help bolster your cause marketing program.

Make sure that the donation process is transparent  

For each dollar that you collect, you need to show how and where these funds were distributed. Consumers who do not see any progress associated with the money they donated may very well choose not to donate anymore.  Be sure to indicate on your website, in your promotional activities, and in-store that money collected helps to do great things.

Consider a cause that has a natural connection with your business  

Perhaps a member of your business has suffered from a disease that could benefit from a donation.  If this is the case, ask him or her to be the “face” of the effort. In the Wharton Business School article "To Increase Charitable Appeal to the Heart-- Not the Head", it describes how consumers are more likely to donate to a cause if “presented with a personal case of an identifiable victim” through pictures and stories, “something that purely engages the emotional system”.

For example, we can all probably think of at least one product that dons a pink ribbon in honor of breast cancer research.  One of the businesses that does so is J. Lohr Vineyards & Wines.  The winery actually began partnering with cause organizers due to a family member’s breast cancer fight.  Founder Jerry Lohr lost his wife, Carol, in 2008 and through sales of both J. Lohr Carol’s Vineyard Cabernet Sauvignon and Sauvignon Blanc, the company had a 2014 goal of “providing over 4,000 mammograms to women who would otherwise be unable to afford them”. Certainly, the cause is worthy enough, but by associating a name, story, and image of Carol Lohr, we begin to associate the brand with a real family – not just a business.

Image 1.  Screenshot of the J. Lohr Vineyards website that details their mission to provide mammograms to women in need.

Or perhaps there is an environmental issue that greatly impacts your city/state/region. Sales from Crimson Pinot Noir, produced by Ata Rangi Vineyard (Martinborough, New Zealand) supports Project Crimson, “to protect and renew our spectacular red-flowering rata and pohutukawa – New Zealand’s iconic native ‘Christmas trees’.” Not only can consumers support the cause by purchasing this wine (Image 2), they can also purchase Northern Rata trees and plant them on their own property (Image 3).

Image 2.  Label showcasing the partnership with Project Crimson.

Image 3.  Sign advertising the sale of the rare Rata trees.

More considerations on creating a cause marketing program to follow in part 3 of this series!

What is Cause Marketing? Part 1

By Dr Kathy Kelley, Professor of Horticultural Marketing and Business Management, and Dana Ollendyke, Extension Associate

Have you seen advertisements like the one below (Image 1) where a portion of the profits benefits a charity or cause?  The official definition of cause marketing from BusinessDictionary.com is "joint funding and promotional strategy in which a firm's sales are linked (and a percentage of the sales revenue is donated) to a charity or other public cause.  However, unlike philanthropy, money spent in cause-related marketing is considered an expense is expected to show a return."

Image 1. With every purchase of this tea, Teavana will donate $1 to the Oprah Winfrey Leadership Academy Foundation.

Although profits should not be the primary reason for building a cause marketing program into your promotional plan, it is suggested that consumers “feel good” about spending their money on goods that support a cause.  In 2013, Cone Communications (a public relations and marketing agency) released their Social Impact Study.  Some interesting take-aways from that study include:

• Over half (54%) of U.S. consumers “bought a product associated with a cause” during a 12-month period ending in fall 2013, which was a 170% increase from 1993.
• A majority of consumers (91%) want “even more of the products and services they use to support [a] cause, and 88% want “to hear how companies are supporting social and environmental issues”.
• If you are looking to better connect with Millennial consumers via social media, they are more likely to “use social media to engage with companies around [causes]” than the general population, 64% vs. 51%, respectively.

This data is just the beginning of your research into determining if cause marketing is right for your business.  

Our next post will focus on cause marketing program development.  

Crowdfunding: An Exciting New Way to Fund a Project

By Juliette Enfield, Penn State Extension Educator, Warren Co.

The success of any business depends on the crowd that supports it.

Crowdfunding captures the essence of the entrepreneurial spirit-that anything is possible. The size and scope of the projects on crowdfunding sites are awe inspiring. In 2012, the JOBS –Jumpstart Our Business Startups Act was passed by Congress and signed into law by the Obama Administration.  This Act eliminated certain restrictions on how new startup businesses could be funded. Since 2012, crowdfunding has become a term that many people are familiar with, but may not have direct experience with. Have you ever considered crowdfunding for your business? Perhaps you are uncomfortable with the high interest rates that may be incurred with a loan, or maybe your credit isn’t the best and you are unable to access a loan in the first place. Crowdfunding can work in a few different ways. Investors can support a new business by buying a share in the business (equity crowdfunding), making donations (donation crowdfunding), or lending money (debt crowdfunding). According to Forbes.com, there are over 500 crowdfunding platforms online, so even if you understand the basic fundamentals of how crowdfunding works, you will need to do some research to find a site that will work well for you. Some sites have stronger reputations than others, and some have easier access to customer service. Also, many crowdfunding sites specialize in a certain type of project or industry. For example, Quirky specializes in funding inventions of new everyday tools, Crowdrise specializes in charitable projects, and GiveForward specializes in funding medical expenses for people will illness. Another difference among crowdfunding sites is how and when payments are received for a project. For example, Kickstarter only accepts payments from investors if the project has been funded, and Indiegogo accepts payments from investors regardless of whether or not a certain goal has been reached. Crowdfunding sites charge a fee ranging from 7-12% of the total project cost, so this may also influence your decision of which platform to use.



Crowdfunding for Farm and Food Businesses

Birchrun Hills Farm, a dairy farm and cheese business in Chester County, PA successfully funded a project to build a new cheese cave on Kickstarter. Kickstarter is a popular donation based crowdfunding website. Kickstarter projects include film, music, art, design, technology, and food. I spoke with Sue Miller, Birchrun Hills Farm business owner, about her experience with Kickstarter. She chose Kickstarter because of the recognition of the site, she liked the all or nothing philosophy of the site, and the fees were reasonable. She also knew of other farm businesses that had success with the site, including North Mountain Pastures in Newport, PA, a meat CSA farm with a charcuterie business. Sue ran a 30 day campaign in December 2014. For different donation levels, Sue offered a variety of different prizes ranging from a hat with the farm logo on it to private cheese and beverage pairing parties. She said the most popular prize she offered was the chance to name a newborn calf on the farm. Sue estimated that less than 5% of the people that were reached about the campaign actually donated. Therefore, the campaign period is an intense marketing time, and having a marketing strategy and a budget in place is essential. Sue said she was delighted to see how the community supported her project, and now that the campaign is over and she is building her new cheese cave, crowdfunding has helped her expand her business network in the region and across the nation. For those thinking about embarking on a crowdfunding endeavor,  Sue recommend that they work for a year or so prior to the campaign period to expand their social media network, since this is the primary way crowdfunding campaigns are advertised. She also said that next time she might consider hiring someone to run the campaign for her, so that she would not have to run the farm and the campaign at the same time. You can still view Sue’s campaign on Kickstarter.

What would you like to do next with your business?

Another crowdfunding site that agricultural businesses should know about is Kiva Zip. Kiva Zip is a debt based crowdfunding site that offers 0% interest loans to funded projects. Kiva was first created to help finance microloans to farmers and small businesses in developing countries, but it has recently grown in popularity in the US with small and beginning farmers. Kiva loans are especially well adapted to new farm and food businesses because the loans are small, from $5,000 to $10,000, and are therefore less risky. Once the money is lent, the business has 3 years to repay the loan. The Kiva fundraising process has three tiers. First, the agricultural businesses must be endorsed by a Trustee, a business or an individual (non-family member) that will vouch for the character of a borrower. Then, once the Trustee is in place, a network of friends and family (ranging from 10-30 contacts) must be the primary lenders to the project. This occurs during the first 15 days that the campaign is launched. And finally, after this primary network has lent to the project, the project is opened for anyone to lend. Kiva projects are live for 45 days. Emily Keebler, Kiva City Pittsburgh Lead, says that the first 15 days of fundraising is the most intense fundraising period. Emily says that many businesses that have a successful lending experience with Kiva Zip then become Trustees themselves for another business, and these small amounts of money continue to support small businesses over and over again. Healcrest Urban Farms, a farm that grows herbs and small fruits in Pittsburgh, PA successfully received a loan on Kiva Zip to pay for the use of a shared kitchen and purchase of an ice cream cart to start their popsicle business, TeaPops. Good Work Farms, LLC, a vegetable farm in Emmaus, PA received a loan on Kiva Zip to purchase draft horses for plowing and lowering energy costs on their farm. BEEBOY Honey, a beekeeper in Pittsburgh received a loan to purchase more hives and a truck for honey deliveries. Kiva Zip may be an option for your food business if you decide that offering rewards for donations may be too much of a challenge and you would rather spend your time and energy repaying a small loan.

Be sure to do your research before choosing your crowdfunding platform. Spend time looking at the projects that are out there. Create a budget, marketing plan, and a clear, concise message about what you are trying to accomplish. Have you had any experience with crowdfunding? Share your comments and suggestions with us!

Sources for this blog:

Caldbeck, Ryan. Crowdfunding Trends: Which Crowdfunding Sites Will Survive. Forbes.com. June 23, 2013. <http://www.forbes.com/sites/ryancaldbeck/2013/06/23/crowdfunding-trends-which-crowdfunding-sites-will-survive> Accessed July 8, 2015.

North Carolina State University Cooperative Extension. Funding Opportunities. June 2014. <http://communitydevelopment.ces.ncsu.edu/funding-opportunities>  Accessed July 8, 2015.

Pollack, Bridget. The Ins and Outs of Alternative Financing. U.S. Small Business Administration Blog. June 4, 2015. <https://www.sba.gov/blogs/ins-and-outs-alternative-financing>Accessed July 8, 2015.

Building a Website for Your Small Business

Creating a useful website is a very important part of attracting customers. Most people, myself included, would find the task of creating a website themselves quite daunting and would immediately want to hire a web designer. But in doing some research of my own, building your own conventional website (meaning not overly complex or customized) may not be as difficult as it appears.

Person adding content to their website. (photo credit: morguefile.com)

To do it yourself, you can use a website builder, which is a tool that allows a user to create their own website without writing code. (Here is a list of some of the most popular website builders.)

This very useful article from Site Builder Report describes some questions to ask yourself to help determine if you should build it yourself or hire a web designer.

1. What is my budget? If you have a small to mid-size budget (which the author defines as $5,000 or less), then you should use a website builder. A competent website designer will usually cost this much or more. You will also need to pay a monthly fee for your website hosting. (Web hosts provide space on a server for your data and allow it to be available on the internet.) By comparison, a website builder like Squarespace, costs $8-$24 per month, which includes hosting.

2. I have a friend, family member, etc. who quoted me a low price. Shouldn't I use them? "Designing websites is a very complicated and involved thing. A very low quote probably means that this person "does not do web design for a living. And that’s a red flag."

3. What do I need/want in a website? "Think convention for website builder. Think customization for website designer...Use things like photo galleries, forms, paragraphs, basic e-commerce, and text." These will help you build a website that is functional without custom designing each piece.

If you really want 100% customization, then you will need a website designer.

4. Can I do it myself? "Trying to do it yourself will open you up to some of the realities of web design and will give you a sense of the constraints and challenges of web design. This will make you so much better when you try to actually hire a web designer. Plus, you may surprise yourself and realize you can do it yourself."

Hopefully this post has made you realize that hiring a website designer is not your only option; you can try to do it yourself. If you do find that you want/need a web designer, I will discuss some tips on helping you to choose a one in a future post. Happy site building!

Mid-Atlantic Consumer Demand for Ethnic Produce is on the Rise

Why is demand increasing for ethnic produce in the mid-Atlantic?  U.S. Census data indicates New York City, Washington DC, and Philadelphia are among the top ten cities that are majority-minority in population, meaning ethnic minorities account for more than half of the population (Census 2010). U.S. Census data also shows that the mainstream population only increased by 9.7% from 2000 to 2010 as compared to 43% for Asians and 43% for Hispanics (Census 2000, 2010). With this increase in population, there certainly would be an increased demand for ethnic produce and therefore more economic opportunities for producers, wholesalers, and retailers who grow and sell these products.  

To address this increased demand for ethnic produce, researchers at Penn State, Rutgers, the University of Florida, and the University of Massachusetts along with industry members (including farmers, retailers, wholesalers, distributors, etc) gathered earlier this year to discuss research data and trends related to ethnic crops in the mid-Atlantic at the 2014 Ethnic Greens and Herbs Workshop.  One of the projects developed by the research team was the Worldcrops.org website.  The World Crops site provides information about vegetables and herbs that can be grown in the northeastern United States. The emphasis is on crops that are popular among ethnic groups living here and can be grown here.  The site is organized by country. 

Another helpful aspect of the site is the glossary which is available in English to Spanish and vice versa.  A user can easily find the English or Spanish name for a particular type of produce as well as the genus and species of more than 350 entries.  Example 1 shows that an avocado is called an “aguacate” (Spanish), “pagua” (Mexican), or “pahua” (Mexican) and the genus and species is Persea americana.

Example 1.  Screenshot of English to Spanish glossary on Worldcrops.org.

Visitors can also find ethnic crops based on the country of origin.  In the “Go to region” box on the main page, visitors can click on a region and then select a country.  In example 2, Brazil is shown.  The language spoken is Portuguese and some of the main crops used in this country are listed including cilantro, maxixe, and okra. 

Example 2.  Screenshot of "Go to region" listing for Brazil on Worldcrops.org.

If you are an ag entrepreneur and are interested in exploring ethnic crop opportunities, it's imperative that you DO YOUR RESEARCH as you would with trying any new opportunity for your business.  Good luck!

Starting a New Farm Business? Minimize Your Risk by Joining an Incubator

By Juliette Enfield
Penn State Extension Educator, Warren Co. 

You dream of being a farmer. You love working outside, growing your own food, and being your own boss, but then reality sets in. The time commitment, the loans, and the pressure to produce suddenly make starting a new farm seem like a crazy idea. The statistics aren’t on your side either. The Small Business Administration estimates that 54% of small businesses fail within the first 4 years. Some of the reasons for this high failure rate are insufficient start-up capital, lack of managerial experience, and lack of business planning. Business incubators can help an entrepreneur to develop managerial and business planning skills in an environment where the initial investments in the business are lower. According to the National Business Incubator Association, 87% of businesses that have graduated from incubators are still in existence today (NBIA, 2014).

Incubate your business for the first few years for a better chance of success.

Incubators provide services for a start-up business including mentorship, rental space and equipment, business planning assistance, easier access to start-up capital, lawyers and accounting services, secretarial services, and networking opportunities. The concept of the business incubator has grown in popularity in recent years. In 1980, there were just 12. Today there are over 1,250 (NBIA, 2014). Incubators foster many different types of businesses including technology, service, and manufacturing. Incubators are usually non-profit organizations which receive funding from grants and donors to stimulate business growth in local economies. Typically, businesses stay in incubators for 3 to 5 years until they are able to successfully run their business on their own.

There are incubators that are specific to farming. These incubators offer many of the same services as the multi-purpose incubator as well as rental space for land and equipment. Farmers who participate in these incubators have full or part time jobs off the farm to supplement their farm income. This allows them to gradually transition into full time farming, if they find that their business is successful. There are two farm incubators in Pennsylvania, The Seed Farm, located outside of Allentown, and the Horn Farm Center for Agricultural Education, located near York. The Seed Farm is for vegetable production using organic methods and Horn Farm is for vegetable and fruit production using organic methods.

The Seed Farm offers a farming apprenticeship program and an agricultural business incubator. New farmers at The Seed Farm are currently required to complete the 9 month internship before participating in the incubator. There is a cost associated with this apprenticeship and there is also an application process. This apprenticeship covers farm management training, tractor training, marketing experience, and business planning. The mentoring continues after the apprenticeship from a full time farmer who works at the incubator. The incubator program offers rental space of 1.5-3 acres at a low rate, which is gradually raised to the real market price after 2 years. Farmers in the incubator have access to shared farm equipment by paying a relatively small fee every month. They also have access to a greenhouse, cooler, and storage space. These farmers have their own insurance and business licenses, and market their own produce. They meet with the farm manager regularly to discuss their business plan. The Seed Farm is in its fifth year, currently has 2 farmers in the incubator and 1 graduate, and would like to expand the program. More information can be found at www.theseedfarm.org.

Aspiring new farmers working at The Seed Farm. Photo credit: The Seed Farm.

Horn Farm Center for Agricultural Education offers a farm incubator program where you can rent as small as 1/8^th of an acre to 2 acres at a low rental rate. To use the farm tractor, farmers pay $25 an hour instead of immediately investing in a $20,000 tractor. As with The Seed Farm, there is a full time farm manager who works on the farm and there is a business planning committee that meets with the incubator farmers regularly to discuss their business planning. Horn Farm is in its fourth year and currently has 4 farmers in the incubator. For more information about Horn Farm, see their website at www.hornfarmcenter.org.

As with other business incubators, farm incubators have multiplied across the country as well. In 2010 there were just 38 and now there are over 125 (NIFTI, 2014). Sometimes after participating in an incubator program, farmers decide that farming is not for them, which is also a valuable learning opportunity. If Horn Farm or The Seed Farm are not located near you, you could benefit from the business incubators that are located in your area of Pennsylvania. Business incubators are located throughout the state and are usually affiliated with a university or local municipality. The National Business Incubator Association has a comprehensive listing of incubators across the country which can be found at: www.nbia.org/links_to_member_incubators.

If you are already successfully farming and you are thinking about making an incubator a part of your farm, the New Entry Sustainable Farming Project out of Tufts University and the National Business Incubation Association have some great resources to help you get started.

Sources for this blog:

Scarborough, N. Effective Small Business Management: An Entrepreneurial Approach. Prentice Hall. New Jersey. April 2011. 10th Edition.