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.  

What Retail Produce Marketing is About!

by John Berry, Extension Educator, Lehigh Co.

The incentive to consider retail marketing is obvious.  The closer you can get to retail customers, the more retail dollars go in your pocket.  However, it's not all profits.  If you sell retail, you will be providing services the wholesalers, packagers, distributors, and retailers typically provide.  As we approach another fresh produce marketing season, let's review some of the key details of operating a direct-to-consumer marketing enterprise.

Visual Display
Proper presentation of products increases sales.  Shoppers receive a positive impression if products are top quality, clean, and tastefully displayed.  Remember that high-quality products are the strength of produce markets!

A lively, well-stocked produce department entices the customer to buy and increases sales and profits.  Think of yourself as an artist, with several palettes of colors to choose from: visual - color, contrast, shape, size; smell - herbs, fruits; and touch - soft or firm.

Make displays that look like they came from the farm.  Wooden crates or boxes work well.  Baskets are beautiful; slant them toward the customer.  Even an attractive tablecloth can add to your sales.  Stair stepped displays create an array of depth, color, and texture; however, they may not be easy for the customer to reach or easy to restock.  Utilize vertical space by hanging products from slings or hangers.

Merchandising
"Pile it high and kiss it good-bye!"  Full, well-stocked displays make customers want to come back and get it.  Customers don't like taking the last of something from a bare, picked-over display; they want to choose the best.  Remember to not overstock to prevent the risk of crushing tender items on the bottom.

Make it easy for the customers to reach for the produce.  Your display should be no more than an arm's reach in depth, and between knee and waist level in height.  Don't put your merchandise on the ground.  Instead of placing your boxes flat, try slanting your produce to give the customer a more pleasing visual sense of your product.

Excellent example of using color and texture with a wide
product mix.  Everything I need to make a delicious side
dish for my dinner.

Organize products in related groupings.  Such groups might include dessert items, salad items, cooking vegetables, apples and pears.  Displaying compatible products together serves as a suggestion for additional purchases and uses of the products.

Research shows the use of color and texture greatly enhances eye appeal.  People enjoy food with their senses, so displays that are eye appealing tend to increase purchases.  Mix a row of radishes between the mustard and kale, tomatoes between the lettuce and cucumbers, or intersperse peaches with blueberries to create dazzling color displays.

Suggested good color groupings:

• Red and yellow or green
• Light green with yellow or purple
• Dark green with red, orange or yellow

If you don't have a lot of variety, create a color mixture with flowers or signs.

Price Signs

Prices should be clearly marked.  Most shoppers are in a hurry and will not search out the manager to find out how much something costs.  Include a few product features and perhaps menu suggestions on signs to stimulate your buyers' thoughts on how to use the item.

Great use of limited sign space to describe the product itself,
how to store at home, and possible uses.

Final Thoughts

Restock displays frequently, rotate products as needed, and remove damaged, decayed, or unsaleable products promptly.  Unsightly produce left on your stand not only detracts from sales, but it leaves the customer with the notion that you sell rotten produce.  If you'd buy it, leave it; if not, pull it out.

Developing a Roadside Farm Market

by Michelle Kowalewski, Extension Educator, Susquehanna Co.

Thinking of growing and selling your own product?  A roadside farm market can be a great outlet to sell products directly to consumers.  Retailing directly to consumers can be a viable alternative marketing strategy and means of increasing profits for any small-scale ventures.  However, marketing through a roadside market needs careful planning and thorough examination of a wide range of topics.

First, as with any business venture, it's important to research! Explore potential competition, customers, and products.  What will make your roadside market different from another and what will entice people to stop and buy your products?  The increasing trend to buy local products is certainly in your favor if you can make a great first impression and encourage customers to stop again.  What products will you grow to sell at your market?  What is your expertise and how does it match up with what your target customers want?  Remember, quality is important to consumers and will be one of the main reasons that they continue to shop at your stand.  Develop a plan, including production schedule of what items might be in season, when, and for how long.  An option if you cannot produce all the items you wish to sell, is to consider supplementing your market with offerings from other local growers.

It's always important to check on regulations.  There are many regulations to operating a small business and a roadside stand is no exception.  Check with local municipalities or officials to check on zoning in your area or township.  Location is a key consideration for a roadside market.  Spend time observing traffic flows in the vicinity of your potential site.  And remember, signage is important.  No matter how nice your market looks, people must be able to find it, so use directional signs to help customers locate your business.  Signs must be eye-catching and easy to read from a distance.  It's less important to list all the products available on the sign than to direct customers to the market.  When people arrive at your market it's important for parking to be easily accessible and safe.  See this past blog on signage for more.

Now that you have customers to your market, remember to keep your displays attractive.  Shoppers like to see displays of fresh vegetables in a high quality, clean environment.  Remember, a positive first impression will keep shoppers coming back for the next visit!  Roadside markets are often selling an image and experience as well as physical products.  Help your customers think about traditions and warm thoughts - old crates, tools, scales, or simply photos can help create a "moment" for the shopper that makes them feel connected.  It's all about selling your story and your products!

A simple, yet attractive, display on something like this old time sleigh,
can trigger warm, nostalgic feelings in customers, bringing them back.

Customer service is important - be sure to listen to your customers as well as educate them about the products that you are producing.  Be friendly and courteous and always handle complaints in a professional manner.

There are a lot of other key factors to consider when developing a roadside market:

• Size - are you building a new structure or remodeling an existing structure? Do you ever envision expanding?
• How will you price your products?  
• Do you need to consider advertising?  
• How will you staff your market?  
• What type of records should you keep?  

To learn more about developing a roadside market, read Penn State Extension's Ag Alternatives fact sheet on Developing a Roadside Farm Market.

Marketing "Sustainable Farming" to Consumers: A Research Review

A recent journal article by Hillary Sackett, Robert Shupp, and Glynn Tonsor includes results that may benefit some readers who are marketing products with a "sustainable" label.  I'll provide the short version here but you may be able to obtain a copy of the work from one of the authors.

Research Motivation & Background

Sustainable agriculture is often described as a farmer working to not only be profitable but also do no harm to the environment and the broader society.  This so-called "triple bottom line" is sometimes referred to as "Profit, People, Planet."  While many in the agriculture industry debate the term, sometimes strongly, it's clear that a segment of consumers make purchases based on their perceptions of sustainability and the practices that make a farm sustainable.  Food marketers need to understand these consumers in order to target promotional efforts accurately.

The researchers used an internet survey to gather feedback from 1,002 people in 2010.  There were two different versions of the survey; one for apples and one for beef.  For each, ten different characteristics of sustainability were defined.  These characteristics reflected 6 production practices, some of which were different between apples and beef.  (For example, one practice for beef was "prohibited use of antibiotics" and one practice for apples was "limited herbicide use.")  Using a method called "Best-Worst Scaling," the researchers repeatedly asked respondents to choose the most and least important options from a group that included six of the ten total characteristics.  By answering this type of question a number of times, with different groupings, the respondent's preferences become clear.

The researchers analyzed the data to determine the relative importance of each of these characteristics.  They did this first for the entire group of respondents and then they used a tool called "latent class cluster analysis" to group similar types of respondents.  The benefit of this type of tool is that the data naturally group themselves rather than the researchers providing their best judgment to group the respondents.  The researchers then explore the clusters to understand the factors that differentiate the clusters.  The results for both types of analysis are useful for marketers!

Primary Findings

Overall, the size of the farm was ranked significantly higher than any other characteristics for both apples and beef.  The factor related to "locally-grown" was ranked 2nd for beef and 4th for apples.  A full set of results is shown below.

Ranked preferences for measures of sustainability on apple and beef farms

The numbers in parentheses show the level of the preference among all respondents.  These can be compared against each other.  Therefore, small farms is nearly twice as important than the second option for both apples and beef.

The latent-class cluster analysis then provided four distinct groups of respondents for apples and five distinct groups for beef.  These are described below.

Apple Cluster Groups

1. Localvores - 14% of respondents fell into a grouping that heavily valued local production.  These also valued minimal herbicide use and preventive/cultural pest control.
2. Small Business Enthusiasts - 30% fell into a group that placed heavy value on farm size and financial stability of the farm.  These also valued several of the production practices roughly evenly.
3. Price-Savvy Shoppers - 10% were consistently most concerned with food prices.
4. Sustainably Indifferent - 46% placed roughly equal weight on the characteristics.  It is not possible to discern whether these respondents care little or greatly about these characteristics; only that they care roughly equally about them.

Beef Cluster Groups

1. Animal Rights Activists - 15% place a great amount of weight on animal safety and pasture-based feed.
2. Nutrition Buffs - 24% place a great deal of importance on limited antibiotic use, growth hormones, and pasture-based feed.
3. Price-Savvy Shoppers - 10% indicate that price is the leading concern.
4. Sustainably Indifferent - 41% fell into this group, as described above.
5. Say No to GMOs - 10% placed full weight on the prohibition of genetically modified livestock.

Putting These Results to Work

The results of this work provide a bit of insight for the food marketer.  Assuming the apple-related results are applicable to other fruits, or maybe produce in general, you can see that themes of "small farms," "Integrated Pest Management," "local," and other production-oriented descriptors could be used in your marketing and promotional materials/websites/social media outlets.  The same could be done for beef (and possibly other meats) based on the beef results.

The research also does a nice job of segmenting the markets.  Based on my readings, I suspect that most of those in the "Sustainably Indifferent" groups are not actively seeking sustainably-grown products.  Of course, the "Price-Savvy Shoppers" are also not in the target market.  Therefore, the article provides some insights into why the others are in the market for sustainably-produced foods.  For apples, some consumers are most interested in buying local.  Others want to support small businesses, whether local or not.  For beef, some are most concerned about animal rights or non-GMOs while others view sustainable products as more healthy.

Use these and other related phrases on your labels as well as your promotional materials.  It should help you connect more deeply with your customers as you hone in on what concerns them the most.  Good luck!

_______________________________________________________________________

"Consumer Perceptions of Sustainable Farming Practices: A Best-Worst Scenario." (2013) Agricultural and Resource Economics Review. 42(2) pp. 275-290.

Farm Marketing: Aspects of Direct-to-Consumer Marketing

by John Berry, Extension Educator, Lehigh County

Direct-to-consumer farm marketing enjoys a special space in east coast agriculture.  Not only do we have some of the best land and productive farmers in our midst - we have millions of hungry consumers surrounding our farms.  These ready consumers not only seek farm products, foods and knowledge - they seek a connection to farm experiences.

One of the areas of retail farm marketing and agri-tourism of particular interest for enhanced professional development to many direct-to-consumer farm marketers centers on merchandising concepts.

Merchandising - pricing, product packaging, market facility and fixtures - sums up all the means you can use to sell your product, and encourages the customer to buy as much as possible.

Attractive signage can entice customers to purchase

Signs - product description, consumer awareness and general written communications - are one key element of merchandising.  Signage is your major means of communication with customers.  What you say is important to the customer in choosing what to buy, or whether to buy, so make sure the information on the sign is complete and accurate.  Always make sure your signs are clean and neat - a worn out sign will undo all the effects of an otherwise perfect display.

When you have the room, don't assume that every customer knows everything about even the most basic item.  Don't be afraid to add information like "Best Apple Pie" or "Best Baked Potato."  In any case, all products which are new, unusual, or seasonal, should be adequately signed.

Signs can also be used to promote items that are especially good buys, or tie-ins with other items in your or another department.  Signs can also emphasize nutritional information on particular items.   Signs are provided by many suppliers, trade associations, and organizations like the American Cancer Society.  Use these to best advantage, but don't rely solely on them to do the job.  Good signage can increase your sales, so use your imagination and create your own "best sellers."

Display techniques - what is being done to show farm products in their best light and encourage purchasing - are another key element of merchandising.  Your market layout may be parallel counters with displays in between, or a lateral maze with counters extending into the center.  You may even have chosen a boutique style layout, with displays in clusters.

Jams are displayed using a cluster, boutique style, layout.

Whichever layout you've chosen, the main feature of its design is to control the movement of your customers so they spend the maximum amount of time in your department, and are exposed to all your products.

The manner in which you display your merchandise within this framework can enhance their captivating environment and maximize your sales opportunities.  It would be defeating your purpose, for example, to put all your basic, staple items in one area, when a customer might make his most urgent purchases and then leave your department without seeing what else you have to offer.  To eliminate this problem, scatter your high-demand "power" items throughout your department, next to impulse items.

To further the education of those active in retail farm marketing and agri-tourism (market owners, managers, other personnel, etc.), Penn State Extension is offering a two-day bus tour of twelve premiere farm markets in northern New Jersey and Connecticut with plenty of ideas, education, food and fun for all.

We have something for everyone - seasonal, year-round, produce, food, tourism, value-added, pick-your-own, entertainment and educational farm direct-to-consumer marketing at its finest!  Not to mention the "classroom-on-wheels" as we travel between markets with opportunities to network and learn from each other.

Tour information, details, and registration is available here. 

Pricing Power for Direct Marketers

by John Berry, Extension Educator, Lehigh Co.

Agricultural marketing activities account for over 17% of the nation's gross national product.  Additionally, roughly eighty cents of every consumer food dollar goes to cover marketing expenses.  Clearly, performing some marketing chores are a possible source of increased revenue for food producers.

Is $1.00/lb the "right" price?  Well, it depends...

However, when we take on the chores of marketing many challenges must be expected. Academics tell us marketing consists of product, promotions, placement, and pricing.  One aspect of marketing that generates many questions is the function of pricing.  "What should I be pricing my melons at?" is heard on many visits to local farm markets.  This leads me to suggest that prices and pricing must be a well thought through piece of your overall marketing plan.

I firmly believe cost of production is the basis of calculating price.  If our price does not at least cover our cost of production we are not even trying to break even.  My mantra is "I can sit on the porch all day and be broke. I don't need to work and be broke."  As an integral part of the marketing plan, price must be flexible enough to meet the competition and adjustable to changing situations.  Having a clear idea of your marketing objectives and the target market for your products makes selection of a "proper price" easier.

Is the Point Profit?

As we get comfortable with setting and adjusting our retail prices, we can start to consider if we are trying to maximize total profits, or the profit per unit.  Are you willing to take a lower price if you could sell more units?  The following table gives you a picture of this "game."  The first row states that if your margin is 10% and you reduce your price 5%, it will take an increased sales volume of 100% to meet your planned revenue goals.

Current				Required %
% Profit		% Price		Increase in
Margin		Reduction		Sales Volume
10		5		100
15		5		50
15		10		200
20		5		33
20		10		100
25		5		25
25		10		67

An effective pricing strategy reflects four factors:

• Your cost for each product.  Retail price needs to cover the cost of the good itself and ideally include a profit in addition.
• Possible sales response to price change.  Many consumers are aware of the going market price.  We do need to understand how our most significant buyers might respond to price adjustments.
• Costs and prices of the competition.  If my cost of production and thus price, is higher than my real competition's selling price; why would customers buy from me? This is where we start to talk about "value" and not price.
• Probable responses from the competition to what you do.  Many successful businesses pay attention to competition.  How might the alternative sources of your products respond to your prices and any price adjustments?

Proper pricing is essential to long-run business success, and pricing is as much a marketing concern as an accounting one.  Additionally, pricing strategies can be a measure of management effectiveness.  Ultimately, as we develop effective pricing strategies we harness the power of retail farm marketing.  We are able to more easily reach our enterprises' marketing and financial goals.