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Strategic Business Planning for Horticultural Producers

Marketing Basics
Ronald L. Rainey, Ph.D. Extension Economist

Four Essential Elements
(successful businesses)

Marketing
• Any activity or performance of an activity that
involves the flow of products/services from the initial point of production/creation to the hands of consumers.

1) Technical skills (competencies)

for your industry 2) Creating a Practical Business Plan 3) Dedication & Willingness to Reach Business Goals 4) Mastering a “Basic” Knowledge of business management areas

• Marketing is the flow of products and services to
consumers and the transactions that facilitate or manage that flow.

Marketing
Marketing is based on the importance of customers to a business and has two important principles: • All company policies and activities should be directed toward satisfying customer needs. • Profitable sales volume is more important than maximum sales volume.

Marketing Basics
Understanding your marketing plan and determining your marketing strategy: • 4Ps of marketing (7P), • Marketing Mix, • Strategic marketing.

Horticultural Business Information Network (www.utextension.utk.edu/HBIN)

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developing a highly specialized product or service. • Working through established distributors or manufacturers' agents generally is easiest for small manufacturers.e. Price Marketing • Price The price of product involving factors such as cost of production. however.Strategic Business Planning for Horticultural Producers 4Ps of Marketing Basic Components of a marketing plan: • Product • Place (and Time) • Price • Promotion Additional 3 marketing areas: • People • Processes • Physical Evidence Product Marketing • Product What product/service(s ) will I sell? product/service(s) Includes branding and packaging. etc. • Promotion strategies include advertising and direct customer interaction. or providing a productproduct-service package containing unusually highhighquality service. Place Marketing • Place (and Time) Method used to get the product to your target market i. especially since advertising and rent can be reciprocal: A lowlow-cost. Promotion Marketing • Promotion Communicating to your customer about the product. market location.edu/HBIN) 2 . dependability. Good salesmanship is essential for small businesses because of their limited ability to spend on advertising. transportation. Marketing Mix Product Product Place Place Customer Customer Price Price Promotion Promotion Horticultural Business Information Network (www. lowlow-traffic location means spending more on advertising to build traffic. small businesses can often command higher prices because of their personalized service.). place and price of your product. volume/quality issues.utextension. Also the level of service (quality. standard practices. • The right price is crucial for maximizing total revenue. Generally. marketing channel utilized.. competitors prices.utk. Small retailers should consider cost and traffic flow in site selection. • Product strategies may include concentrating on a narrow product line. higher prices mean lower volume and vicevice-versa. guarantees.

not extreme. Maxwell What is strategy? • Competitive strategy is about being different. detailed result. affect you Visible – Are easy to visualize. it will provide you direction. • Strategy is the creation of a unique and valuable position in your industry or marketplace. Measurable – There is a means to determine the objective. Rewarding – They are profitable and selfselfsatisfying. John C. Short-Term Objectives are: Specific – The objective achieves a particular. Reasonable – Are practical and obtainable. not to identify a final destination. positively. Eventual – Will be fulfilled at a future time. • Be the premier supplier in the region.utk. Horticultural Business Information Network (www. Long-Term Business Goals Examples of goals might be: • Maintain a profitable operation. …if a goal is good. Timed – They have a specific timeline and/or deadline. Short-term Objectives Examples of objectives might be: • To increase gross revenues 5 percent each year • To achieve 1212-15 percent return on equity within 4 years • To reduce fixed expenses by 7 percent within 3 years Importance of Goals …the purpose of goals is to focus your attention and give you direction.utextension.Strategic Business Planning for Horticultural Producers Long-Term Business Goals Directional – Move you toward the general objectives of our vision statement. • Activities are the basic units of competitive advantage. • Create employment for family members.edu/HBIN) 3 . Inspiring – Are challenging. • Strategy is about choosing what not to do. • Be on the cutting edge of technology. Attainable – They are within economic and physical capabilities. • Be considered the top producer in the county.

Dollars Maturity Sales 0 Profits Time Horticultural Business Information Network (www. or firm is looking to enter new markets. or increase promotional activities. Firms either reduce price. use different advertising/sales strategy. • When? Present market is saturated. expand distribution. • How? New products for new markets. • When? Customer has a need or a problem. Existing Market Market Penetration Penetration Market Market Development Development Products & Services New New Related New Product Product Related Development Development Diversification Diversification “Identify Your Competitive Advantage” Market Development • Why? To venture into new markets.utextension.edu/HBIN) 4 . through innovation or augmentation of a product. New Product Development • Why? To satisfy buyer’s needs.utk. modify product. use different distribution. • How? New or improved product. Firm possesses an advantage over competitors. • How? Increase current customer product usage or get new customers. • When? When market is growing.Strategic Business Planning for Horticultural Producers Marketing Strategies Markets Existing New Market Penetration • Why? To dominate your existing market. • When? Distinctive competencies are available. Product Life Cycle Growth Introduction Decline Diversification • Why? Growth opportunities outside of current business. • How? Sell existing products in new markets.

discounts. etc. Be Specific. • Business philosopher Jim Rohn said. quantify your claims. and other sources. say it well.Strategic Business Planning for Horticultural Producers Marketing Strategies? 1) Notice your own buying strategies. • Utilize available resources available through government agencies.utk. Third. • Develop a well defined “marketing strategy” with a focus on creating value through differentiated product & service development.edu/HBIN) 5 . Innovation Systemization Summary • Marketing is everything that you do to “communicate” your product/service to your target market. Develop an Ability to see Your Customer’s Perspective. 2) Take an idea that works in one industry 3) 4) 5) 6) and use it in another. Push Putting pressure on the channel members to sell/buy more effectively: volume discounts. trade publications. have something good to say. Pull Increase demand for product at consumer’s end of the channel: advertising. promotions. Summary • Know your customer! Research and identify your marketing options and incorporate marketing plans into your business plan. The product is pulled through the channel because of consumer demands and requests. university. • Horticultural Business Information Network (www. Push is directed at channel members with the end result being more product flowing through the channel. say it often. – – – First. samples. There exists a customer need for the product and it finds it’s way to the consumer. Any Questions? Marketing Channel Characteristic • Gravity Place the good in the channel and let nature • take it’s course. Second.utextension.