How Do I Develop A Strategic Marketing Plan?: Strategic Business Planning For Commercial Producers

Strategic Business Planning for Commercial Producers
How Do I Develop A Strategic Marketing Plan?
Types of Marketing Planning

Strategic Marketing
Encompasses the entire farm strategy Deals with the broader issue of determining firms strategic position in the market and how to create value from that position
Product Marketing/Pricing
Deals with the tactical side of selling a product
Similar to a set of standard operating procedures for marketing a particular product.
Marketing Defined . . .
Marketing is anticipating the needs and wants of targeted customers and managing the process through which these needs and wants are satisfied . . . profitably
Management Philosophies
Production Concept Starting Point Focus
Product Product Quality and Features Improving production & distribution efficiency
Marketing Concept
Market
Customer needs
Means
Integrated Marketing
Ends
Profits through sales volume
Profits through customer satisfaction
Building A Strategic Marketing Plan
Strategic Marketing Plan

1. 2. 3. 4. 5. 6. Environmental Analysis (SWOT) Identifying Customers Competitor/Value Creation Analysis Marketing Mix: The 4 Ps Financial Analysis and Budget Implementation and Control Plan
1. Know Your Marketplace

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Trends and changes:
Market analysis Segmentation Prioritizing target markets
2. Who Are Your Customers?

Customers vs. Consumers
Customer: firm or person that buys your product Consumer: firm or person that eventually uses your product
Customer/Consumer Trends
Customers Just-in-time inventory Business to business (B2B) Manufacturing mentality Industrialization of agriculture Consumers Households with fewer people Active, on-the-go lifestyles Concern over the health aspect of food, with a desire for good taste Less time for meal prep
Know What Is Important to Your Customer

Get inside the mind of your customers Find out why they would buy from you . . . or why they would not Truly understand their needs
Intentional listening Customer analysis Solve their problems
3. Competitor/Value Creation Analysis

Make sure you are distinctively different from your competition in areas of importance to your customers
Competitive analysis
Reallocation of resources if necessary

Positioning
The Value Chain

Firm Infrastructure
Supporting Activities
Human Resource Management Technological Development Procurement
Inbound Operations Logistics
Outbound Marketing Service Logistics & Sales
Relationship with Suppliers
Relationship with Buyers
4. Determining the Marketing Mix

The set of controllable variables that will accomplish the marketing objectives:
Product strategy Place (distribution) strategy Promotion (communication) strategy Pricing strategy
Product Strategy
Portfolio of Products
Corn, soybeans, hogs, dairy, cattle, value-added grain, fruits and vegetables, custom farming operations, custom feeding operations Fits your strengths and weaknesses Provides acceptable risk/return tradeoff Meets needs of a particular customer segment
Quality
No. 1 versus No. 2 GMO vs. non-GMO
Service
Timely custom operations Pre-sorting of grain or livestock quality
Volume
Large and small quantities Guaranteed volumes (contract)
McDonalds Product Package

Food Fast service Fun for the kids Variety Non-smoking Consistent product
Waxy Corn
Corn with specific type of starch Delivery Schedule Specific hybrids Quality requirements Purity level
Place Strategy
Storage
On-farm vs. off-farm Segregated or IP
Timing
On-demand Equal amounts throughout the year
Location
Delivery to multiple points
Assortments
Delivery of different amounts to different places at different times
American Crystal Sugar (ACS)

M&M Mars changed from a commodity focus for inputs to a quality assurance focus. ACS keeps the sugar silo at the M&M Mars plant full. ACS shifted from a warehouse next to the ACS factory in Minnesota to an ACS warehouse in Pennsylvania near the candy plant.
Spring Wheat Bakers

Farmer-owned cooperative that processes wheat, grown on Northern Plains into flour Frozen and par-baked bread factory in Atlanta, Georgia, a population center
Promotion Strategy
Advertising
Creating brochures and other advertisements on the products your farm provides and what value they add Creating a farm logo
Personal Selling
Telling your customers how you create value Meeting your grain elevator manager for coffee Having lunch with the lender Taking a Christmas pie to your landlord(s)
Public Relations
Being a good neighbor Being involved in the community Open house days
Price Strategy
Price is the cost the customer must bear in order to obtain the product. It includes: list price discounts allowances payment period credit terms
Pricing Methods
Value-Based Pricing
Set price based on buyers perception of value (rather than on the sellers costs)
Cost-Based Pricing
Add a standard markup to the cost of the product
Competition-Based Pricing
Set price based on following competitors prices
Value-Based Pricing
Customer Oriented Based on customers perceived value
Match price to perceived value

Brand loyalty
Competition-Based Pricing
Price decision based on actions of competition Less attention on cost or product demand Large firms all charge the same price Smaller firms follow lead of large firms, may offer a slightly lower price
5. Financial Analysis and Budgeting

Estimate the demand given the pricing and promotion strategy. Determine expenses associated with production and marketing. Determine anticipated cash flows. Will strategy cash flow? When? What are the critical assumptions of the financial analysis and what are the impacts of changes in those assumptions?
6. Implementation and Control

Focus attention of everyone on delivering what the customer wants
Management of people Monitoring and control
How Do I Build A Product Pricing Plan in A Commodity Market?
Commodity Marketing
Homogeneous Product differentiation in services, not product.
Low-cost strategy
What about the price received?
Does every producer get the same price?
Marketing plans systematic pricing strategies.
What Is A Marketing Plan?

A marketing plan is an outline of price, date and
quantity objectives used to generate a

reasonable return for the business given the existing market conditions.
Diagram of A Corn Marketing Plan

Date Triggers
March 15 Jan. 1 May 1 Harvest
Sell 20%
$2.50/bu
Sell 20%
$2.40/bu Price Triggers
Sell 60%r
Existing Price
What Does A Marketing Plan Do?

Detached from the decision
Proper perspective
Introduces discipline Check your logic What if ...
Steps In A Marketing Plan

Relationship between the business plan and marketing plan
Production history and expectations
Expected prices
Production costs Price and date targets
Review and evaluation
The Business Plan and the Marketing Plan

Marketing plan is implementation of the BP
Implementation consistent with objectives

What are important considerations?
Production History and Expectations

What is the farms history? Is there an underlying trend? How variable is production? Write down expected production. How does expected production relate to pre-harvest sales?
Price Expectations
Assess the situation
Historic patterns (seasonal) Basis patterns
The current situation

Outlook source Market advisors (?!?)
AgMAS An Objective Study of Market Advisory Services

25 Firms subscribe to each service. Observe and follow recommendations Compare to a benchmark price answer Questions:
Do they consistently beat the benchmark? Do they reduce risk and increase returns? Are they as good with corn as with soybeans? http://www.farmdoc.uiuc.edu/agmas/
The Difference
Whats the difference between the market advisory service and the marketing plan?
Beat the Market vs. Accepting What the Market is Giving. Active Marketing = Private Information Active Marketing vs. Passive Marketing
Cost of Production
What are the costs? What revenue cover costs? What price is needed to cover the costs? Is this price realistic?
Price, Date and Quantity Objectives

Identify price and date triggers ..
When should pre-harvest sales be made? What prices are acceptable? Prices attainable?
Set quantity objectives according to

Financial need Risk perceptions
Evaluate and Review Stay disciplined! Evaluate your actions. Are conditions changing?
A Little Marketing Philosophy ...

Bad outcomes still happen Never compare to the market high .. Your plan for your operation ...

How Do I Develop A Strategic Marketing Plan?: Strategic Business Planning For Commercial Producers

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

How Do I Develop A Strategic Marketing Plan?: Strategic Business Planning For Commercial Producers

Uploaded by

Copyright:

Available Formats

Strategic Business Planning for Commercial Producers