Strategic Business Planning for Commercial Producers

How Do I Develop A Strategic Marketing Plan?

Strategic Business Planning for Commercial Producers

Types of Marketing Planning
• Strategic Marketing
– Encompasses the entire farm strategy – Deals with the broader issue of determining firm’s 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.

Strategic Business Planning for Commercial Producers

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

Strategic Business Planning for Commercial Producers

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

Strategic Business Planning for Commercial Producers Building A Strategic Marketing Plan .

3. 6. 2.Strategic Business Planning for Commercial Producers Strategic Marketing Plan 1. 4. Environmental Analysis (SWOT) Identifying Customers Competitor/Value Creation Analysis Marketing Mix: The 4 P’s Financial Analysis and Budget Implementation and Control Plan . 5.

Weaknesses. and Threats (SWOT) • Trends and changes: – Market analysis – Segmentation – Prioritizing target markets . Opportunities.Strategic Business Planning for Commercial Producers 1. Know Your Marketplace • Strengths.

Consumers Customer: firm or person that buys your product Consumer: firm or person that eventually uses your product .Strategic Business Planning for Commercial Producers 2. Who Are Your Customers? Customers vs.

on-the-go lifestyles • Concern over the health aspect of food.Strategic Business Planning for Commercial Producers Customer/Consumer Trends Customers • Just-in-time inventory • Business to business (B2B) • Manufacturing mentality • Industrialization of agriculture Consumers • Households with fewer people • Active. with a desire for good taste • Less time for meal prep .

or why they would not • Truly understand their needs – Intentional listening – Customer analysis – Solve their problems .Strategic Business Planning for Commercial Producers Know What Is Important to Your Customer • Get inside the mind of your customers • Find out why they would buy from you . . .

Strategic Business Planning for Commercial Producers 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 .

Strategic Business Planning for Commercial Producers 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 .

Strategic Business Planning for Commercial Producers 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 .

hogs. 2 – GMO vs. fruits and vegetables. non-GMO • Service – Timely custom operations – Pre-sorting of grain or livestock quality • Volume – Large and small quantities – Guaranteed volumes (contract) . soybeans. 1 versus No. cattle. value-added grain. custom feeding operations – Fits your strengths and weaknesses – Provides acceptable risk/return tradeoff – Meets needs of a particular customer segment • Quality – No. dairy. custom farming operations.Strategic Business Planning for Commercial Producers Product Strategy • Portfolio of Products – Corn.

Strategic Business Planning for Commercial Producers McDonald’s Product Package • • • • • • Food Fast service Fun for the kids Variety Non-smoking Consistent product .

Strategic Business Planning for Commercial Producers Waxy Corn • • • • • Corn with specific type of starch Delivery Schedule Specific hybrids Quality requirements Purity level .

Strategic Business Planning for Commercial Producers 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 .

Strategic Business Planning for Commercial Producers 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.

a population center . grown on Northern Plains into flour • Frozen and par-baked bread factory in Atlanta.Strategic Business Planning for Commercial Producers Spring Wheat Bakers • Farmer-owned cooperative that processes wheat. Georgia.

Strategic Business Planning for Commercial Producers 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 .

Strategic Business Planning for Commercial Producers 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 .

Strategic Business Planning for Commercial Producers Pricing Methods • Value-Based Pricing – Set price based on buyers’ perception of value (rather than on the seller’s costs) • Cost-Based Pricing – Add a standard markup to the cost of the product • Competition-Based Pricing – Set price based on following competitors’ prices .

Strategic Business Planning for Commercial Producers Value-Based Pricing • Customer Oriented • Based on customer’s perceived value • Match price to perceived value • Brand loyalty .

Strategic Business Planning for Commercial Producers 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 .

• Will strategy cash flow? When? • What are the critical assumptions of the financial analysis and what are the impacts of changes in those assumptions? .Strategic Business Planning for Commercial Producers 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.

Strategic Business Planning for Commercial Producers 6. Implementation and Control • Focus attention of everyone on delivering what the customer wants – Management of people – Monitoring and control .

Strategic Business Planning for Commercial Producers How Do I Build A Product Pricing Plan in A Commodity Market? .

Strategic Business Planning for Commercial Producers Commodity Marketing • Homogeneous Product – differentiation in services. • Low-cost strategy • What about the price received? – Does every producer get the same price? • Marketing plans – systematic pricing strategies. not product. .

. date and quantity objectives used to generate a reasonable return for the business given the existing market conditions.Strategic Business Planning for Commercial Producers What Is A Marketing Plan? A marketing plan is an outline of price.

1 May 1 Harvest Sell 20% $2.50/bu Sell 20% $2.40/bu Price Triggers Sell 60%r Existing Price .Strategic Business Planning for Commercial Producers Diagram of A Corn Marketing Plan Date Triggers March 15 Jan.

.Strategic Business Planning for Commercial Producers What Does A Marketing Plan Do? • Detached from the decision • Proper perspective • Introduces discipline • Check your logic • What if …. ..

Strategic Business Planning for Commercial Producers 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 .

Strategic Business Planning for Commercial Producers The Business Plan and the Marketing Plan • Marketing plan is implementation of the BP • Implementation consistent with objectives • What are important considerations? .

Strategic Business Planning for Commercial Producers Production History and Expectations • • • • • What is the farm’s history? Is there an underlying trend? How variable is production? Write down expected production. How does expected production relate to pre-harvest sales? .

Strategic Business Planning for Commercial Producers Price Expectations • Assess the situation – Historic patterns (seasonal) – Basis patterns • The current situation – Outlook source – Market advisors (?!?) .

uiuc.farmdoc.edu/agmas/ . • 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.Strategic Business Planning for Commercial Producers AgMAS – An Objective Study of Market Advisory Services • 25 Firms – subscribe to each service.

Passive Marketing .Strategic Business Planning for Commercial Producers The Difference • What’s the difference between the market advisory service and the marketing plan? – “Beat the Market” vs.” – Active Marketing = Private Information – Active Marketing vs. “Accepting What the Market is Giving.

Strategic Business Planning for Commercial Producers Cost of Production • • • • What are the costs? What revenue cover costs? What price is needed to cover the costs? Is this price realistic? .

– When should pre-harvest sales be made? – What prices are acceptable? – Prices attainable? • Set quantity objectives according to – Financial need – Risk perceptions . Date and Quantity Objectives • Identify price and date triggers ..Strategic Business Planning for Commercial Producers Price.

• Are conditions changing? .Strategic Business Planning for Commercial Producers Evaluate and Review • Stay disciplined! • Evaluate your actions.

• Your plan for your operation ... • Bad outcomes still happen … • Never compare to the market high ..Strategic Business Planning for Commercial Producers A Little Marketing Philosophy .. ..

Strategic Business Planning for Commercial Producers Strategic Business Planning for Commercial Producers .