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Marketing local products:
Short and long distribution channels

[ Summary ]

Section I
Marketing local products via short distribution channels

 

Chapter 1
A few general factors

 


New consumer trends, which are leading people to seek healthier, more natural products whose identity is associated with an area (mountain, protected area, etc.) are opening up new market opportunities for rural products.

 


1.1 Short distribution channels, opportunities
for enhancing added value

 

"Short" distribution channels enable producers to cut out the intermediaries between producer and consumer. The shortest distribution channel is therefore one in which producers sell their product direct to the consumer (direct selling).

Short distribution channels provide opportunities to create added value in the area and to emphasise the distinctiveness of its products. As a result of the close ties created between area, customer and product, such forms of selling make it even more difficult to relocate local products.

However, in order to market products via short distribution channels, the only way to minimise the risks of embarking upon initiatives that have no future and are costly in terms of investment is to adopt a rigorous approach.

 

The gradual approach to marketing

 


1.2 A gradual approach

 

A gradual approach - which is often possible in this case - is one of the keys to success. This means making the heaviest investments only after the products, customers and producers have been matched through small-scale initiatives.

Ideally, a gradual uninterrupted approach is the very best formula, but in practice, where there is not enough consumer potential in the production area, the solution is to go immediately in search of urban customers, either via short distribution channels (shops) or long distribution channels, as is often the case.

In developing these activities a formal market survey is an essential next step after the test phase. Although the assistance of an external consultant can be very valuable at this point, not many consultants are able to carry out a simple survey that is both inexpensive and integrates the maximum number of producers into the process. Taking the advice of colleagues who have already undertaken this approach, through regional or national networks or the LEADER European network, for example, saves time and targets the search more effectively.

In view of the special characteristics of rural areas, most large- scale initiatives are carried out collectively. In fact farmers and craft workers rarely have the means to develop the product ranges and make the necessary investment on their own. This is particularly true when it comes to reaching urban markets which, in quantitative terms, form the largest market in Europe today. So, one of the important roles of support structures like LEADER local action groups is to guide and assist collective players right through to the project development phase.

Lastly, developing such activities calls for a continual-evaluation approach. This means devising and recording the appropriate indicators (turnover for each product, number of customers, etc.). This provides the working basis that will guide future actions.

 


1.3 Capitalising on geographical or cultural proximity

 

Selling via short distribution channels takes advantage of nearby cultural and/or geographical markets: local consumers, tourists staying in the area and emigrants originally from the area are all potential customers for direct selling. Producers use their own social network to refine their perception of the demand. It is an easy form of marketing, at least during the initial development phases. The aim of selling via short distribution channels is to raise the selling price and hence farm revenues, and since selling activities are carried out locally, this helps to keep jobs in the area.

 


1.4 Recognising the distinctiveness of an area’s products

 

Certain local products are distinctive: they are the result of special historical, geographic or agro-climatic conditions or of a specific production method. Nevertheless such distinctiveness is not necessarily properly promoted by traditional distribution channels, or perhaps not at a remunerative price. By fostering direct contact with the producer (or the area, via a local shop), direct selling makes it possible to explain such distinctiveness to the consumer and thereby enhance its value in the consumer’s eyes.

The area and its potential are promoted through local products. Explicitly signalling their presence in the shop is one way of raising awareness among the public - both visitors and the local population - about the very existence of the area, its value, its culture and its distinctive products.

 

Definition of a short distribution channel

 

Short and long distribution channels: a question of intermediaries Throughout their journey from producer to consumer, raw materials are subjected to a succession of processes and procedures by intermediaries who share out between them any added value on the product. The shortest distribution channel is “direct delivery to the consumer”, where producers themselves sell their products, processed or otherwise, to the final consumer.

At the other extreme, one of the longest distribution channels is that of conventional agro-industrial production. This is where the farmer produces the raw material; this is then processed into food products by multinational industrial groups; and finally the resulting standardised products are sold to the purchase centres of leading supermarket and hypermarket chains. The terms “long” and “short” distribution channel do not refer to the physical distance between producer and consumer, but rather to the number of intermediaries between producer and consumer. For example, if a producer goes into town with a van to sell his product directly from a hypermarket stand, he is selling via a short distribution channel. There is a series of alternatives between the two extremes, in which producers deliver their product to the consumer more or less directly, sometimes through the intermediary of a restaurant or cooperative shop.


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European
Commission

Agriculture
Directorate-General