Marketing local products:
Short and long distribution channels
[ Summary ]
Section I
Marketing local products via short distribution channels
Chapter 2
Conditions for success
More often than not, the development and successful outcome of
initiatives to market local products via short distribution channels
calls for six key points to be taken into account.
2.1 Realistically assessing the volumes
that can be sold via short distribution channels
The volumes that can be sold via short distribution channels depend
on the type of distribution channel. In the case of direct farm
sales in France, for example, it is estimated that a customer
generally travels within a radius of less than 20 km to buy
farmhouse products. In the case of the combined sale of tourist
products from the farm, in essence it is not even a food product
that is being sold, but rather a cultural or tourist product.
2.2 Developing collective action
Individual initiatives often quickly come up against their
limitations and, what is more, it may be advantageous to set up a
range of products. Direct farm sales of a single product rarely earn
more than a few thousand euros per year for the farmer concerned,
whereas the turnover of a collective point of sale, offering a range
of farmhouse products, can attain several hundred thousand euros
shared between ten or so farmers. The grouping and collective
commitment of farmers and/or craft workers makes it possible to
market a diversified product range, maintains motivation over the
long term, limits the financial investment of each producer in
developing a new distribution channel and strengthens solidarity and
social cohesion in the area.
With the collective approach, it is a good idea to call on support
structures to guide and assist the group of producers through their
project, since the process is complex and comprises several stages,
with individual interests and objectives having to be adjusted to
suit a collective approach.
2.3 Harnessing commercial skills
to develop direct selling
In the initial stages, it is generally possible to sell via short
distribution channels without making any significant commercial
investment. Producers can take care of the selling side themselves
from the farm premises or at an open-air market. However, as soon as
investments are envisaged - in order to fit out a shop for example -
commercial and management skills as well as formal market surveys
are required. Furthermore, the motivation of the producer is vital:
direct selling calls for the involvement of one or more people who
have made it their job and have acquired the requisite skills.
2.4 Ensuring product quality
Product quality is a decisive factor. If the product is poor, no
form of sale will be effective, nor will there be customer loyalty.
In the majority of cases, improving the objective quality of the
product AND matching it to the expectations of the consumers at whom
it is aimed (uniformity, packaging, etc.) are prerequisites for the
development of distribution channels. For a producer acting alone it
is not easy to take an objective view of the product by setting
aside all mercenary or emotional considerations. An outsider
(specialised consultant or, very often, the customers themselves)
will frequently be better at capitalising on the distinctiveness of
the products for new consumers.
Three European quality labels
In 1992, the European Community implemented a regulation aimed at
promoting the quality and distinctiveness of certain agribusiness
products.
The regulation relating to the protection of geographical
indications and designations of origin for agricultural products and
foodstuffs [regulation (EEC) no. 2081/92], as well as the regulation
relating to certificates of specific character for agricultural
produce and foodstuffs [regulation (EEC) no. 2082/92] are two
pillars of this European quality policy.
Pursuant to this regulation, more than 500 products benefited in
1999 from one or other of the following three European labels:
- “Protected Designation of Origin” (PDO) refers to foodstuffs
produced, processed and prepared in a specific geographical area by
making use of recognised know-how;
- “Protected Geographical Indication” (PGI) refers to products
for which there is a geographical link during at least one of the
three stages of production, processing or preparation;
- “Traditional Speciality Guaranteed” (TSG) refers to products
that are traditional either on account of the ingredients of which
they are composed or on account of their method of production.
In 1998, the Commission launched a campaign to raise the awareness
of producers, retailers and consumers about these labels. The
campaign resulted, in particular, in the creation of logos
identifying each of the three product categories (PDO, PGI and TSG).
They can be accessed at Web site:
http://ec.europa.eu/dg06/publi/review98/p09_en.htm
2.5 Adopting a gradual approach
As far as possible, a “step-by-step” strategy using successive forms
of selling, starting with the markets that are easiest to reach with
limited funding, makes it possible to overcome obstacles
progressively. It allows time for products to adapt to customer
expectations, for production to overcome its early teething troubles
and for producers to test their selling abilities on a real-life
scale.
Prior to taking any investment decision it is advisable to carry out
a market survey, whilst continual monitoring of demand makes it
possible to periodically adjust supply and to start up new
initiatives.
2.6 Designing new products
By considering an area, its local communities and its products as a
whole, it is often possible to create new products or services
incorporating some sort of service that brings added value to the
area. Associating fun and enjoyable activities with discovering a
product, production method or area, or passing on product knowledge
and culture can provide a wealth of opportunities. One key task is
therefore to work out at the project design stage exactly where the
players involved will recover, in terms of turnover or services, the
effort invested in organisation.
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