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Marketing local products:
Short and long distribution channels

[ Summary ]

Section I
Marketing local products via short distribution channels

 

Chapter 5
Placing products on the market

 


 


5.3 Analysing supply and demand

 


Soliciting a professional outsiderís view

It is desirable to carry out a formal supply analysis and to decide what separates the local product from its rivals. A person from outside the producer group or the area is sometimes in a better position to pinpoint such distinctiveness. It is no coincidence that numerous initiatives for marketing local products in urban markets have stemmed from people who, though originally from the area, have moved away to the city. Because of their origins, they are familiar with local products and their characteristics, and because of their time spent in the city or abroad, they are also familiar with the requirements of potential customers.


Market survey

In parallel with any market survey, it can be useful, and indeed even vital, to test the product in fairs and local markets, and through direct farm selling. This does not require any investment and yields highly conclusive results in terms of motivation and feasibility. At fairs the product can be test-marketed in a real- life situation, making it possible to discover how customers perceive it and ascertain the abilities of the producerís salesperson, etc.

It is recommended to involve producers in the market survey, by making them carry out some of the surveys themselves and getting them to participate in the interpretation exercise. This reduces costs and puts producers in closer touch with customers, allowing them to find out customer expectations and to meet customers when they interview them for a survey.

A market survey includes the three variables for placing products on the market: catchment area, customers and competition.


Catchment area

This is the geographical area within which the company manager, farmer or group proposing the project can expect to attract customers. It is a vital element. Striving to promote a remote point of sale will not produce positive results. The answer is therefore to bring the service to the customer.

This involves ascertaining:

  • the density of the resident population and the influx of visitors (tourists, second-home owners, etc.);

  • whether the population is urban or rural;

  • the means of transport for reaching the shop (by car or bus, taking into account any obstacles such as a river, motorway, etc.);

  • logistical infrastructure (road, etc.).

The question that must be asked is: will the population in the catchment area be sufficient to provide a living for the farmer, craft worker or project?

In France the rule of thumb is that more than 25,000 inhabitants within a 25 km radius of a point of sale means that the study can go ahead, whereas if there are only between 5,000 and 10,000 inhabitants, profitability will be more of a problem.


Customers

This requires five types of information:

  • Socio-professional category, buying and consumer habits. How much of their budget do consumers spend on the type of products we are interested in? Where and how do they buy products (fresh or packaged, etc.)? What is their current volume of spending (for the average household shopping-basket)?

    This will provide some of the elements for determining what brand image the point of sale should be given and what the pricing policy should be, as well as whether to offer fresh or packaged products.

  • Expectations of the product: what do consumers want? What do they buy at present? What do they find lacking? This allows producers to choose between two types of product: ordinary consumer products, which must be affordable to all socio-professional categories, or festive fare and special products, which can be more expensive.

  • Where do consumers shop?

    On this basis, it is possible to work out a commercial strategy and distribution channels (markets, shops, etc.)

  • What type of service do consumers want?

    Based on the answers to these questions, extra services can be offered to customers when they buy the product (payment in one or two instalments, delivery). The idea is to supply the product whilst meeting customer demand for services and not the reverse (it is essential to ensure that the commercial strategy is not built around a service rather than the product itself).

  • How can you communicate with consumers?

    Based on this knowledge, a communication strategy can be worked out (word of mouth, mail shots, leaflets, promotional sales in large shopping centres, local radio).


Competition

  • Who are the competitors?
  • What do they do
  • what products do they make?
  • Where do they sell?
  • How do they sell
  • Do they have an aggressive sales technique or not, including pricing)?

From this information, it is possible to work out if there is strong or weak competition and hence whether the sales method should be aggressive or not. The conclusion will determine positioning. If competition is strong, the marketing strategy can be expected to reach 0.1 to 0.5% of customers in the catchment area. If competition is weak, it can be expected to reach between 0.3% and 2%.


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European
Commission

Agriculture
Directorate-General