Marketing local products:
Short and long distribution channels
[ Summary ]
Marketing local products via short distribution channels
Placing products on the market
5.4 Project approach
Initial human and economic
objectives of the project
A project is the result of the determination and effort of an
individual or group. Therefore the criterion for success is not only
motivation but also the independence acquired by farmers or craft
workers in bringing their project to a successful conclusion after
the consultants have done their job.
The project approach should include product tests and test
marketing, as described earlier. Such testing may lead to a change
in the business approach.
A formal market survey takes place downstream of the tests. It
allows the feasibility and profitability of a major investment to be
defined in advance in order to avoid making unnecessary mistakes
The market survey is not “scientific”. It is a technique to examine
all of the marketing parameters and use check lists to record
results, study them and adapt initiatives in line with their
Improving initiatives calls for an objective evaluation of the
results and it is vital to record data. Useful indicators include:
patronage (the number of customers should be noted every day);
earnings for each product (cash register data should be studied);
qualitative observation of customers (persons working at the sales
counter should note customer observations for the half-day or the
whole day, as well as their own observations about the products and
the sales results); and a customer file should be kept, recording
information about items such as repeat business.
Market survey carried out with a view to setting up a shop selling
farmhouse products in town
The aim of the survey was to determine the advisability, for a group
of farmers, to invest in a project for a town shop to sell a wide
range of ordinary consumer goods (vegetables, fruit, eggs,
delicatessen meats, pork, rabbit, duck, chicken, cheese and fresh
dairy products, plus complementary items such as jam, honey, wine
and fruit juice). The planned investment was considerable, since it
involved hiring shop premises, fitting them out and recruiting a
The market survey revealed the following information:
- 15,000 inhabitants in the catchment area, with not much to
attract shoppers because there were few other shops in the street.
It could be expected to capture between 3% and 5% of the theoretical
market. The population was mainly young, with an average to high
income (data obtained from the Chamber of Commerce). This pointed to
a potential turnover of between 150,000 and 450,000 euros per year.
- The use of a qualitative and quantitative approach that
included in-depth interviews and a questionnaire sent to a
representative sample of potential buyers made it possible to
pinpoint customer expectations and find out what they thought of the
product range the farmers’ group was proposing to sell.
- The point of sale was indeed set up, at a cost of 106,000
euros. Turnover gradually increased, reaching 230,000 euros a year
after two years. However, a local disruption (public works at the
end of the road where the shop was situated, preventing cars from
parking nearby) caused earnings to fall back to below 153,000 euros.
This example shows that although a market survey avoids gross
errors, it is not a particularly precise technique. A market survey
does not take into account the motivation and the ability of the
project promoters to adapt, a fundamental factor that can make an
uncertain project viable or, on the contrary, lead to the failure of
a project that starts out in an ideal context.
Continually monitoring the market
in order to reorient the project
Without innovation, customers become weary of the finest product,
even from their usual point of sale. Each product has its own life
cycle, which means that producers must update their products in some
Knowledge of the market depends on continual monitoring. This means
periodically re-analysing demand and potential target groups in
order to be able to put together a suitable product offering at any
time. It is particularly useful to formally monitor the market every
two to three years or whenever a product, shop, or service reaches a
plateau, in terms of either turnover or patronage, or when a problem
arises (e.g. a decline in patronage).
Unlike in the case of a preliminary study prior to investing in a
project, a supplementary source of information is available for
monitoring the market in the form of business indicators: earnings
for each product; patronage; margins for each product; percentage of
unsold articles; suggestion box; customer comments; sales trends;
competition; customer loyalty; and team motivation.
Certain producers practise informal permanent monitoring. This means
that they remain continually alert to their customers, observe what
their market competitors are doing and make use of their holidays,
whether at home or abroad, to visit places that are likely to
provide them with new ideas.