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Marketing local products:
Short and long distribution channels

[ Summary ]

Section II
Collectively marketing local
products via long distribution channels

 

Chapter 4
Marketing channels

 


 


4.3 Finding out what makes the consumer-zapper tick

 

It has emerged that a large category of consumers is almost indifferent to product brands or trade names. In short, they chose products with no apparent logical motivation. This phenomenon may be due to a number of factors, such as the gradual decline in the number of product lines on the shelves, the standardisation of promotion policies, too much advertising, etc. To counteract this, the major chains have introduced a policy of characterisation, with the aim of reviving their customers’ interest. As a result, in many countries today a local approach and the introduction of products with an image of “traditional quality” (always prized by consumers) have become two of the most favoured tools. This development has aroused renewed interest in small cottage-industry production units on the part of the major chains and, as a corollary, a greater willingness to negotiate different, less restrictive purchasing terms than for other product lines. Proposing, for example, periodic sales promotion activities, organised by the customer (producer), in a professional manner but with strong characterisation associated with the identity of the products presented, is a decisive factor in negotiations to keep price erosion to the minimum.

The Seine-et-Marne Chamber of Agriculture (France) has developed a business strategy for entering the hypermarket distribution channel. Its business negotiation policy is based on a number of key strengths:

  • approaching mass retailers in two phases: downstream of the purchase centres and negotiating with individual hypermarkets;

  • promotion at points of sale, based on thematic promotional activities;

  • rejection of the policy of “price erosion” very often practised by the purchasing departments of mass retail operators.

By presenting products to national purchase centres it is possible to match products with demand in terms of presentation, labelling, wrapping, packaging and price range. After the bid has been accepted, one is in a position of power to tackle the negotiation phase with each individual hypermarket. This preliminary visit makes it possible to target the points of sale effectively and to contact only those that are sure to need the product being offered. The next stage is to negotiate the delivery terms with the purchasing manager of each point of sale (volumes, prices, payment terms, logistics, administrative details, positioning of the products on the shelves, promotional activities, etc.). Based on these elements, the strategy consists of guaranteeing sales outlets by stipulating with customers, after a trial period, a growing or production contract to formalise their mutual commitments.

The credibility of the service relies on a number of key elements:

  • a broad and “tailor-made” offering, whatever the production sector;
  • products of irreproachable quality;
  • a partnership based on specifications and product traceability;
  • compliance with Community health standards for farm processing units;
  • transparency of tariffs, whatever the shop;
  • developing the commercial brand;
  • involving producers in the thematic promotional activities that are periodically organised in hypermarkets (once or twice a month).

Sales promotion activities are as much appreciated by hypermarket managers (because they liven up the aisles), as they are by farmers (who are able to rapidly sell off any product surpluses and attract new customers to their farms). Most promotional activities are spread over three days, from a Thursday to a Saturday. For special occasions, they may last a week.

In fact the direct participation of producers in promotional activities forms part of a wider-ranging service strategy developed by the Chamber of Agriculture. This includes professional development for producers in the sector of regional marketing and changing the way they see their business and its positioning in a competitive, market-oriented context. The manager of the service therefore periodically organises sales training sessions for the members of EIGs and invites them to come along when negotiating sales with the hypermarkets.


European Flag

European
Commission

Agriculture
Directorate-General