Why agricultural marketing is complex and expensive

Direct marketing: comparison of marketing channels

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Dagmar Deutsch, agrarheute
on Tuesday, January 19th, 2021 - 5:00 am (comment now)

Farm products meet various customer requirements. They find their way to the customer in different ways.

Farmers who want to market their products directly can choose between various options, all of which have their advantages and disadvantages. The respective operations manager has to decide individually which sales channels are possible. The economic and spatial conditions of the company play just as much a role as personal inclinations.

In the following we show the advantages and disadvantages of the six different sales channels and reveal what needs to be taken into account and which investments are necessary:

  • Farm shop
  • Vending machine
  • Market stall
  • Trading partner
  • Delivery service
  • Online shop

The farm shop as a classic sales channel

In addition to the market stall, the farm shop is the classic way of direct marketing. A suitable room must be available on the farm for this. In addition, farmers have to invest in shop equipment, including a refrigerator or freezer counter, depending on the product.

advantages of a farm shop:

  • Direct customer contact makes it possible to offer customers new products in a more targeted manner.
  • In smaller places without a supermarket, the farm shop can distinguish itself as a local supplier.

disadvantage of a farm shop:

  • Selling becomes difficult in a location remote from the market.
  • Sales personnel may be required.

In principle, it is important in the farm shop to offer an attractive overall range all year round in order to create constant incentives for shopping. On agricultural today we have already put together 10 tips for a successful farm shop.

Opportunities from vending machines

Vending machines can be found in some places in savings banks, in front of restaurants or butchers, and for fresh milk from the farm. Basically there are machines for every product, from raw eggs and 2 kg potatoes to frozen goods and convenience products.

advantages from vending machines:

  • The customer can shop around the clock at the machine.
  • The time required is limited to filling the machine.
  • The machine can be set up anywhere and so be close to the customer.

disadvantage of a vending machine:

  • There is no personal contact with the customer to make the benefits of your product palatable to him.
  • Advertising via other channels is particularly important here, especially until word of the location of the machine gets around.
  • The machine must always be well filled.
  • Regular checks are necessary for functionality or vandalism.

A permit is not required to set up a machine. With regard to the mandatory information, it is sufficient if the customer can only read it after pressing a button. If alcohol is to be sold in the device, the required age verification is also possible. In addition, a cash book must be kept at a vending machine. Also read: Direct Marketing: This is how sales via vending machines work

Good planning with a market stall

The market stall is a classic variant for selling products made in-house and a great way to also sell convenience products. The stand fees are usually between 1 and 15 euros per running meter and stand day. Electricity is usually provided when needed. Some markets charge a provision fee plus consumption, some deduct a flat rate. There are costs for the transport to the market and staff have to be paid or your own working hours have to be calculated. Depending on how the goods are to be presented, a sales trolley may be necessary. But a simple stand is also sufficient.

advantages of a market stall:

  • The benefits of the products can be wonderfully conveyed to the customer at a market stand, in the form of a tasting or a personal conversation. This is an opportunity, especially when something new is introduced.
  • Since the times are fixed, it is easy to plan and, depending on the market, it is also possible to only sell seasonally or only in the introductory phase.

disadvantage of a market stall:

  • If there is no suitable market nearby, the transport costs could be too high.
  • The target group of market visitors is small.

Each municipality or city regulates the details for its markets itself and has a corresponding office that provides information. It is advisable to inquire at an early stage, as stands are often taken for a long time. Some markets offer daily stands, some only permanent stands.

Trading partners complete the product range

If the product ranges complement each other, it can make sense to team up with other direct marketers and sell in their farm shop, for example. This also applies to providers of subscription boxes. Some supermarkets have also discovered the sale of regional products for themselves and offer smaller sellers the opportunity to offer their products in their branches. As a farmer, you only need a means of transport to deliver your products to the point of sale.

advantages from trading partners:

  • New sales outlets open up a larger group of customers.
  • Additional advertising may not be necessary, if so, this can be done together with the partner.
  • Ideally, the time required is limited to delivery. These times are easy to plan.
  • Fewer buyers with larger purchase quantities are possible.

disadvantage from trading partners:

  • You are not your own boss and have to rely on your partner's business to run smoothly.
  • The profit margin has to be divided.

Many of the box-box providers supply organic products and also expect a corresponding certificate from their cooperation partners. The requirements for cooperation with food retailers vary regionally and locally.

Marketing of agricultural products via an online shop

Online grocery retailing is becoming increasingly popular. At the same time, not everyone enjoys personal contact with customers. This distribution channel is particularly suitable for farmers who prefer to avoid it.

Software for developing a simple web shop is available free of charge on the Internet. More professional variants cost a few hundred euros. Whoever consults a web developer is on the safe side. However, this creates additional costs, as well as the required storage space on the Internet. Anyone who already has their own website usually already has one.

Legal issues also play an important role in online trading. Since internet law is very complex, it is therefore advisable to seek advice from a specialist lawyer.

advantages of the online shop:

  • No large seed capital required.
  • A large group of buyers can be reached through national sales.
  • You can flexibly organize the time when you process the orders.

disadvantage an online shop:

  • Technical know-how is required.
  • The competition on the internet is very strong.
  • If you add the shipping costs to the product price, it becomes more expensive for the customer and he has to consider whether the product is still worth it to him.
  • It is difficult to find customers, and most importantly, to keep them; Internet buyers are not loyal, as they are in the farm shop.
  • A lot of advertising and many customer loyalty campaigns are necessary.
  • The time required and the management costs of an online shop are often underestimated.

In principle, anyone can open an online shop at any time. In principle, the products that you as a farmer market online must be easy to pack and dispatch. The mandatory information must be available to the customer before he clicks on "Buy", for example with the help of pop-up windows, images or photos. In addition, consumer law determines how prices must be indicated or what must be in the imprint. The expiry date of the finished product must only be stated on the product actually shipped, for example on a label.

Delivery services: paragraph for secluded yards

Ordering goods directly to your home is becoming increasingly popular. More and more people have their groceries brought directly to their front door. The distribution of subscription boxes is a particularly promising model. When it comes to investments, you need a delivery vehicle, and you also need boxes and boxes for transport.

advantages of delivery services:

  • Fixed delivery times enable good planning, which can also be accommodated with a tight time budget.
  • Especially when your company is isolated, customers can be reached who may be too far away from you.
  • You can calculate the required minimum sales per customer well.

disadvantage of delivery services:

  • For the delivery service in particular, the question arises as to how customers find out about your product. Presumably, a delivery service only works as a supplement to another distribution channel.

If you want to offer a delivery service, you need to think about how your customers can place their order. It is ideal if you can sell your offer as a subscription. Customer loyalty is a major challenge for all sales channels.

The farm shop box: order regional groceries online