M. E. Swisher2
Direct marketing refers to selling that is based on a personal, one-to-one relationship that ties farmers and consumers together. Many times this relationship is face-to-face, like at farmers' markets. Other times, the consumer and farmer may not actually meet, for example, for Internet sales.
The goal of traditional marketing is to sell a commodity. Direct marketing focuses on marketing product differences. This mindset shift to direct from traditional marketing is the fundamental difference between these marketing strategies. Commodity products are treated as if there is no difference between them: all No. 1 watermelons are the same. Because there is not much product differentiation, commodity items are sold on a price basis.
On the other hand, instead of ignoring product differences, direct marketing relies on differentiation. The idea is that neither products nor consumers are identical; products vary with consumers' unique tastes and preferences. Farmers who are successful at direct marketing profit from these differences (niches), rather than compete solely on price.
Competing solely on price is rarely feasible for small scale farmers. Farmers who accept the lowest price for their products must have the lowest costs. Larger farms can almost always produce high volume, uniform products more cheaply than smaller farms.
While small farmers cannot effectively compete with large scale operations on price, their businesses are uniquely positioned to compete on other, non-price factors. Competing on non-price factors means that farmers must offer their customers something they want but cannot buy at the grocery store, or anywhere else. Differences can include convenience, flavor, variety, and novelty.
Convenience: Ready-to-eat salad mix is an example of products that are more convenient for consumers and could be direct marketed by small-scale producers effectively. Selling produce or meat with recipes and serving suggestions is another way that farmers can make their products more convenient than what is sold at the grocery store.
Flavor: Consumers often list taste and freshness as the top reasons for buying directly from farmers. Producers who get their products to consumers the same day they are harvested will always win on this issue. Also, small scale producers can pay more attention to detail, which often results in a more flavorful product.
Variety: Small farmers can produce 20 different varieties of tomatoes, or grow a multitude of vegetables, flowers, and raise livestock. Small farms can diversify in a way that larger farms do not, and offer their consumers a wide variety of products.
Novelty: This ties into the variety and specialty issues. Farmers who are tuned into their customers' preferences are prepared to respond to those preferences with their products.
Specialty Products: Labeling can distinguish your unique products from the generic. "Eco-labels" are a good example of this: locally grown, certified organic, grass-fed, or free-range. When consumers purchase products with these labels, they are expressing preferences; they are "voting with their dollars."
There are a variety of ways that small scale farmers reach their customers with direct marketing. Some may be more suited to your farm and products than others. For many farmers, a combination of several marketing outlets is effective. Specific examples of direct marketing strategies include:
Chefs and restaurants
Internet or mail order
Community Supported Agriculture (CSA) or Subscription
The following lists highlight some of the advantages as well as the challenges of eight of these direct marketing strategies.
No harvest costs
No transportation costs
Crop/Product mix is not critical
Location is critical
Intrusion on family life
Parking and staffing
Limited growth potential and product value
No one on your farm can re-sell products you do not raise
Long potential season, depending on the crop mix
Usually limited transportation and packaging
Location is critical
Appearance, upkeep of the stand
Staffing—long business hours
Parking and traffic
No one on your farm
Product mix can be supplied by other vendors
Requires farmer to be good salesperson
Can be time intensive
Packaging and presentation are important
Distance to market
Market season and days may not fit your needs
Competition among vendors
Reduced physical infrastructure needs
No one on your farm
Very flexible hours (weekends and evening are fine!)
Growth is virtually unlimited
Management of website
Freshness advantage may be lost – not appropriate for extremely perishable items
Payment mechanism and security of transactions
Packaging is critical
Shipping cost and reliability
Up-front payments help with cash flow
Income does not depend on the weather (farmers market) or crop prices (retail)
Acts as an "insurance policy" in case of crop failure in the case of CSAs
May help with labor shortage; many CSA members volunteer on farm
Satisfied members are great advertising
Hard sell because of the up-front cost to the consumer
Requires quality consistency with variety of products
Requires highly organized farmer and core group of helpers
Delivery logistics can be complicated
Large potential for growth
Pooled resources—purchases, advertising, transportation, etc.
Product mix and variety of group is greater than any one producer
Little added infrastructure or demand on your farm
Now you are part of a group—you may not like all of the decisions
Legal costs and time to establish a co-op
Management is critical—hiring professionals may be the best route
Competition among members (prices go up so I decide to sell my stuff somewhere else, for example)
Stable, non-volatile market
High growth potential
Farmer gets high portion of food dollar
Small farmer investment
Farmers are consumers too!
Requires organization of or by consumers
High degree of management required
Formal organization with rules and regulations, just like a grocery store
Very long planning cycle (up to a year in advance)
High potential for growth in Florida, with the importance of cruise lines, amusement parks, etc.
Up front legwork—contacts
May require that farmers or group of farmers meet regulatory requirements
Failure to deliver is a disaster
May be suitable for a limited number of products
Requires large and consistent volume
The information in this section has been condensed and adapted from Keys to Success in Value-Added Marketing by Holly Born (2001). This publication was a collaborative effort between SARE and ATTRA. It is available free of charge from ATTRA, go to http://attra.ncat.org/.
Involve the community including consumers, farmers, supportive elected leaders, and other businesses to help your efforts. Make use of the different skills and talents in your own network. These people are also invaluable for building a network of people to advertise your product(s) and business. Remember, go-it-alone efforts are rarely successful.
There is a steep learning curve for producers getting into direct marketing. This is true even of those farmers who have been involved in agriculture their whole lives. Smaller operations tend to be easier to manage, and if you find you have miscalculated or otherwise erred, those mistakes will tend to be less costly for a smaller operation than a bigger one.
If one marketing technique or product is not successful, it is easier to switch gears and try something else if you have not invested a whole lot.
Lack of consistent and useful records can undermine the most enthusiastic agricultural entrepreneur. Without good information, it can be difficult to evaluate your progress and to determine whether or not you are meeting your goals. Financial records may be required for tax purposes, but other records can be helpful as well. Farm maps detailing what grows best where or detailed records of what specific products sell best (to which clients, at what time of day or year, etc.) can help you narrow down your product mix to the most profitable items.
This one requires you to think like a consumer. What do consumers want? Whenever you have the opportunity, talk to your customers about their purchases. Good marketing means that you know your customers' preferences, you listen to their suggestions, and you are willing to adjust your production accordingly. Be pro-active! Consider having tastings or sampling new products with family, friends, or loyal customers.
Born, Holly. 2001. Keys to Success in Value-Added Agriculture. Southern Sustainable Agriculture Working Group and National Center for Appropriate Technology's ATTRA Project. https://attra.ncat.org/attra-pub/viewhtml.php?id=271 (February 2016).
This document is FCS7211, one of a series of the Family Youth and Community Sciences Department, UF/IFAS Extension. Original publication date June 2003. Revised January 2016. Visit the EDIS website at http://edis.ifas.ufl.edu.
M. E. Swisher, associate professor, sustainable agriculture, Department of Family, Youth and Community Sciences; UF/IFAS Extension, Gainesville, FL 32611.
The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other UF/IFAS Extension publications, contact your county's UF/IFAS Extension office.
U.S. Department of Agriculture, UF/IFAS Extension Service, University of Florida, IFAS, Florida A & M University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, dean for UF/IFAS Extension.