Product

Meal kits and delivery services seem to be the current “hot button” trends in direct farm marketing. Food tech is big these days. Blue Apron and the Amazon’s purchase of Whole Foods are just two examples of current of companies with pretty web design and polished communication strategies. But there are still questions about profit margins with the current delivery systems due to the perishability of fresh foods. Also, imagine possible food safety concerns over meal kits sitting on a hot front porch.

Everyone likes to point to “Millennials” as the customer base we must now tailor our products, services, and delivery logistics to satisfy. No doubt, their purchasing preferences have heralded in a demand for more convenience in their shopping options (online versus brick-and-mortar stores), more diversity in their menu selections (nose-to-tail meat options or only plant-based “meat” imitators), and to-their door, in a box, or ready-made meals and kits.

Profitability through direct marketing has, in large part, been derived by targeting a customer segment that has a higher level of disposable income. This segment often lists freshness, supporting local farmers, and product quality ahead of prices when deciding to purchase local food products. While the U.S. economy appears to be strong, the Hartman Group in their recent report “The Business of Thrift 2018: Understanding Low-Income and Value-Oriented Consumers” finds that over half of American households (56%) qualify as low-income today (based on federal poverty guidelines and size of household).

As the marketing and cropping season gets into full swing, there are always questions about product pricing, marketing costs, and decision on what to produce. In the pricing module I use to teach the “Food for Profit” classes, we approach pricing by looking at both fixed and variable costs. These are terms most business folks are very familiar with but don’t often set down and really pencil out for their operation.

A lot has happened on the farm marketing scene since March 2020. Farmers, processors, and other small businesses have quickly adapted to stay in business in a constantly changing environment of pivoting markets, processing bottlenecks, and government support programs.

Quality products and top-notch customer service are the cornerstones of a profitable marketing plan. A wider array of point-of-sales payment options is now becoming an important component of good customer service with many customers. These options include credit cards, debit cards, and NFC (near field communication: ApplePay, Google Wallet, etc.). Near field communication is the technology that allows smart phones and devises to establish communications with each other when they’re close together.

Although they’ve been around for a long time, gift baskets are still a “hot” holiday gift idea. Gift boxes are a near-perfect offering for direct marketers. They can be customized for the receiver, convenient for the giver, can be offered at different pricing options and, can feature your special products. If they include a gift certificate, they may even draw the receiver into your brick-and-mortar or online store.

December is often a “Slam” month for most direct marketers. Holiday sales, year-end inventories to conduct, annual profit projections, and the final push of multiple last quarter marketing initiatives that were often launched even before Halloween. The major goal is to end the year in the financial black. Other goals now take a back seat.

A shift was already underway to ordering food online in America, prior to the arrival of the coronavirus pandemic. U.S. online grocery sales grew 22% in 2019 and, propelled by high demand from nationwide COVID-19 lockdowns, stands to surge about 40% this year, according to the Coresight Research U.S. Online Grocery Survey 2020. Shopping for food online has become normal, if not the “new normal”. Farmers who direct market their products and craft food entrepreneurs can also implement the online tools necessary to capture these profitable food and beverage sales.

In 1906, an Italian economist named Vilfredo Pareto created a mathematical formula to describe the unequal division of wealth in his country. The Pareto principle (also known as the 80/20 rule or the law of the vital few) states that in many cases, roughly 80% of the effects of an action comes from 20% of the causes. Pareto showed that approximately 80% of the land and wealth in Italy was owned by 20% of the population.