2.8.1. Identification of markets
2.8.2. Developing a marketing strategy
2.8.3. Packaging and brand image
Perhaps the most common problem faced by small scale producers is their inability to effectively sell their products. There are numerous examples of producers who are able to make high quality products at a competitive price, but have little experience or skill in finding people who are willing to buy them. Market research and the development of an effective marketing strategy are therefore essential components of establishing and running a small fruit and vegetable processing enterprise. In Section 2.3.2, the procedures that are used to conduct market surveys are described. This is the first stage in identifying different markets and is a necessary step in developing a marketing strategy. Subsequent steps in developing a marketing strategy are described in more detail below.
There are always a number of different markets into which fruit and vegetable processors can sell their products. Within each market there are also a number of market segments or sub-divisions, that can be specifically targeted by a producer. It is very important to decide at an early stage in establishing a business, what type(s) of market does a processor wish to target but also which particular segments within each. These decisions should be evaluated (and if necessary changed) at regular intervals.
It is true that in many developing countries the total market for some types of processed fruits and vegetables is small and selling to customers in one particular market segment may not be sufficient to exceed the break-even point for a small enterprise. However, the process of identifying different market segments helps the entrepreneur to focus on how the business will operate and what types of promotion, distribution and selling should be used.
Examples of different types of markets for processed fruits and vegetables are shown in Table 28, together with examples of different segments within each. It should be stressed that this list is not comprehensive and that other potential markets and market segments may exist in specific locations. The entrepreneur should therefore find out the types of market that exist locally and determine whether they may be suitable to supply.
This is the term given to different identifiable groups of customers. Market segments are described by different income levels but examples of other segments include:
· those based on age (e.g. foods that are mostly eaten by children, such as sweets or weaning foods)· those based on sex (e.g. foods that may be mostly eaten by men, such as snacks that are taken in bars)
· those that are based on religious beliefs (e.g. special foods for festivals)
· those that are eaten mostly by office workers at lunchtime etc.
Within each broad market type, there are a number of segments that may have different needs for particular types of fruit and vegetable products. If a particular segment is targeted by a producer, this is known as selecting a market niche and a product that is sold to a single market segment is known as a niche product. An aspiring entrepreneur should carefully consider which types of people are likely to buy a new product and then devise promotion and sales methods that suit the groups that are selected. A checklist of market information that should be sought may include the following items:
· who will be your customers (businesses, institutions, private individuals)?
· where are your customers (urban, rural, which towns, nearby to production site)?
· what are the average income levels of your intended customers?
· who are the important competitors, how many are there?
· where are your competitors?
· what are their apparent successes and weaknesses?
· how will your product be better?
· who will sell your product and where are the sellers located?
· how will your product be distributed?
· how will your product be packaged?
· what promotion or advertising do you intend to do?
· what further information do you need to obtain?
For example, in the urban domestic market in there may be different segments based on income levels, on gender or age, on eating habits such as vegetarianism, on types of work that people do or on particular areas of concern such as 'healthy eating'. Similarly in the institutional markets the segments may include food for children in rural schools, foods that are used in meals for patients in district hospitals or for the soldiers in military barracks.
The importance of identifying these different segments is three-fold: first it is possible to tailor the product quality characteristics to those that a particular group of customers say they prefer; secondly the promotion of a product can be designed to target a particular segment and thirdly the distribution and sales outlets can be chosen to target where people in the particular segment usually buy their food.
Taking fruit bars as an example, these can be made to compete with alternative products such as sweets, the consumers in both rural and urban areas are likely to be children but the customers will differ depending on the location. In rural areas where there may be less disposable income, mothers buy an individual sweet for their children from village shops or at weekly markets as a reward or for a special occasion. A father may buy sweets as a special treat when he returns home from a period away from the household.
In urban areas families may have more disposable income, a higher level of knowledge about dental problems caused by excessive sweet consumption and a desire to eat more 'healthy' foods. These mothers may therefore prefer to buy a fruit bar as they perceive that it will be better for their children's health than more traditional sugar based sweets. In cities they may be bought by mothers from supermarkets in bags that contain a larger amount, which is given to children over a period of time.
Alternatively, people may give money to children to buy their own sweets from local kiosks. In this example there are therefore a number of market segments that a producer may wish to target:
· rural mothers who buy individual sweets from village shops or weekly markets
· rural fathers who buy individual sweets from kiosks at bus-stops or village shops
· urban mothers who buy packets of sweets from supermarkets or local shops
· urban mothers who prefer to buy fruit based sweets instead of sugar based sweets
· urban children who buy individual sweets from local kiosks.
The fruit bar producer may therefore wish to address the market segments of concerned mothers in urban areas as well increasing the promotion in village shops and kiosks. The results of a market survey (Table 14) can be used to determine the size of different market segments that could be targeted. In the example from an East African country, shown in Table 28, assumptions are made about the percentage of people in each segment who would buy the processed food (a fruit based snack-food) and it can be seen that the two main market segments are rural poor and expatriates/tourists.
Although only a small proportion of poor rural people buy snacks each week, the large numbers involved mean that the market size is also large. In the other category, the higher disposable incomes of tourists and the larger percentage that are expected to buy fruit based snacks or have them available in hotels makes this an important potential market segment.
Each market segment may require different types of distribution and promotion. In the rural market, distribution is via wholesalers who transport the product to a number of rural towns, together with all other goods that are sold in village shops. The village shop owners then visit the towns to buy stock using public transport. The product therefore increases in value and in price each time it is handled by a distributor or trader and a price mark-up of between 10% and 25% can be expected at each stage (see Figure 49). The tourists buy snacks from a variety of sources: from kiosks and restaurants along the tourist routes, from supermarkets in towns and at hotels. Depending on the area that a producer wishes to cover and the number of such sales outlets, it may be possible to supply them directly and avoid price increases by traders. The types of promotion that are available to producers are as follows:
· newspapers
· radio and television
· signboards, posters and leaflets
· personal contacts
· special promotions
· free samples in retailers' shops.
In the examples given above, the types of promotion are different for each market segment. Rural customers are unlikely to have access to television, but may have access to a radio or to newspapers. However, posters or signboards in villages and special promotions in retailers' shops are likely to reach more people. Tourists are unlikely to use radio, TV or newspapers, but may see signboards or kiosk advertisements and buy the product along tourist routes. However, personal contacts with hotel owners and promotions in supermarkets may be more effective.
From the above examples, it can be seen that a processor should identify as precisely as possible who the main consumers will be, where they are located and how they buy their foods. When this information is added to that about the quality and price that consumers expect (Section 2.3.2), the result is known as the marketing mix which is often described as the '4Ps' - Product, Place, Promotion and Price. Some aspects of the marketing mix are described in Figure 59.
Using this information, producers can then refine their product to meet customers' needs and develop a strategy to market their products to the particular segments that they believe will provide the greatest sales. This involves creating a product with the characteristics of flavour, size, appearance etc. required by the customers, developing a suitable and attractive package (see below), negotiating with wholesalers, retailers, distributors, hotel and restaurant owners designing and distributing promotional materials and finally producing and supplying a uniform quality product in the amounts required.
Marketing is therefore putting systems in place that will both make consumers believe that they are buying something special that meets their needs and also supplying the right amount of product when the customer wants to buy it. Customers' perceptions are not just about price and quality, but may also include status, enjoyment, attractiveness, convenience, health or nutrition. Producers should decide which factors are special for their product and emphasise these in their promotion.
Table 28. - Estimated sizes of different market segments for fruit bars
|
Type of consumer |
Estimated number of consumers, assuming different %'s of total actually the processed food |
|||||||
|
0.1% buy |
0.5% buy |
1% buy |
5% buy |
10% buy |
30% buy |
Total** |
||
|
Domestic: |
||||||||
|
|
Urban wealthy |
|
|
|
321 |
|
|
6,424 |
|
|
Rural wealthy |
|
198 |
|
|
|
|
39,522 |
|
|
Urban not wealthy |
61 |
|
|
|
|
|
61,250 |
|
|
Rural not wealthy |
758 |
|
|
|
|
|
758,600 |
|
|
Tourists/expatriates |
|
|
|
|
|
1155 |
3,500 |
|
Customers in 6 restaurants/snackbars |
|
|
5 |
|
|
|
520 |
|
|
Ferry customers |
|
|
60 |
|
|
|
1200 |
|
|
Institutional:* |
||||||||
|
|
Hospital (x1) |
|
|
|
|
|
|
0 |
|
|
Schools (x17) |
|
|
|
|
|
|
0 |
|
|
Prison (x1) |
|
|
|
|
|
|
0 |
|
|
Army barracks (x1) |
|
|
|
|
|
|
0 |
|
Other food processing companies* |
|
|
|
|
|
|
0 |
|
|
Export: Urban wealthy across border |
1 |
|
|
|
|
|
1300 |
|
|
Customers of International "Fair Trading" companies |
25 |
|
|
|
|
|
25,000 |
|
|
International import Agents* |
|
|
|
|
|
|
0 |
|
* Survey findings revealed that these potential customers were unwilling to buy the product** Totals obtained from census data, socio-economic survey data and information from interviews
Figure 59. - Examples of components of the marketing mix
|
Product |
Place |
|
Promotion |
Price |
It should be noted that the development of a marketing strategy is not a single exercise that is done when a business starts. The strategy should be continually monitored, to see if planned sales are taking place and the expected customers are actually buying the product. The strategy should be constantly reviewed to improve it or even to change it completely. In this context, the actions of competitors are critical (see Section 2.3.2). It is most unlikely that other producers will do nothing when a new product is promoted. They are more likely to react by offering loyalty bonuses to retailers who continue to promote their products, to introduce their own special offers and increase the amount of promotion that they do. A new producer should therefore be constantly aware of the feedback from customers and retailers, the changes that competitors make and any customer complaints that are received.
At an early stage in the development of a new business, entrepreneurs should decide on the symbol or image that will be used to identify their products and makes them recognisable among those of competitors. This 'logo' is used on all products in a producer's range and helps to develop a brand image. The label on a package is the first point of contact between a customer and the producer and it should therefore be considered as part of the marketing strategy. If first time buyers are attracted by the label and enjoy the product, they will continue to buy the same brand and develop a loyalty to it. These repeat buyers are the type of customer that is required to build up sales of a product.
The label not only gives customers information, such as what type of product it is and how it is used, but the design and the quality of printing also suggests to the customer an image of the product. This can be one of high quality, exciting taste or a reliable company, but a poorly produced label can also suggest low quality food, lack of care in its production or a cheap product that is only eaten by people who cannot afford anything better. When products are displayed in retail stores alongside those of competitors, including imported brands, the package and particularly the label has to compare favourably with the others before customers will choose it.
The design of a label and the quality of the paper or other materials that are used is therefore of critical importance in promoting the product. In general a simple, uncluttered image on the label is better than a complex design. The brand name or the name of the company should stand out clearly and if pictures are used, they should be an accurate representation of the product or its main raw material. Examples of good label design and promotion are shown in Figure 60a and b and in Figure 61.
Colour can be used to produce either a realistic picture (full colour printing) or blocks of one or two bold colours to emphasise a particular feature. Care is needed when choosing colours as they are culturally very significant and have a direct effect on peoples' perceptions of the product. For example in many societies, white is associated with death, whereas in others, it is red or black. In some areas, browns, ochre and greens are associated with 'nature' or natural unprocessed products, with an image of health and good quality. In others, bright oranges and yellows can either mean excitement or cheap, low quality products.
In some countries there are legal requirements on the design of the label and the information that is included (Section 2.4.2). As a minimum in most countries, the following information should be clearly visible:
· name and address of the producer name of the product
· list of ingredients (in descending order of weight)
· net weight of product in the package
· a 'use-by' or 'sell-by' date.
An example of a label that contains sufficient information is shown in Figure 61. In addition, the producer may wish to include:
· instructions for preparing the product
· storage information or instructions on storage after opening
· examples of recipes in which the product can be used
· an 'e-number' if export to Europe is contemplated
· a bar code.
In view of the importance of labels, producers should pay the highest price that they can afford to obtain the best possible quality. Professional designers or graphic artists may be located at universities, art schools or in commercial agencies and these should be employed to produce a range of ideas. These can then be discussed with the Bureau of Standards and then a printer to obtain quotations before a final decision is made. Most printers require a print run of several thousand labels and great care should be taken to check the design for errors before printing, as these would be very costly and time consuming to correct during production. The subject of labelling and package choice and design is complex and is described in more detail in the publications in the Bibliography.
Figure 60a - Well-designed label
Figure 60b - Well-designed label
Figure 61. - Promotion of products using a poster
