The construction of a new abattoir and processing room for poultry presents an opportunity for development of an improved marketing system.
Assuming that the new abattoir was built on the basis that it was wanted rather than imposed, it will act as a focal point for poultry processing. It is a place where producers will meet wholesalers, middle men and customers of all sorts and discuss progress in the marketing of the product. Whether trade in poultry is new or already established, the participants will maintain an awareness of market opportunities.
Although the very small scale operations of 50 – 200 birds/day probably offers little scope for a substantial change in marketing strategy, the 350 birds/hour model has distinct possibilities for expansion of an existing market. The following defines marketing, explains what it is and how it can be carried out.
Put simply, marketing is finding out what customers want and supplying it at a profit.
The process is customer oriented. The customer will not buy an unwanted product.
The product must be provided at a profit. Profit provides the incentive to continue with the business. The potential for increased profits offers the main incentive to develop and supply a variety of products to tempt the customer.
The activities involved in marketing include the collection, evaluation and dissemination of marketing information; planning and scheduling of production; forming contracts between buyers and sellers; constant improvement of all post-harvest activities; and co-ordinating inputs, including transport, processing, storage, credit, health care etc.
Marketing is important because of changing demographic patterns. Populations generally move from the villages into the towns, perhaps leaving fewer people in the main agricultural production regions. Combined with the general growth in population, this situation provides improved opportunities for rural communities to grow and sell more of their products, particularly in the towns, earning more money and being able to raise standards of living. The urban folk are able to make their contribution to society without the need to consider constant agricultural activity. Growing more food may be easier for those with land/facilities/cash but the farmer with a smallholding may find it difficult to take advantage of a larger market, particularly where there is competition from a larger producer. An improved marketing strategy, however, may enable him to reduce certain costs, perhaps by joining with others, leaving him with better profits.
Before a poultry marketing strategy can be developed, it is well to understand and list the characteristics of the product. The following are examples. They may vary from one region to another:
Poultry consumption offends no religious sentiment.
Its production is dependant on a wide variety of inputs eg
Efficient cold chain
Its production and consumption is generally non-seasonal.
It is a perishable product which most usually needs refrigeration and considerable post-harvest care.
It may be sold whole or in a wide variety of different parts. A different value can be placed on each part.
It is eaten as a central part of the meal.
Each part may be prepared for consumption in different ways according to a different recipe. It is invariably cooked and eaten with other food products and additives eg vegetables, spices.
It is a basic food commodity inasmuch that it is a supplier of proteins and essential food nutrients to the human diet.
It is not the only supplier of proteins and essential food nutrients to the human diet. It is in competition with other meats and protein sources including fish, eggs and dairy products.
Its consumption level is dependant on price, income of buyer and the price and availability of competing alternatives.
Having understood the product, it may be as well to understand and list the characteristics of the market. Once again, the following are examples:
Poultry should be supplied from an accredited abattoir.
There are many contacts to be made in the marketing structure. For example, producers, buyers, sellers and customers. All have information indicating the product which the customer demands.
Customers expect poultry to be a constant product, not chaning with season, time of day, severity of rains etc.
The customers expect a constant throughput, not expecting serious shortfalls or gluts. Production schedules need full control.
The product may be subject to the laws of supply and demand. An oversupply will lead to a fall in price and profitability. An undersupply may cause a rise in price but the customer may purchase other products to the detriment of later sales.
Markets can be supplied under contract. For example, a particular buyer may want a constant order filled each week to a particular products specification for which he will pay a premium.
There is a standard of quality which the market demands. Customers will not return to buy more if the product is unwholesome. At point of purchase, quality relates to presentation as much as anything else. Assessment of quality by the customer may be fairly subjective if not almost unreasonable. Customers may look at the colour of the meat. They may also look at the colour of the wrapper.
The market may respond to advertising.
Test marketing the product may or may not indicate the results of implementation of a full marketing strategy.
There are three steps which must be undertaken before a change in marketing should take place. These are:
Research and analysis of the potential market,
Reaching a decision about what to do by way of making inroads into the new market and finally
Converting that decision into practice.
The first step is to determine exactly what market exists and the problems and constraints on that market. Information should be gathered on the volumes traded (if any), its type (high volume/low margins or low volume/high margins), product traded (whole, in pieces, breaded, spiced, cooked etc) its numbers (ratio between the various sorts), weights of portions, style of packaging, how it is transported to the markets, how it is stored in the market before sale, if cold storage is available, if there are refrigerators in private homes on a large scale, the number of potential speciality markets (hotels, fast food outlets, prisons, schools, hospitals, private clubs, restaurants etc), who is supplying what to whom. The list is seemingly endless.
The second step is to determine what the markets want. The prices should be examined. If too high, an increase in supply may bring down prices a little but result in a much bigger turnover. This may indicate a large income elasticity to which an increase in production/supply is indicated to the benefit of all participants in the marketing chain. The market may want a different grade of poultry, cut differently (into drumsticks and thighs for example, rather than legs) improved shelf-life, different packaging (eg a film bag rather than a wrap; the bag may be re-used for a non-food item), changed use of the product in response to a current fashion, advertising campaign etc. Once again, the list is seemingly endless.
The third stpe is to examine the service the customers require. This relates to volumes of product, its price, its time of delivery (morning, evening), regularity (daily, weekly) and system of delivery, (ie in bulk, retail packs, ready to cook, returnable containers etc), its type of pack (easy to open), its type of labelling and so on.
For the fourth step, the potential entrant to the market needs to know where the poultry is sold successfully and unsuccessfully, what competition there is for the product, what margins are available, who are the main participants in the market (wholesalers, middle men etc). This may be made easier if a diagram is drawn to show how the market operates.
Finally, the market research seemingly completed, the information must be analysed with a view to finding a niche which the supplier can fill. This is one of the most difficult stages and the one on which the venture will be sustained or not. There are no answers which can be given in a book. If there were, the niche would be filled by someone else, making the advice appear dated very quickly. To make matters more complicated, the new venture may be subjected to competition. The entrepreneur will need to continue to keep an eye on the market and change his practices to keep ahead of the competition. His research and analysis should never stop. A successful market is built on information.
The first decision is to accept the results of the analysis and chose the niche to be filled. This may be a circular process in that the niche identified may be so impractical to fill that it will be necessary to return to the analysis of the market research data. For example, it may be very profitable to supply a naval vessel with 3000 tonnes of poultry every six months. If the cold storage to hold the product for the production period while awaiting the irregular schedule of the ship was inadequate, however, the enterprise would not be practical.
The next move is to plan and integrate all the inputs, production and supply (both to and from), production scheduling, labour materials, services, transport etc. It may be a good idea to write down the proposed marketing chain in a graphic form to see where the difficulties lie.
Having found the niche, the venture should be costed. The costs may depend on the route chosen for the supply or production volumes. For example, it may be cheaper to combine forces with another supplier and contract a trasport company to get the poultry to market rather than buy and use a company vehicle. Whatever system is chosen it should be a practical way forward, the least complicated and one to give maximum returns or profit. it is well to remember that to halve the profit margin (thereby reducing the cost to the buyer) and treble the supply will bring in greater returns than not changing pricing structure. It is also well to remember that if the supplier does not have the production capacity to meet the market requirement, the order may go to a supplier who can. Other aspects of costings must be taken into account. For example, the cost of special packaging, special equipment which may need to be purchased, extra costs for processing labour (eg cutting to a different specification). The cost of borrowing capital must also be included.
Implementation may require the services/skills and business of partners. This may be a bank, finance company, transport company, cold storage complex, poultry supplier, wholesaler, retailer etc. These must be chosen with care. A small transport company with low tariffs will be of no use if the driver is consistently late for collection of the poultry from the abattoir if it must be delivered to the shop at exactly 0800. To co-operate with the big transporter who charges more but gives a reliable service may be better than another concern which offers a higher margin but risks losing the business altogether.
It may be advisable to form a co-operative with other suppliers or from contracts with specialist markets to supply fixed quantity, quality and priced goods on a regular basis. These markets must be supplied to contract, which usually state the exact time, date, quantity, quality etc and expect a continuity of supply. To fail on the contract may invoke penalties. The supplier must be confident of fulfilling his side of the contract. Needless to say, a poultry processor in contract with a hotel, say, would also have a contract with a poultry producer who would also be expected to supply the stated quantity, quality etc to time.
Some buyers demand a particular product prepared to their unique specification as part of a contract. They may contract that the specification must not be divulged to another party or used if the contract is broken later. The buyers may also expect to visit the factory and make recommendations about its condition, inspection etc. There is no harm in this. Beware, however, the buyer who wants a considerable volume of the factory output. if the factory gears up to meet the contract and the buyer defaults, the owner may have lost a lot of his investment and produce more than he is able to sell elsewhere. The buyer may return to demand a much lower price based on the weakness of the situation.
Every time a change in system is proposed there will almost certainly be cost implications. The proposal will need to be recosted time and again until the best system is found.
Finally, it may be desirable to test a market before making contracts with suppliers and buyers with untested goods or services. This is a perfectly acceptable way forward if handled properly.
This is the moment of truth. All the decisions are made, the way forward determined, the contacts made and happy, perhaps the contracts cast in legal stone. There only remains general advice:
The product should be right in terms of quality, quantity, packaging, price, temperature, time and so on. In other words, the contract to the market, whether written or moral, should be fulfilled.