Wednesday, July 27, 2011

Marketing Lessons From the Farmers Market: Part 2

First published by GreenBiz 2011-07-25
In Part 1, we reviewed how G&S Corn Stand at the local Farmers Market excelled at the 5 P's of the Marketing Mix (Product, Place, Price, People (service) and Promotion).

3 Ways to Apply More Broadly to Green Marketing

The corn stand, despite its simplicity, is rich in business lessons. Inventory management, branding and customer relationship management are some of the sophisticated tactics used. Let's discuss three of these in more detail.

1. Create Quality that is Obvious
Most industries are mature or declining, since they no longer grow faster than the GDP or population. GDP first quarter 2011 growth compared to first quarter 2010 growth: U.S. grew 2.3 percent, Germany 5.2 percent India and China grew considerably faster at 7.8 percent and 9.7 percent respectively. How does your company stack up?

If your company operates in a mature or declining industry, there is hope.

G&S Farms and Blasi intuitively followed the strategy of the founder of modern management, Peter Drucker to make their product unique. Peter Drucker advised in his book "Management Challenges for the 21st Century" that a business in a commodity market "manage for steady improvement in quality and service to strengthen the company's position."

Commodity + Quality = Differentiated product

Quality is one way to make your product greener. Quality requires less rework and returns. Quality products last longer increasing value for the customer. Quality provides the consumer with a more satisfying experience increasing use of the product.

Many companies claim quality. Each company should ask, "Is my quality as obvious as the differences among sweet corn is to a 5-year-old?"

Once you have a quality product, consider the entire supply chain to ensure that quality is sustained. The partnership with the manufacturer (G&S Farms) and the retailer (Blasi) ensures that distribution and sales reinforces the quality experience. And it reduces waste.

G&S and Blasi give attention to maintaining the just-picked quality. Special reusable carrying cases avoid bruising, ice keeps corn from over-heating, and a full canopy shades the product. This is a higher standard than Blasi's farmers market competitors.

2. Market Differently
Philip Kotler, known as the father of modern marketing, stated in his book "How to Create, Win and Dominate Markets" that "Once you define the attributes of your brand, you need to express them in every marketing activity."

But it is not necessary to express your brand like everyone else. Rather than talking up his product or providing samples, Blasi does it differently. With the customer watching, Blasi hand selects each piece of corn; visibly checking the corn and rejecting any that fail his high standards. He is demonstrating his care. One other benefit, it is also faster for Blasi to pick than the customer so he makes more sales.

This approach to help the customer make better selections can be implemented using personal 
shoppers, whether human or virtual. The right wine pairing, the best athletic shoe for your type of sport, and the best office chair are examples.

Some other personal touches that Blasi deploys: Wearing name tags and alerting customers with email messages when their favorite variety is available. This is unique at the farmers market.

Take a fresh look at your green product and avoid the clich├ęs of green color theme, planet earth images, or brand logo that has sprouted flowers or leaves. Look at other industry segments for techniques that you can import.

3. Create Desire Through Scarcity
Given the overabundance of products, many consumers are indifferent. To move product, markdowns are often required, reducing profitability.

Extra inventory is costly to manufacture, transport and store. This extra inventory is expensive for both the company and the environment.

In contrast, there is the beloved corn stand. Part of the consumer psychology that is activated by the corn stand is the scarcity principle. Robert Cialdini, in his classic book "Influence: The Art of Persuasion," explains that "opportunities seem more valuable to us when their availability is limited."

Markdowns once triggered this scarcity principle, but consumers are now trained to expect markdowns at the end of season. Or markdowns are so plentiful and products are so similar, that consumers switch brands to cherry-pick those that are on sale.

The new method employed by the corn-selling champ leverages consistency in price but scarcity of product. This sense of scarcity is established by limited hours of availability, limited corn season and limited amount of product that may sell out.

Of course, a differentiated product is required or no one will care. Some ideas:
• "Hope springs eternal" is the standard merchant mindset. A little pessimism may be in order if your company's forecasts leave you with excess product.
• The farmer's market is the original pop-up store. Think about how to duplicate a temporary venue for your channel.
• A limited time offer may be seasonal products or a special run that your company was lucky enough to secure. It is a great way to test new concepts without a big commitment. Samuel Adams is well known for its seasonal beers. Target has been successful at promoting fashion by high-end designers at low-end prices that typically sell-out in days.

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