by Melissa Piper-Nelson
Niche marketing has been a popular tool for agricultural direct sellers for a number of years. Growers have been encouraged to find specific, targeted markets and to produce, define and sell to a particular audience. For some agricultural-based, food and value-added products, niche marketing works very well as it allows producers to streamline operations toward a specific goal. The disadvantage comes into play when that narrow market margin too strictly confines selling opportunities. If you are seeking expanded marketing options, or are ready to engage other target audiences, it may be time to think beyond typical niche marketing, but consider these three main factors in doing so: Defining the new market audience; preparing your operation for the change; and evaluating the possible return on investment.
Selling to a new market segment requires research and investment. One of the first questions to ask is whether your product or service offers the benefits that group is seeking and willing to pay for. Is it time saving, health improvements, better living, or age-appropriate products that the audience wants? How does your product measure up to others in the market already? And, what will make your product catch the attention of new buyers?
Business professionals understand that at least some market research is necessary to match a product with consumer expectations. What works for young singles is usually not the same message that reaches families and seniors. Even with the same food product, packaging, distribution, point of sale materials and promotions may require vastly different strategies. CSA operations have learned this lesson by strategizing for different size families and selling to singles by offering limited shares, bulk options and product substitution options. Farmers market vendors have closely studied what their customers buy and in what quantities, but also realize that consumers follow trends that may alter how their product is packaged and promoted.
This type of research helps you know what changes you may need to make and how much that will impact your overall business budget. Lots of additional changes in structure and promotion may not make it worthwhile to seek new customer bases, or it may open your eyes to new opportunities worth the investment.
Producing a product and selling to a target audience over time, structures a business operation to meet specific needs. This is often reflected in how many employees are required, what machinery and retail set-ups are necessary and what type of sales operation works best. Some niche market sales are geared to farmers’ markets, CSAs and farm-gate operations. Others follow large retail or wholesale market streams that depend on specific production schedules, volume, transportation requirements and quality definitions. Moving to a different or more broad-spectrum market may require significant changes in how you do business. Consideration must be given to how those changes will take place, how much they will cost, and how you will prepare to meet the new conditions. Some operational changes can be phased-in more slowly than others. Will you need to purchase a new tractor or harvesting equipment, will sorting and packaging equipment be changed out, will you need to hire additional labor or construct a new building? Maybe targeting a new audience is more about promotion and advertising than construction and production. Whatever the factors, as owner and manager, you need to consider what changes are necessary, how they will be implemented, and how it might change your funding requirements.
What will it cost to expand beyond the niche market? Deciding to move beyond a current or very targeted marketing sector brings to light the many phases of your overall operation. Even if you consider your U-pick venture or small farm retail stand resistant to a changing market, altering the direction of sales will impact your business in some ways. Adding new product lines (baked goods to a produce stand, or gifts to a Christmas tree retail outlet) requires you to think about how each operation may be changed and how much it will cost.
And will the return on your investment match your expectations? For example, if different packaging will help you attract a new set of consumers, are the price of machinery and supplies enough to sustain the change? You can review these potential changes on your own, or find business and marketing consultants to assist you in deciding on new sales strategies within manageable risks.
Niche markets have proven successful for many direct marketing operations, but they are not the only option. It may be time to think about new and emerging market opportunities, which will increase your sales. This may mean moving from a comfortable niche marketing situation to adapting your business in new ways for evolving consumer groups. To consider altering your business plan, begin by identifying the groups that want to purchase your product. Then decide if moving in that direction will pay off in both the short and long run. Finally, manage the risk of changing your business plan to evaluate if profit potential exists. These are the important factors that will allow you to enter new markets with confidence and the strategies for success.852
Beyond niche marketing
by Melissa Piper-Nelson