Pricing

Christmas has not been canceled for 2020! The September 2020, issue of the Mastering Marketing newsletter featured tools for holiday planning.This article builds on those tools and features making specific marketing strategies for the 2020 Christmas season.

For two beautiful days in mid-September, I had the opportunity to join Penn State Extension’s Annual “Are You Crazy?” Retail Farm Market Bus Tour. This year, guided by Penn State Extension Educators, Brian Moyer and Carla Synder, the tour provided participants with an opportunity to visit premier retail farm marketing/agritourism enterprises to see new things, get ideas to use at home, learn from each other, and build a network of contacts.

Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Having a good grasp on your target market makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. It provides a focus to all of your marketing activities.

Whether you’re gearing up to sell at a farmers’ market, through your roadside stand, or by private treaty, you cannot thrive in business today without a pricing strategy. The price you set for your product must fall between two points: what the customer is willing to pay and your breakeven point (the point at which you start losing money).

The national average for ground beef is currently $5.39 lb. Prices are not looking to scale back until 2015. A good steak hasn’t cost this much in America since Ronald Reagan was president. A dwindling number of cattle and the growing export demand from countries such as China and Japan have caused the average retail cost of fresh beef to climb to $5.28 lb. in February, up almost a quarter from January and the highest price since 1987.

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.

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.

As we move through the realities the Covid-19 protocols, many are experiencing first hand its effect on their business’s viability. Whether you are dealing with a constricted or delayed Farmers Market, an unprecedented spike in your online and delivery orders, or sympathizing with your restaurant buyers whose sales have been restricted to pick-up and curbside options only. It is an unpredictable time and with so much information flying around, it’s hard to pause and consider what your business might look like when these restriction ends. There are no clear answers at this time, but that doesn’t mean there aren’t actions you can take to affect the outcomes. We just know things will won’t be going back to the way they were before Covid-19.

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.