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Department stores Hypermarkets Health & Beauty Convenience Supermarketsd

The retail food market in Thailand can be divided into four major sub-sectors:hypermarkets, supermarkets, convenience stores, and traditional markets (wet

markets and "mom and pop" stores). Over 70% of the retail food trade in Thailand isdone through the traditional markets. This is one reason why foreign retailers are so

optimistic about the future growth prospects of the Thai retail food industry. Mosthypermarkets and supermarkets are concentrated within the Bangkok area. Even

though Bangkok has only 20% of the country's population, the area accounts forover 70% of the supermarkets and superstores.

modern retail trade channels goes through three primary segments: hypermarkets,supermarkets, and convenience stores. Hypermarkets, such as Tesco Lotus, Big C,

and Carrefour, are similar to Super Wal-marts and Super K-Marts in the U.S. Another

hypermarket, Makro, bears similarities to price clubs in the U.S., such as Sams Club.Tesco Lotus superstores, as of December 2002, total 52 locations nationwide and aresituated in and around Bangkok as well as other major cities in throughout Thailand.

Big C is the second largest hypermarket chain in Thailand currently and has 35locations in Bangkok and other major cities. Makro and Carrefour have 21 and 17

total stores, respectively.

The main supermarket chains in Thailand are Tops, Food Lion, Foodland, Home Fresh

Mart, and Villa. These supermarkets are usually smaller than those in the U.S. Villaand Foodland generally cater more to expatriates and higher income Thais.

Therefore, these companies usually carry more premium priced and importedproducts than other stores. Villa carries the largest variety of imported products of

any store in Thailand. Some Tops stores, such as the one in Central Chidlomdepartment store, also cater to the higher-end market. Tops is the largest

supermarket chain in the country, with 48 locations as of December 2002.

Snacks can also be found in convenience stores throughout the country. 7-Eleven is

the largest such chain in the country, with over 2,000 stores in operationnationwide, making it the fourth largest 7-Eleven distributor worldwide. Stores like

7-Eleven and Family Mart are located in prime points throughout major cities and atfuel stations along major highways. Other convenience stores, such as Tiger Mart,

Jiffy Mart, and StarMart, are located only at fuel stations.

Only five key players dominate the modern trade channel currently, and with many

recent changes in the industry, largely due to Vietnams WTO commitments, the

competition is going to get fiercer.

Based on Nielsen insights, retailers need to examine four key points in order to increase

their competitive advantage in this fast-growing channel:

Store location

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o Depending on the type of retail store, businesses need to consider the

majority socio-economic class (SEC) in the area as well as different

consumer needs

Supplier management

o Having just in time delivery

o Suppliers offering competitive pricing

Customer experience

o Convenience

o Having the right mix of products for the modern trade channel

o Knowledgeable sales assistants

New customer development

o

Understand what are the purchase triggers for the modern trade channelor specifically, your store

MARKET RESEARCH: INDUSTRY, MARKETPLACE, CUSTOMERS, AND COMPETITOR

Before any business activity begins, market research is essential. Without it, you are operating

your business blindly with very little chance for success. It helps to have a good grasp of the

business environment in order to make smart choices about how you will compete for sales.

Industry Analysis

How do you define the industry? Food industry, specialty food, or gourmet food

business?

How will you classify your product? Cooking staple or condiment?

What are current trends and important developments?

Who are the largest and most important players? Do they matter to your business?

How?

What problems is the industry experiencing: Oil qualities? Supply vs. demand?

Oversaturation of new brand entries? Shrinking competition (attrition) from boutique brands?

What national and international factors influence the industry? Imported volumes? EU

subsidies? Weak/strong dollar?

Marketplace Analysis

How do you define your marketplace? Your sales territory?

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How large is it and how fast is it growing?

How is it segmented by type of marketplace? Gourmet food stores, health food stores,

cheese shops, farmers markets, etc.

What companies currently service this market?

What trends are important in your marketplace?

Customer Analysis

Who is your customer? What segment of the market are you targeting? Timid buyers

looking for a bland oil? Adventurous types who want something spicy with a lot of bite?

What characteristics define your target customers? High income, price sensitive,

environmentally concerned, health-focused?

How many types of customers do you have? Distributors, retailers, food brokers, food

lovers, restaurants, home cooks? And what are their concerns?

What motivates buying decisions? Is it price, bottle, color of the oil, label, word of

mouth, local connection?

What evidence do you have that potential customers will want your product?

Competitor Analysis

What are the five top brands you expect to directly compete with? Are they the big

multinational players or locally grown brands?

What are their size, location, target market, and growth history?

What are their products? How are they priced? What market position do they use to

differentiate themselves?

How is your product different/better? Be realistic and specific. We get several calls a

day from people who tell us (and believe) their oil is the best in the world or unique.

Short-Term Considerations

There are six key areas that determine what kind of approach to take when creating and

retailing a specialty olive oil brand. We have already addressed some of these above, but at

this point, we will focus on the retail and branded business scenario.

Will you grow the olives or buy the fruit or oil in bulk?

Will you process it yourself or hire a miller?

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Will you have one product offering, or plan for expansion into other price points or

product lines (extra virgin olive oil, flavored olive oils, dipping oils)?

Will you package it yourself or hire a co-packer?

Will you build your own sales force or use a distributor/reseller to handle sales and

distribution?

Who is your best target consumer? How will you create awareness and demand for

your product?

Answers to these questions will guide the direction your business takes and identify inherent

costs. Once youve assessed the costs, it will be relatively simple to determine profit potential.

Long-Term Considerations

When you start to map out the longer-term plan, youll deal with issues like market

distribution expansion, realized brand value, and exit strategies.

Will you try to transition from specialty food stores to mainstream grocery chains?

Will you create product line extensions to broaden your brand and expand avenues of

distribution?

Will you be interested in capitalizing on the inherent value of a successful brand and

consider a buy-out by a major packaged goods manufacturer?

So get out a big piece of paper, list the questions above and start creating a decision tree.Then follow the path and fill in some timetables and costs. At the end of the exercise, you willhave a pretty clear idea of what you are up against. And, if you are seeking outside fundingfor your new venture, youll already have answers to most questions any investor will ask.

Marketing the Product

Any marketing strategy is all about finding customers. The best oil is useless if you don't have

buyers for it. In this section you must prove to yourself, and then the reader, that there is an

eager market for your product. In prior sections you have explored the marketplace,

competitors, and unmet needs and opportunities. Here is where you will discuss utilizing those

opportunities. How is your oil different from your competitors? What unique features and

benefits will your products have? Who are your customers? Start with some form of test

marketing. It can be an inexpensive tool to gain invaluable insight into what might work and

what wont. Some olive oil entrepreneurs will buy oil made from the variety they intend to

plant, bottle it in the proposed container, and sell it at farmer's markets, or do focus groups,

give it to friends, etc. to get feedback. This should all be done before you buy an acre of land

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or plant a single tree. You may be able to set up a card table at your local market if you offer

tastings of their other offerings. Try to be objective and don't let your bias toward your

product affect your test subject. This is a learning experience. Why does the customer prefer

the oil they do? Is it a product attribute you hadn't thought about, like the color or bottle

cap/cork?

Once you are confident of a direction, follow the traditional marketing approach of the four

Ps and focus on four factors: product, price, packaging, and promotion. A more recent and

critical addition to this list is place or distribution strategy. If you can create the right mix for

each of these areas, youll have a good chance of success.

Product Strategy

The single most important thing you can do to determine the best product configuration is to

do your homework. If you have a good fix on what is out there (the competition), what is

missing (what consumers may be looking for and not finding), and what your distribution

options are (the best channel to push your product through), you can save a lot of expensive

trial and error.

Be as detailed as possible about defining your product. Will you sell one single blended oil or

will you have a whole line of single varietals? Some producers press oil at different times of

the year to create "early" and "late" versions with different characteristics. While blended oils

have traditionally received the highest ratings and appealed to the broadest market, single

varietals are interesting and can increase sales out of curiosity and appeal to individual

tastes. Some olive oil producers will sell cured olives or olive tapenades. Do you want to sell

the oil in different types of packaging, such as stainless fusti or gift baskets? Will you sell

olive oil accessories such as tasting or dipping bowls and olive motif tablecloths? Will the

product be a condiment, a staple, or be bought as a gift or souvenir? Remember that an

important goal is to have repeat customers and to build loyalty.

Pricing Strategy

The second area to focus on is the mechanics of determining price. You can approach this

one of two ways: work from a cost-basis (aka zero-based budgeting) and calculate a final

retail price by building in margins after you compile your costs; or research what is already

selling and for how much, and project what you think the final retail cost of your product

could be, then work backwards into what your net sales value is after distribution costs. This

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approach will also give you a very quick way to see if you will be cash-positive or cash-

negative after selling a bottle of oil.

In the specialty food business, most companies try to achieve a 10% net profit margin. So,

dont get infatuated with the image of supermarket shelf placement unless your projections

show that higher volume can offset lower margins. Just remember there is no quicker way to

go out of business than to be wildly successful selling a product at a loss.

So, what are the margins you can expect in the course of taking your product from ex-

warehouse (cost when it leaves your warehouse) to a point of purchase? It will vary a little

depending on what channels of distribution you go through, but the following pricing exercise

provides some norms for what each point of distribution expects to get as a cut of the final

price.

Price to Consumer $11.99

Less 40% ($4.80) (Retailer Margin)

_______

Cost to Retailer $7.19

Price to Retailer $7.19

Less 25% ($1.80) (Distributor Margin)

_______

Cost to Distributor $5.39

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Price to Distributor $5.39

Less 5% ($0.27) (Broker Margin)

_______

Cost to Broker $5.12

Price to Broker $5.12

Less 20% (-$1.02) (Gross Profit Margin)

_______

Your Ex-Warehouse Cost $4.10

Distribution Strategy (Place)

The third area to consider is what channels of distribution to use. You may choose to start

out going directly to consumers, selling at farmers markets and seasonal fairs. As already

mentioned, it is a great way to go through a low-cost test marketing phase and get direct

consumer feedback without retail chain exposure before you are ready. Best of all, this route

incurs no sales commission margins. Or you might start out as your own sales force, with a

trunkful of product, visiting every local retail outlet that you have already researched and

think you have a high probability of success with, in which case you will only need to

consider their margin. Or use a broker (who will impose a 10% margin instead of 5% if they

dont sell to a distributor) to get to a retailer. But you get the idea. If it passes hands in the

process of getting to the consumer, you have to factor in a sales cost/commission for each

link in the chain.

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There are a few other variables to keep in mind. Brokers do not buy your product, they

only represent it, serve as your field sales force, and expect you to manage the store-door

delivery and accounting. Distributors will buy your product, but usually only if they are

confident that it is already pre-sold to their customers. If it doesnt move off the shelf

quickly enough, a repeat order wont be forthcoming.

Finally, remember that you will face many sales costs besides commissions. Discounts for

early payment (e.g. 2% 10 day discount), slotting fees (large scale grocery store only),

breaking cases for smaller retailers, product sampling, sales promotion discounts (e.g. buy

ten cases, get eleventh free) are all part of the distribution business that you will probably

face at one time or another.

Packaging and Promotion Strategy

In specialty food businesses, marketing almost always makes up the greatest expense. You

have to create awareness of your product at every level of the distribution process and

create demand from all your customers.

In order for your product to sell into the distribution chain, you may face the expense of

trade show attendance, mass mailings to a purchased retail list, internet marketing, and

sales kit promotional materials.

In order for your product to sell at the in-store stage, consumers need a reason to buy it.

Your marketing message gives them that reason. They may have read a positive review in

the local paper (think public relations push), seen a bottle on a friends kitchen counter

(happy customers are your very best sales force), received a mail-order catalog featuring

your product, or made an impulse purchase because of an attractive end-aisle display or

shelf talker at the gourmet food store. They could have even picked your bottle out from

among ten other brands on the shelf simply because they liked the looks of the label. No

matter what motivated them, it resulted in a purchase because they responded to a

marketing message (one of some 7,000 that Americans are exposed to every day).

Decisions on the distribution channelDeveloping new channels structure and function processes demands a complex setofstrategic decisions that will determine the form in which a channel is organized, howtheflows will be performed and how the demands of the end consumer will be satisfied.It is

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a strategic decision in the micro-universe of each firm, in constant pursuit ofincreasedprofits and lower costs. At the same time, it is important at the macro level wheninvolvinginductive and restrictive environmental forces responsible for the organizationalchanges.

Kotler and Armstrong (1993) comment that decisions on selecting appropriatemarketing channels are among the most important that a firm must make. Thedecisions related to the firms sales force and to advertising depend on thepersuasion,training, and motivation that the resellers need.Decisions on needs of consumer service

The structure of marketing channels is obviously developed to serve the consumersandshould begin with knowledge of their purchasing habits rather than with themanufacturers desire to develop a specific channel structure (McCalley, 1996). Toplanthe channel efficiently, it is necessary to know what levels of services consumersdesire.According to Coughlan et al. (2002), the extension of these services to the consumer,andfaulty planning and/or execution can seriously compromise the relationship of theparties, with serious consequences to the product image. In general, these decisionsinvolve elements such as size of the lots (breaking bulks) that will be offered, degreeofmarket decentralization, wait time for products, variety of products and servicesupport.Decisions on objectives of the distribution channel

The channel objectives must be defined in terms of the level of service desired by thetarget consumers. In general, the firm identifies several segments that desiredifferentlevels of services from the channel, and from there decides what services will satisfythose needs and what the best channels are to be utilized in each case (Bucklin,1966;Kotler and Armstrong, 1999; Coughlan et al., 2002).

The nature of the products, corporate policies and procedures, and characteristics ofthe intermediaries, competitors, and environmental factors also influence theobjectivesof the channel. In general, these objectives can be divided in objectives for theconsumers, in terms of the needs of the segment targeted, objectives of the firm, interms of volumes, profit, etc. and objectives for the intermediaries.Managerial decisions on the distribution channelBowersox and Cooper (1992) distinguish the organization of the channels by thedegreeof directivity inherent in the alternative of channel structure chosen, whether it willbe

implemented by the firm itself (direct channels) or via intermediaries (indirectchannels).

There are three main areas that require managerial decisions in relation to themarketing channel structure: channel extension (length), distribution intensity, andchoice of intermediaries for performance of the functions within the channel

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1. Location, location, location. Start with the end in mind. Home based vs

professional office.

2. Whats in a name? Branding is important, make the name you choose send

the message.

3. TEAMS. How do you find the players you need to make your business

successful? Once you find them you need to keep them. Empower your team,

have a written employee manual that sets the rules and the rewards.

4. Home based business? Train the family to be professional when answering thephone, the door or the neighbours. Keep your balance, all work makes for an

unhappy family.

5. Leadership. How do you determine your leadership style? Learn from the

experts, read their books, take the personality tests and recognize your

strengths. Put your leadership plan in place and stick to it. Be a role model.

6. Enthusiasm. Positive thinking is important, there will be times when a SMILE is

all you have to start with. Empower, lead by example and get the job done!

7. Sell your strengths. Buy your weaknesses. It is better to contract out, than try

to accomplish something that isnt your expertise. Barter when possible.

8. Be There! Set a good example, be on time, personally and with the

product.9. Invest in technology. Make sure that your phone system, computers, databaseare top notch. Use the technology to the fullest and update regularly.

10. Follow up. How do you measure your results? Write the business plan, put the

targets on your wall where you can see them and chart your course. If you are

not measuring up find out why and make the necessary adjustments.

11. Image you are the business! Make sure that you look the part. Be professional.

In person, on the phone or through email. Branding, image and success go hand

in hand. Keep a smile on your face and in your voice.

12. Affirmations. Start each day with a positive statement, attitude is

everything. Today is a good day, I will accomplish what I set out to do.

13. Do your homework. Compare your products and services to the competition

how do you measure up? Go the extra mile to make your product or servicesoutstanding!14. Build a strong and effective database. Target your market and make sure you

have identified how to reach them. Utilize the web gather lists of

organizations, associations, government agencies and industries who would

benefit from knowing you and your company.

15. Plan your strategy. Do a survey, find out what your potential clients want, and

fill their need. Dont sell, find out what they want to buy!

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16. Put an action plan into place. Use the SMART acronym, specific,

measurable, achievable, realistic and timely.

17. Co-opetition. Work with your competitors. The term was coined by the credit

unions when they wanted to take on the big banks using co-opetition, they

could compete!18. R & D. Research and Development? Yes, but it is also Rob and Duplicate

there is nothing really new, look to the past to improve the future. RememberThomas Edison? He found existing products and made them bigger, better or

best!19. Use the 3 Rs. Re-package re-use, re-

invent.20. Understand your market and your own personal needs. Ask the questions Who

are you? What do you need? What will you share?

21. Launch an action plan, evaluate the results, measure, monitor. Time invested

should produce a measurable return.

22. Start each conversation with the words How can we help you? Listen carefully

to the answer. Its not about selling product, its about building rapport fill

the need.23. Arm yourself with ice breaking conversation. Learn the art of effective

networking.24. Share your resources. Be proud of your business and those who work with

you.25. See Success! Visualize accepting the award, or nominating a customer towin an award.

26. Believe in people. See their strengths, encourage them to utilize them. Dream

big, you can always scale back!

27. Refer, Re-unite and Recognize. People appreciate referrals, keep in touch with

past contacts. Be honest, sincere and enthusiastic when it comes to recognizing

your peers you get what you give!

28. Dont ask for referrals earn them! Show and tell, dont

sell.29. Volunteer find your niche, what do you care about? Get

involved.30. Keep in touch. Always leave the door open for new business, it often comes

from old friends, past clients and associates.

31. Find common denominators. What do you have in common with your peers,your customers, and your potential clients? Build rapport, find common

interests and goals.

32. Joint venture. Its not just for big companies. Strategically aligning yourself

with companies who compliment is often one of the most successful ways to

grow.33. Write. Learn to write about yourself and your company write informative

articles about relevant issues become an expert. Dont write ads write

about resources, contacts, sources of reliable information.

34. Media. Learn to write media releases if this isnt your strength, barter or

hire a media expert. Get you and your product in front of the press.

35. Learn to listen. Practice asking relevant questions and then just listening to

the answers. Dont interrupt. You will be surprised at how much more youlearn.36. Turn negatives into positives. There is always two perspectives, try to see

both sides and come up with a way to move forward.

37. Make it better. Take your product or service and find ways to improve it

make it easier to use, faster, lighter, more efficient.

38. Become an expert. Write articles for relevant newsletters and industry

publications. Volunteer. Be an expert on panel discussions.

39. Promote yourself and your product. Brand everything you can, create

awareness.

40. Put in 10 times as much effort as you think it should take. (10:1 ratio. 10 inputs

for every 1 output.)

41. Bring in 3 partners, advisors, friends or colleagues and let them advise and

support you.

42. Be heard. Consider being a guest on local radio. Be easy to find. Put your website

on your car. Be resourceful. Re-cycle last years promotional materials anddonate them to charity.

43. Be open minded. Always find a

win/win.44. Package your business so that it adds EXTRAORDINARY value to the consumer,

not just the customer.

45. Motivate yourself and others by creating a visual display showing

measurable progress on you business whether its a product or service.

46. Bring in customers/users and alpha testers at the very beginning and LEARN

from them.

47. Link the business to your vision. When both are connected, the business gets

a big lift.

48. Maintain a healthy reserve: twice as much capital/expenses/time asestimated.49. Force the business to prove itself, in some way, during each stage

of its

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Target MarketVariety Spicess traditional market has been the premium restaurant and upscale caterer market.Variety Spices also plans to expand its target market to the upscale, serious, at home cook fortwo reasons: business in this segment now accounts for 15% of the companys net revenue andthere has been almost no marketing focus placed on this business. In early marketing tests, theorder response rates exceeded our expectations by wide margins and these customers have

already begun to reorder.Customer ProfileRestaurant / Trade

The typical Variety Spices restaurant trade customer has these characteristics:Average Years in business: 5Median Restaurant sales: $800,000Predominantly urban establishmentsChef is the purchaserPrefers to purchase by phoneConsumer Customer

Average age: 42Median household income: $70,000Male Purchasers: 35%

Female Purchasers: 65%Employed as: Executive; HousewifeYears of cooking experience: 15 yearsFrequency of restaurant visits: three times a monthOwn their own home

Major Competitors and ParticipantsWhile there are several spice and herb mail order fulfillment houses, Variety Spices is the onlycompany that carries a robust line of products. Here are some of the companies that currentlycompete with us or will compete in the consumer market place.Competitor 1 : a retail outlet located in New Mexico that markets its line of hot peppers and hotsauces through a direct marketing catalog. While the company does market to restaurants andconsumers, their current emphasis is the consumer marketplace. Their catalog is not veryprofessional and has a mediocre reputation with their customers.

Competitor 2: a retail store located on the East Coast, that caries a broad range of spices. Itrelies on its location and image for its folksy appeal. The quality of spices is reasonably good, buttheir service is poor and their prices are high for what they offer.Competitor 3: Perhaps the largest national chain that markets products to the restaurant trade.Strengths are focused on basic non-perishable foodstuffs. They do carry spices but they are ofbulk quality and there is little emphasis on this product line. Nonetheless, they remain animportant competitor since they have a direct sales force that calls on their clients.Competitor 4: This small distributor focuses on the distribution of vanilla and vanilla beanproducts. While most of their business is wholesale to boutique and natural food stores, theyhave begun to market their limited product line to consumers using lists from the major foodmagazines.Competitor 5: this upscale cookery catalog carries a limited selection of spices and herbs andwould represent serious competition in the consumer market place if they expand their product

offering.Projected Market Growth and Market Share ObjectivesVariety Spices expects that its traditional restaurant and caterer market will continue to grow at a40% rate while its share of the market will increase over time due to its competitive products andhigher level of service. In the consumer market, the company expects to grow much faster thanthe projected market growth rate since it will be making substantial marketing investments in thisarea.As we stated in the summary, there are several trends that are fueling the growth of both ofthese markets. These include the following:

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an overall trend by diners and at home cooks to experience exotic spices andflavors.

an increased focus on freshness Variety Spices guarantees the freshness of itsproducts and date stamps their blending dates.

a strong growth rate by restaurants and interest by consumers in the food types(Asian and other hot food) that require the types of spices that Variety Spices is

well known for.Product / Service Offering

Product / Service SummaryVariety Spices carries over 250 spices and herbs products. Each product comes in a variety ofprepackaged sizes that are provided to us by our suppliers.

Competitive Product ComparisonsThere are several competitors as previously outlined. The Variety Spices product line has thefollowing advantages over its competitors:

Variety Spices has long term relationships with the highest quality providers ofspices from all corners of the world. Since we buy in bulk, we can provide highlycompetitive prices for the best products that a customer can find.

it is the only supplier that has a broad range of spices and herbs. The closest

competitor carries 130 products as opposed to the 250 products that VarietySpices currently carries.

Product Pricing StrategyVariety Spices uses a market-based approach to pricing. Variety Spices prices its products at aslight premium to other suppliers. It justifies this pricing premium with its wide range of productoffering, its customer service and the no-questions-asked money back guarantee. The typicalcustomer is a either a premium restaurant, caterer or serious at home cook. While pricing is aconcern to these customers, they are more interested in quality, convenience, and reliability.The market-based pricing approach utilized by Variety Spices works as follows. Through marketanalysis and customer feedback, Variety Spices arrives at a target price per product from whicha target profit is subtracted to derive a target cost. If necessary, Variety Spices uses a valueapproach to assure that the cost of each spice product is appropriate to provide sufficient profitwithout sacrificing quality.

Sales and Distribution PlanVariety Spices has three major targeted markets:1. Restaurants2. Professional caterers3. The serious at home cook

Critical Questions You Must AnswerWhat is the customer profile?Do I offer a whole product solution?What is my average deal size?How complex is my solution?

How long is my sales cycle?What are my companys Strengths and Weaknesses?How much money is available for Marketing/Sales?How and where do my competitors sell effectively?What complimentary product sales opportunities exist?Build a customer profile?What channel partners should I have? Build a channel partner profile

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Link to end-user targets Fit with existing channels What role do they play? Influence Sales

Support TechnicalHow do I choose them?How do I measure them?How do I generate business for them?Do the financial requirements make sense for our companyEight Steps in Designing the Market Driven Distribution are:

1. Know what the customers want

2. Decide on the outlet

3. Determine the costs

4. Bound the ideal5. Compare the alternatives

6. Review assumptions in the list of research7. Confront the gap between the ideal and the actual distribution system

8. Implement changes in the system, if required

2.1) Distribution Decision

Product decisions may be the most important of all marketing decisions since these lead

directly to the reasons (i.e., offer benefits that satisfy needs) why customers decide to

make a purchase. But having a strong product does little good if customers are not able

to easily and conveniently obtain it.

Distribution decisions focus on establishing a system that, at its basic level, allows

customers to gain access and purchase a marketers product. However, marketers may

find that getting to the point at which a customer can acquire a product is complicated,

time consuming, and expensive. The bottom line is a marketers distribution system must

be both effective (i.e., delivers a good or service to the right place, in the right amount, in

the right condition) and efficient (i.e., delivers at the right time and for the right cost).

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Distribution decisions are relevant for nearly all types of products. While it is easy to see

how distribution decisions impact physical goods, such as laundry detergent or truck

parts, distribution is equally important for digital goods (e.g., television programming,

downloadable music) and services (e.g., income tax services). In fact, while the Internet

is playing a major role in changing product distribution and is perceived to offer more

opportunities for reaching customers, online marketers still face the same distribution

issues and obstacles as those faced by offline marketers.

In order to facilitate an effective and efficient distribution system many decisions must be

made including (but certainly not limited to):

Assessing the best distribution channels for getting products to customers

Determining whether a reseller network is needed to assist in the distribution

process

Arranging a reliable ordering system that allows customers to place orders

Creating a delivery system for transporting the product to the customer

For tangible and digital goods, establishing facilities for product storage

Selling Produce to the Foodservice Sector

The foodservice sector includes restaurants and other institutionsprovidingprepared meals away from home. This market channel has beengrowing for foodconsumption in the U.S. in general and for fresh produce in particular.A recent study

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estimated that 50% of consumer produce sales are throughfoodservice establishments.1This phenomenon is happening in Kentucky, as well. Local restaurantsprovide a ripemarket niche for Kentucky farmers selling fresh vegetables and fruit.

Though sales torestaurants typically account for less than 15% of a growers totalsales, prices paid byrestaurants are normally stronger than wholesale and auction prices.Selling torestaurants is especially a way for growers who have had somesuccess with on-farm orfarmers market stands to increase their sales volume.

Modern Trade is developing fast and it is expected to count for more than

40% of total value sales in the FMCG market in 2007.

Discounters have the most aggressive expansion plans covering all regions ofthe country.

Hypermarkets are also very dynamic (4 times more outlets in 2007 compared

to 2005) and will become the leading modern trade channel in 2007.