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Marketing StrategiesMarketing Strategies

ANSC 406 LABANSC 406 LAB

TWO TYPES OF TWO TYPES OF PRODUCERSPRODUCERS

COMMERCIAL PRODUCERCOMMERCIAL PRODUCERPUREBRED PRODUCERPUREBRED PRODUCER

COMMERCIAL PRODUCERCOMMERCIAL PRODUCER

Relative inflexible marketRelative inflexible marketPrice established by poundPrice established by poundLittle can be done to change priceLittle can be done to change priceHistorically sells through auction or Historically sells through auction or stockyardsstockyards

PUREBRED PRODUCERPUREBRED PRODUCER

Affect price of product, both up or Affect price of product, both up or down greatlydown greatlySells by the head from commercial Sells by the head from commercial prices to millions of dollarsprices to millions of dollarsProduct will sell within price range Product will sell within price range determined by merchandising programdetermined by merchandising program

COMMERCIALLY FOCUSED COMMERCIALLY FOCUSED MARKETING STRATEGIESMARKETING STRATEGIES

ALLIANCESALLIANCES

ALLIANCES: ALLIANCES: Allow cowAllow cow--calf producers to calf producers to share equally in potential profits through share equally in potential profits through retained ownership, and improve beef cattle retained ownership, and improve beef cattle consistency by grouping together animals of consistency by grouping together animals of like type, finish and like type, finish and cutabilitycutability. .

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ALLIANCESALLIANCES

Alliances are generally developed Alliances are generally developed around some common goals or values:around some common goals or values:

*Health and management program*Health and management program*Specific breed*Specific breed*Geographic identity*Geographic identity*Emphasis on specific traits*Emphasis on specific traits

ALLIANCE ALLIANCE CONSIDERATIONSCONSIDERATIONS

Important considerations with retained ownershipImportant considerations with retained ownership

•• Producer sizeProducer size. Many producers will not have enough . Many producers will not have enough calves of similar kind to fill a pen at most feed yards. calves of similar kind to fill a pen at most feed yards.

•• Cost of productionCost of production. Knowing your cost of production is . Knowing your cost of production is critical to making decisions regarding profitable opportunities critical to making decisions regarding profitable opportunities in the market.in the market.

•• InformationInformation. Good, reputable information and awareness . Good, reputable information and awareness of current trends is helpful in marketing decisions.of current trends is helpful in marketing decisions.

•• Financial requirementsFinancial requirements. Retained ownership requires . Retained ownership requires additional capital and delays income. Can your cash flow be additional capital and delays income. Can your cash flow be adjusted to deal with these issues?adjusted to deal with these issues?

MARKETING MARKETING COOPERATORSCOOPERATORS

A cooperative is a producerA cooperative is a producer--owned, democratically owned, democratically operated business structure with written byoperated business structure with written by--laws. laws. Cooperative marketing arrangements among cattle Cooperative marketing arrangements among cattle producers often take the form of packaging cattle in producers often take the form of packaging cattle in pools for sale. pools for sale. Packaging means that cattle are merchandized by Packaging means that cattle are merchandized by putting them into groups with particular putting them into groups with particular characteristics to meet the needs of buyers. characteristics to meet the needs of buyers.

MARKETING MARKETING COOPERATORSCOOPERATORS

According to the 2002 Census of Agriculture, the According to the 2002 Census of Agriculture, the majority of farms with beef cattle have fewer than majority of farms with beef cattle have fewer than 50 head. (50 head. (USDA NASS, 2002USDA NASS, 2002))The average cowThe average cow--calf operator, after accounting calf operator, after accounting for weaning percentage and held replacement for weaning percentage and held replacement heifers, probably has fewer than 30 calves to sell heifers, probably has fewer than 30 calves to sell each yeareach year——of both sexes and with a range of of both sexes and with a range of weights. weights. Packaging cattle into uniform lots of optimum size Packaging cattle into uniform lots of optimum size is therefore not possible for most individual cowis therefore not possible for most individual cow--calf operators. calf operators.

MARKETING COOPERATOR MARKETING COOPERATOR STRUCTURESTRUCTURE

Each member of the coEach member of the co--op indicates the number of op indicates the number of steer and heifer calves he or she will provide to the steer and heifer calves he or she will provide to the pool the coming year. pool the coming year. The calves are preThe calves are pre--priced through a video auction priced through a video auction using videos and descriptions of "representative" using videos and descriptions of "representative" calves calves On the day of delivery, producers are responsible On the day of delivery, producers are responsible for bringing their calves to the loading/unloading for bringing their calves to the loading/unloading facilities facilities The coThe co--op is paid by the video auction company op is paid by the video auction company and the coand the co--op issues a check to each producer op issues a check to each producer based on the total weight they contributed to each based on the total weight they contributed to each calf pool.calf pool.

ALTERNATIVE MARKETING ALTERNATIVE MARKETING STRATEGIESSTRATEGIES

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NICHE MARKETSNICHE MARKETS

The successful niche marketer will The successful niche marketer will target those poorly served consumerstarget those poorly served consumersIdentify their needs, and produce a Identify their needs, and produce a consistent, highconsistent, high--quality product that quality product that satisfies those needs. satisfies those needs.

NICHE MARKETS NICHE MARKETS REQUIREMENTSREQUIREMENTS

Requires different personal skillsRequires different personal skillsTremendous time commitment. Be honest in Tremendous time commitment. Be honest in a selfa self--assessment. assessment. Do you really have the desire, dedication, Do you really have the desire, dedication, skills, and willingness to deal with skills, and willingness to deal with consumers, retail buyers, and government consumers, retail buyers, and government agencies? agencies?

ALTERNATIVE BEEF ALTERNATIVE BEEF MARKETINGMARKETING

LeanLeanOrganicOrganicNaturalNaturalPasturePasture--finished (or grassfinished (or grass--fed or grassfed or grass--finished). finished). Other common selling points for alternative Other common selling points for alternative beef include: beef include: ““no antibiotics,no antibiotics,”” ““locally locally raised,raised,”” ““family farm,family farm,”” and and ““humanely humanely produced.produced.””

TYPES OF BEEF TYPES OF BEEF MARKETING PROGRAMSMARKETING PROGRAMS

LEAN BEEFLEAN BEEFORGANIC BEEFORGANIC BEEFNATURAL BEEFNATURAL BEEF

LAURAS LEAN BEEFLAURAS LEAN BEEF

Based in Kentucky, LauraBased in Kentucky, Laura’’s markets lean s markets lean beef in nine states. No preservatives, salts, beef in nine states. No preservatives, salts, or fillers are used in packaging. Started in or fillers are used in packaging. Started in 1985 as a 1985 as a ““value adding experiment to a value adding experiment to a family stocker operation,family stocker operation,”” by 1995 the by 1995 the company was debtcompany was debt--free, worth $20 million, free, worth $20 million, and employing 30 people. Today, Lauraand employing 30 people. Today, Laura’’s s Lean Beef is sold in 3,000 stores in 33 Lean Beef is sold in 3,000 stores in 33 states. states.

LAURA LEANS LAURA LEANS STRUCTURESTRUCTURE

Genetically lean breeds such as Genetically lean breeds such as LimousinLimousin and and CharolaisCharolaisNatural feeds onlyNatural feeds onlyNo antibiotics or implantsNo antibiotics or implantsLow stress handlingLow stress handlingGrass fed with short term grain Grass fed with short term grain feeding in the endfeeding in the end

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ORGANIC BEEFORGANIC BEEF

Until recently the USDA did not permit Until recently the USDA did not permit ““organicorganic”” labels for livestock products, labels for livestock products, pending federal standards for organic pending federal standards for organic certification. Even farm names with certification. Even farm names with the word the word ““organicorganic”” were not permitted were not permitted on the label However, in January 1999 on the label However, in January 1999 the USDA approved the use of a the USDA approved the use of a federal label for the interstate sale of federal label for the interstate sale of ““organic meat.organic meat.””

ORGANIC STRUCTUREORGANIC STRUCTURE

Animals for slaughter must be raised Animals for slaughter must be raised under organic management from the under organic management from the last third of gestationlast third of gestationProducers are required to feed Producers are required to feed livestock agricultural feed products livestock agricultural feed products that are 100 percent organic that are 100 percent organic No hormones or growth No hormones or growth promotantspromotants

ORGANIC STRUCTUREORGANIC STRUCTURE

Producers are prohibited from withholding Producers are prohibited from withholding treatment from a sick or injured animal; however, treatment from a sick or injured animal; however, animals treated with a prohibited medication may animals treated with a prohibited medication may not be sold as organic not be sold as organic All organically raised animals must have access to All organically raised animals must have access to the outdoors, including access to pasture for the outdoors, including access to pasture for ruminants ruminants Animals may be temporarily confined only for Animals may be temporarily confined only for reasons of health, safety, the animalreasons of health, safety, the animal’’s stage of s stage of production, or to protect soil or water quality.production, or to protect soil or water quality.

ADDITIONAL ALTERNATIVE ADDITIONAL ALTERNATIVE MARKETINGMARKETING

Natural BeefNatural BeefUnder current USDA policy, meat may carry the Under current USDA policy, meat may carry the "natural" label if it contains no artificial ingredients "natural" label if it contains no artificial ingredients (color, flavor, preservatives, etc.) and is minimally (color, flavor, preservatives, etc.) and is minimally processed processed

ADDITIONAL ALTERNATIVE ADDITIONAL ALTERNATIVE MARKETINGMARKETING

Pasture Raised BeefPasture Raised BeefPasturePasture--finished beef (PFB) is lean beef. finished beef (PFB) is lean beef. Sometimes it is finished entirely on pasture; Sometimes it is finished entirely on pasture; sometimes there is a short period of grainsometimes there is a short period of grain--feeding (as in the case of Laura's Lean feeding (as in the case of Laura's Lean Beef). The essential elements of highBeef). The essential elements of high--quality PFB are highquality PFB are high--quality pasture, quality pasture, appropriate genetics, young slaughter age, appropriate genetics, young slaughter age, attention to factors that affect flavor, and attention to factors that affect flavor, and aging of the carcass.aging of the carcass.

PUREBRED MARKETINGPUREBRED MARKETING

Private TreatyPrivate TreatyProduction SalesProduction SalesConsignment SalesConsignment SalesBull TestsBull Tests

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ASPECTS OF MARKETINGASPECTS OF MARKETING

SELLINGSELLINGMARKETINGMARKETINGMERCHANDISINGMERCHANDISING

SELLINGSELLING

Product DrivenProduct DrivenGetting rid of your productGetting rid of your productConcentrate on product and programConcentrate on product and program

MARKETINGMARKETING

Customer DrivenCustomer DrivenHave what the customer wantsHave what the customer wantsMain focus is satisfying the customerMain focus is satisfying the customerWilling to initiate changeWilling to initiate change

MERCHANDISINGMERCHANDISING

Presenting your name and product in Presenting your name and product in an attractive and agreeable fashionan attractive and agreeable fashionConcentrate on customer satisfaction Concentrate on customer satisfaction and moving your product effectivelyand moving your product effectively

QUESTIONS FOR YOUR QUESTIONS FOR YOUR CLIENTCLIENT

What type of cattle do you want to raise?What type of cattle do you want to raise?Is there a market for this class of cattle?Is there a market for this class of cattle?Do you have customers?Do you have customers?Where are your customers located?Where are your customers located?Do you have any competition?Do you have any competition?Can you produce and sell in the portion of Can you produce and sell in the portion of the total market?the total market?What are your customers specific needs?What are your customers specific needs?Are you willing to concentrate on quality?Are you willing to concentrate on quality?

PRIVATE TREATY PRIVATE TREATY SELLING ADVANTAGESSELLING ADVANTAGES

You donYou don’’t have competitors t have competitors vsvs consignmentconsignmentYou donYou don’’t have to sellt have to sellYou determine the valueYou determine the valueYou decide who to sell toYou decide who to sell toNo expenses for auctioneer, sales No expenses for auctioneer, sales management etc..management etc..Although most are not good at it some can Although most are not good at it some can make large sums of moneymake large sums of moneyYou decide what to sell and whenYou decide what to sell and when

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PRIVATE TREATY SELLING PRIVATE TREATY SELLING DISADVANTAGESDISADVANTAGES

You have to know your productYou have to know your productIts hard to establish a price or valueIts hard to establish a price or valueCustomers donCustomers don’’t have competition t have competition from other buyersfrom other buyersYou have to let people know you You have to let people know you exsistexsist in order to be successfulin order to be successfulHave a chance of not getting the Have a chance of not getting the whole offering soldwhole offering sold

STRATEGIES FOR STRATEGIES FOR CONSIGNMENT SALESCONSIGNMENT SALES

Producer must be willing to sell some Producer must be willing to sell some of their best animals.of their best animals.Have attitude that they would want to Have attitude that they would want to purchase what they are sellingpurchase what they are sellingSuperior presentationSuperior presentation

CONSIGNMENT SALE CONSIGNMENT SALE ADVANTAGESADVANTAGES

Your product is seen by a large group Your product is seen by a large group of people.of people.Smaller operators can sell their Smaller operators can sell their productproductEstablish your name or ranchEstablish your name or ranchLeave an impression upon potential Leave an impression upon potential customers.customers.

CONSIGNMENT SALE CONSIGNMENT SALE DISADVANTAGESDISADVANTAGES

Unorganized managementUnorganized managementPast sale offering was poor so low Past sale offering was poor so low expectations by buyersexpectations by buyersLivestock didnLivestock didn’’t bring what they were t bring what they were worthworthSale has bad reputationSale has bad reputation

FACTORS TO CONSIDER FACTORS TO CONSIDER FOR PRODUCTION SALESFOR PRODUCTION SALES

Do you have enough cattle to sale (60 Do you have enough cattle to sale (60 lot minimum to cash flow)lot minimum to cash flow)Past success of private treaty salesPast success of private treaty salesPast success of consignment salesPast success of consignment salesName recognitionName recognitionQuality of offeringQuality of offering

KEYS TO SUCCESSFUL KEYS TO SUCCESSFUL SALESALE

Establish sale budgetEstablish sale budgetAdvertising budget (3Advertising budget (3--5%)5%)Have auctioneer (1%)Have auctioneer (1%)Prepare facilitiesPrepare facilitiesObtain buyersObtain buyersHave Have ringmenringmen, , loadoutsloadouts, P/A system, clerks, , P/A system, clerks, restroomsrestroomsBlock talkerBlock talkerPrepare for health requirement arrangementsPrepare for health requirement arrangementsArrange for refreshments or lunchArrange for refreshments or lunchHAVE LIVESTOCK PREPAREDHAVE LIVESTOCK PREPARED