organic marketing plan
TRANSCRIPT
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ALTERNATIVE FORMS OF OCCUPATION
CONTINUOUS TRAINING IN RURAL AREAS
Marketing Advertisement of organic products
Athens
2006
EL/2004/B/F/PP-148258
Index
. INTRODUCTION BASIC TERMS .............................................................. 3
1. Organic Farming ....................................................................................... 3
2. Organic Livestock Production ................................................................... 4
3. Specification of organic Products production.......................................... 4
B. MARKETING ADVERTISING OF ORGANIC PRODUCTS .......................... 9
1. Means of trading organic products ........................................................... 9
(a) Wholesale of organic products to distribution companies ................................9(b) Wholesale of organic products to supermarkets ...........................................10
(c) Wholesale of organic products to organic products markets .........................11
(d) Retail sale of organic products in open markets conventional or organic
products markets ...........................................................................................12
(e) Retail sale of organic products by the producer ...........................................12
(f) Retail sale of organic products by agencies, such as Associations, through local
markets ..........................................................................................................13
2. Advertising Promoting Organic Products ............................................ 14
3. Pricing Policy (cost, profit) of the Organic Products .............................. 20
4. Competition level and market share ...................................................... 21
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. Introduction Basic terms
1. Organic Farming
Organic farming, in the frame of the Regulation E.C. N 1257/99, is the conversion of
the conventional farms to organic, by the use of methods friendly to the
environment, as those are defined by the Regulation EEC N 2092/91 and its past
and future amendments. Organic may be any unprocessed agricultural crop
product, or human foodstuff, which is made up of one or more ingredients of plant
origin. These products bear the indication organic, as they have been produced or
compounded according to the principles of the Regulation EEC N 2092/91 (Index I,
II & IV) and inspected according to specific measures of control, as they are
described in Index III of the same Regulation.
Organic Farming is a system of integrated production, where the freedom to use
chemical fertilizers and synthetic pesticides is limited, compared to conventional
systems of integrated production. Organic farming is not confined to a simple
substitution of the synthetic and chemical substances of the conventional agriculture
by the those permitted by the Regulation EEC N 2092/91. Organic farming demands
an integrated and sustainable use of the natural resources and of the agricultural
ecosystems.
Thus, organic farming is a productive method which sustains the fertility and the
morphology of the soil, promotes the welfare of the animals and at the same time-
avoids the use of synthetic pesticides and chemical fertilizers, such as hormones and
antibiotics, as well as Genetically Modified Organisms. The farmers are using
techniques, which aid the sustainability of the ecosystems and the reduction of
pollution.
Organic farming and livestock production ar e mainly based on:
The use of renewable resources, on a local level, the biological
diversity of the ecosystem and the self-sufficiency of the soil.
The use of indigenous plants and breeds of animals, which are
adapted to the local environment and on the appropriate choice of
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cultivation techniques and rotations, showing a preference to the
mixed cultivation systems (coexistence of cr ops and livestock).
The recycling of plant and animal origin wastes, so as to return
nutrients to the land.
2. Organic Livestock Production
Organic Livestock production is a system of rearing based on the natural living
conditions of the animals, using mainly organically produced feedingstuffs, giving
priority to natural treatments rather than to allopathic medicines when diseases
occur, is against genetic modification, protects the environment and is distinguished
both for taking care of the welfare of the animal and for the quality of the products
that are finally produced. It demands an integrated treatment of the animals, one
that can guarantee their health and their natural development, as well as the
sustainable development of the natural resources of the ecosystem.
It has to be noted that organic pr oduction demands a greater effort and a higher
labour input than the conventional one. On the other hand, the producer is
compensated for this effort, as organic products have greater demand and higher
prices than the conventional.
In conclusion, organic farming is more than a new activity. It is a different
philosophy of production, which is addressed to all those who feel nature,
understand its needs and are sensitive enough to produce, without destroying.
3. Specification of organic Products production
On March 2000, the European Commission created a logo with the words Organic
Farming EC Control System (Regulation EEC No 2092/91), as an optional basis for
the producers, whose systems and products comply with the provisions of the
Regulation. The consumers who buy these products may be certain that:
At least 95% of the products ingredients are produced by organic methods
The product complies with the rules of the official control system
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The product is coming straight from the producer or the preparer in sealed
packaging
The products show, on the label, the name or the business name of the
producer, the preparer or vendor, as well as the name or code number of the
inspection authority or body
a) As far as the fresh organic products are concerned, the specifications that
rule the market are mainly laid down by the super markets, which are
very strict about the macroscopic characteristics of the products.
According to these specifications, fresh organic products should be totally
developed, mature, clean and dry, grown according to their age, healthy,
with no diseases, without cracks openings, with invariable colour on their
surface. In addition, they must be divided according to their size, which
determines their selling potential, as well as their price.
Thus, what the producers need to do first, is to ameliorate the quality
characteristics of their fresh products, so as to increase the percentage of
the marketable products (first selection products), which render better
prices and at the same time- improve the image and the credibility of
their products. At a second phase, they must find new ways to dispose
the products that do not comply with the above strict specifications
(second selection products). These can be also traded as organic, and will
end up either to processing (jams, sweets, pickles etc), or to the
consumers, in open markets, at a lower price.
On the other hand, the organic producers maintain that the price and the
trading conditions should not be determined by the macroscopic
characteristics of the products.
b) For the processed organic products, the specifications required are stricter
than that of the conventional products. Their main differentiations are
related to the application of various control systems (ISO, HACCP etc), to
the use of natural substances as preservatives and to the notification of
the processing procedure, so as to make the control possible in every
stage of the processing.
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The minimum requirements for the organic livestock production, according to the
Regulation (EC) No 1804/99, are the following:
1. Conversion
If livestock products are to be sold as organic, a period of conversion is required.
Suggestively, we mention that the conversion period in the case of the animals for
milk production is 6 month, and in the case of the animals for meat production:
a. 12 months, and in any case the of their life for the bovine
b. 6 months for sheep and goats
These periods are valid only for the conversion of the livestock. The conversion of
the land associated with the livestock production must precede. If the conversion is
simultaneous of the complete production unit (livestock, pasturage, land etc) the
conversion periods are different.
2. Origin of the animals
When a pr oduction unit is converted, all the animals of the same species must be
converted. The same producer can rear different animals in the conventional way, in
a different unit. For the organic livestock production, it is advised to select breeds or
strains that are easily adapted to the environment (preferably indigenous).
3. Free range areas
All mammals must have access to pasturage, or an open-air exercise area, or an
open-air run, while poultry must be reared in open-air range conditions. The land
associated with the production must comply with the Regulations must undergo a
conversion period and is, therefore, part of the inspection system. In an organic
pastureland, it is permitted to feed animals that are not of organic origin, but the
total number of animals should not exceed the potential of the area and in any
case- the animals should be distinguished.
4. Feed
Livestock must be fed on organically produced feedingstuffs. Feed should be mainly
natural, while any supplementary feedingstuff must also be organic. It is prohibited
to use feedingstuffs that have been produced with the use of Genetically Modified
Organisms or products derived therefrom. In general, natural vitamins, trace
elements and minerals are allowed, while amino acids are not.
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5. Manure management
The total amount of manure applied on the holding must not exceed 170kg of
Nitrogen per hectare/year. Until the spreading of the manure is possible, it should be
kept in an appropriate storage installations of the holding, so as to avoid the
contamination of crops, soil or water.
6. Housing
The housing conditions must be such, in which the animals can satisfy their biological
and behavioural needs. The stocking density must be controlled, as there is a
minimum surface net area permitted per head i.e. 1,5m indoors and 2,5m outdoors
for sheep and goats. The animals should have freedom of movement. The products
used for the cleaning and the disinfection of the livestock buildings and installations
should be the ones permitted by the Regulation.
7. Veterinary treatment
In organic livestock production, the prevention of the diseases is considered to be
very important. Prevention is ensured by the careful selection of the breeds of the
animals, husbandry practices, use of high quality feed etc. If, despite that, disease or
accidents occur, the animal must be treated immediately. Priority is given to
homeopathic treatment. Antibiotics, or other allopathic medicines may be used only if
the above products do not pr ove to be effective, while they can never be used for
prevention. In case they are used, the withdrawal period must be twice the
recommended. In any case, the same animal receives three or more treatments or
one for animals whose productive lifecycle is less than a year, it cannot be sold as
organic, unless it undergoes the conversion period.
The parasite control must occur mainly through the right management of the land. It
is possible to use antiparasitics, but only occasionally. Vaccination is permitted, as a
mean to avoid disease.
8. Other practices
The reproduction is based mainly on natural methods. The cutting of teeth, tail-
docking, trimming of beaks and dehorning are permissible only if they are necessary
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to ensure the health, hygiene, safety or welfare of the animals. Physical castration is
allowed only under special circumstances of production.
The transport of livestock must be carried out with consideration, in such a way to
limit stress. The livestock and the other products must be identified in all the stages
of production, preparation, transport and trading.
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B. Marketing Advertising of organic products
1. Means of trading organic products
The difficulty in the access of the organic products is one of the restrains of the
respective market. A variety of organic products can be found only in few specialized
shops. Moreover, even in case the consumers have actual access to organic
products, a second constraint appears: their high price compared to the
conventional products. For the greatest part of the consumers, the level of the prices
is much higher than what they are willing to or even capable of- paying. Many
surveys have indicated that consumers would be indeed willing to pay a higher price
for organic products, which should not though exceed that of the conventional by
more than 20-25%.
A more effective management of the organic products market in Greece, requires a
more effective and organized network of trading, combined with a reliable system of
inspection and control. The consumption of organic products is limited due to the
lack of information about their quality, to the low level of ecological awareness of the
Greek consumer compared to the disposable income- as well as to the high prices
and to the lack of constant offer.
Facing the above constraints is bound to contribute to the improvement of the
market of organic products in Greece. It is estimated that in the short term, the
insufficient offer, and not the insufficient demand will be the main problem of the
domain.
The means of trading organic products can be categorized as following:
(a) Wholesale of organic products to distribution companies
It is the most widespr ead mean of trading organic products in our country, due to its
strong advantages, combined with the exporting potential of many of the Greek
products.
The advantages are:
It offers the possibility to program the production
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It does not require selection, standardization and packaging
It absorbs all the production
It does not require: storage areas, post-selection procedures,
means and network of distribution
It contains only small danger as far as the kind of cultivation is
concerned
The disadvantages of this mean of trade are the following:
The respectively low prices of the products
The respectively high percentage of products that remain
out of trade
The lack of control over the final prices of the products
The inability of processing the products
The possible loss of the power to identify the products,
when the products are mixed
The long period of paying off
(b) Wholesale of organic products to supermarkets
This way of trading is increasingly used in our country, due to the amelioration of the
organization of many of the small production units (i.e. greenhouses, small family
businesses of processing).
The advantages of selling the organic products straight to the markets are the
following:
The possibility to offer the products to a relatively higher number of
customers
The consumers facility in identifying the product and the possibility to
gain a higher added price
The possibility to expand to other products
The possibility to partially process the products
A relatively low risk, as far as the distribution of clients is concerned
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The respective disadvantages are:
It demands standardization and packaging
It demands means and network of distribution
The high competition between same products
There is a medium/long period of paying off
It demands a big variety of products, in order to enter the market
The inability to further inform the consumer about the product
(c) Wholesale of organic products to organic products markets
It is a growing domain in our country, mainly due to the development of many small
and medium specialised stores in many areas of the country (not only in the urban
areas).
The wholesale of organic products to organic products markets has the following
advantages:
The sales are personal and the consumers can be better informed
The potential to sell the products in bulk, if the store is controlled and
certified
The potential to ameliorate the products, based on the comments of the
consumers
The potential to exchange views with the consumer
It is easier to ameliorate and amend the products (i.e. the package)
On the other hand, the disadvantages are the following:
It demands a network of distribution
It requires a big variety of products
It involves a relatively high risk, as far as the distribution of the clients is
concerned
The promotion and distribution of the products requires a long period of
time
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The high competition between same products
The long period of paying off
(d) Retail sale of organic products in open markets conventional or organic productsmarkets
This is one of the traditional ways of distributing organic products, since the
beginning of organic farming in our country. Its main advantages are:
The potential to offer products of lower quality
It does not require standardization and packaging
The price is paid in cash
High prices can be achieved even for low quality products
It does not require a network of distribution
There is a daily and direct contact with the consumer
Nevertheless, the disadvantages are:
The loss of time -that would be spent in the farm
It demands the respective infrastructure (i.e. refrigerators, storage areas)
The long distance between most of the farms and the urban areas
The lack of the respective supportive infrastructure by the Municipality
It demands appropriate means of transport
(e) Retail sale of organic products by the producer
This way of distribution is not widely used in Greece. On the contrary, it is maybe the
most widely used in the other European countries.
Nevertheless, the development of organic farming and agricultural tourism,
combined with the appropriate organization and infrastructure of the farms, could
result to its wider use.
The advantages are:
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The opportunity to offer other services (i.e. eco-tourism, agricultural
tourism
The price is paid in cash
The opportunity to offer (partially) processed products
The direct contact with the customer
While the disadvantages are:
It requires a suitable room for the reception of guests customers
It requires safe and smooth road connection
It requires refrigerators and other facilities
The achievement of sales requires an additional know-how
The long distance between most of the farms and the urban areas
(f) Retail sale of organic products by agencies, such as Associations, through local markets
Associations of this kind function in many Greek cities (i.e. Chania, Corfu, Iraklio),
and their renderings are high. Thus, a wider expansion is expected.
This way of trading presents all the advantages described above, while it demands a
far better organization of all the parameters (organization of production, processing,
sales). In addition, it has the advantage of offering direct contact with the
customers, who can be directly informed by the farmer himself, the possibility to
record their needs and the possibility to regulate the offer of goods according to the
demand.
On the other hand, the fact that organisations of this kind are mainly functioning in
relatively big urban areas, excludes the inhabitants of the remote areas.
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2. Advertising Promoting Organic Products
In order to schedule the promotion of organic products, it is important to know the
characteristics of the audience, which these products address. The parameters that
determine the consumers behaviour towards organic products can be classified as
following:
Economic
Random, i.e. advertising
Psychological & sociological, i.e. their wish to belong to a specific social
group, or to demonstrate an attitude concerning their nutrition
Demographical, i.e. the interest of the consumer is influenced by an
increase in the members of the family (birth of children)
In addition, it is very important to know the market s dynamic to absorb organic
products, in order to balance the offer and the demand. This means that directions
must be given, so as to avoid the increased offer of some products resulting to low
prices for the producer - and the increased demand for others leading to high
prices for the consumer.
Some suggestive parameters that lead to increased demand and consumption of
organic products are mentioned:
The recent scandals concerning poultry and bovines, which have alarmed
the consumers
The consumers effort to have access to safe foodstuffs, such as organic
products
The consumers wish to avoid foodstuffs that contain Genetically Modified
Organisms
The consumers wish to support organic farmers, taking into account the
positive effects of organic farming on the environment
The expansion and increase of the variety of organic products
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In the near future, an increase in the consumption of organic products is expected,
due mainly to the following reasons:
The intensification and improvement of the information flow about
organic products
The fact that organic products can be found in more markets (super
markets, small and open markets etc.)
The expected reduction of the prices, due to the improvement of the
means and methods of production, standardization and trading.
The future increase of the demand will largely depend on the coordination of an
effective marketing strategy, in order to attract the consumers who either do not buy
organic products, or buy them only occasionally.
During the last years, there is a strong debate, in order to forecast the increase of
the offer in the European market of organic products, which holds today a 10% of
the total foodstuff market.
The market of organic products appeared in Europe during the 1980s and in Greece
a decade later. It was initially supported by a group of consumers who believed in an
alternative lifestyle and had environmental awareness. Today, this dynamic is already
exploited, and there is no obvious way to expand it.
In Greece nowadays, most of the consumers buy organic products. This group of
consumers can be approached in the small markets, if a modern marketing strategy
is applied. For this type of consumers, the acceptance of the organic products higher
prices is related to the belief that they are produced in an environmental friendly way
and they are safer than the other products. Important criteria are the taste and the
freshness. Nonetheless, some products, such as milk and other dairy products have
no real difference in taste. Finally, another convincing parameter is the subjective
difference in taste of some fruits and vegetables, possibly due to the greater variety
of organic products and to the different climates, in which they are produced.
The optimistic reports about the future increase in the demand are based mainly on
the overestimation of the occasional consumers. According to that, the extension of
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the market will be achieved through these invisible buyers, and not through the
regular consumers.
In order to promote conventional products, the advertisers and the producers mainly
emphasize their quality characteristics, their nutrition value and their particularities.
On the contrary, while promoting organic products, there is no particular reference
to of the above characteristics; the emphasis is given to the lack of chemical
fertilizers during their production and processing.
In addition, in the future, Greek organic products will compete not only with the
conventional Greek products, but with the imported organic products as well. The
marketing s target should therefore be the promotion of characteristics such as
localisation and safe origin.
The marketing strategy that has the above targets must act at two levels: for the
regular consumers, the political references which express the awareness, the values
and the lifestyle should continue to be in force. In this way, a small part of the
market is already covered. For the invisible and occasional buyers, the markets
conditions (production cost, localisation, variety, increasing demand for new products
etc.) should be taken into account. At this level, no particular ideology needs to be
enforced.
In the given framework of the internal organic market, a stable development can be
achieved, through the maintenance of a small difference in prices between the
organic and the conventional products. This presupposes a stable balance of cost
and income and a professional marketing design.
It also has to be noted that the need to maintain a stable difference in prices
between the organic and the conventional products, combined with the increased
production cost of the organic products renders the taking of measures by the
respective agencies a need. Political measures are needed in order to control and
organise the trade.
It is also understood that the lack of information is one of the main burdens to their
wider consumption.
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In the frame of the efforts towards the development of the organic products market,
emphasis should be given on the information and education of a wider audience. The
consumers are interested in the safety of foodstuffs; they have, thus, to understand
that organic products are healthy and of a higher quality, as well as to learn to trust
the inspection systems and their indications. In addition, the consumers should be
notionbetter informed about the of organic farming and products, as some of them
cannot tell the difference between organic and a product friendly to the
environment.
Greek consumers seem to have no regard for the advertisements, whose messages
do not seem to trust. Therefore, informing the public is a complicated procedure, for
which the State, the producers, the companies, the traders and the specialists are
equally responsible.
Greek consumers are mainly informed about organic products by:
Books about nutrition
Specialised magazines
Informational leaflets
Organic producers
Social environment
Nevertheless, they seem to prefer information by the State in the following forms:
Organised informational campaigns in the mass media (television, radio,
newspapers)
Through the development of public institutions (Informative Institute about
Nutrition and Domestic Economy)
Through the School (special modules on nutrition, environment etc.)
By the Consumers Associations and Unions (seminars, lectures etc.)
Today, special emphasis is given to personal sales, which are considered to be an
effective way to transfer specialised knowledge. This kind of sale is indispensable,
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especially for the organic products stores, as the consumer usually expects that the
salesmen in such stores have the respective specialised knowledge.
If special attention is given to the packaging and presentation, organic products can
be differentiated from the conventional. It is important that the package is
environmental friendly and not bigger than the product. Green packages are the
ideal, meaning recycled paper bags, or other materials, designed in a way that
ameliorates the image of the product. It is equally important to place organic
products in a different shelf at the supermarkets; this way, the prices or the
appearance of the products are not directly compared to the conventional ones.
Moreover, it is essential to apply some of the marketing mixes, so that organic
products can be equally attractive to the conventional, as far as packaging,
advertising and promoting are concerned. The marketing mix should be based on a
plan promoting high quality and taste. In addition, the package should at the same
time be eco-friendly and modern, effective and healthy. The label should be a
guarantee for the consumer about its organic character, being directly recognised.
Education, training and information of all the agencies that are part of the chain that
brings the products from the producer to the consumer are also indispensable, and
there current condition is considered to be insufficient to cover the needs of the
market.
There is a need for a better-organised informational network, using all the available
means. Below, we present some useful and effective strategies for the promotion of
the organic products.
I. Creation of a Website, containing information such as:
b. A database, containing all the organic producers, the inspection
organisations, the products produced, since when, the extent of their
holdings etc.
c. All the information concerning the inspection and labelling system, as
well as the respective activities
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d. All the surveys that have been conducted about organic farming, by
Research Centres, Universities and other agencies in Greece or in
other countries as well
e. A database, containing the fertilizers that can be used, and where are
they to be found
f. Information concerning education and training, addressed to the
producers
g. A list of all the enterprises that are active in the domains of offer,
transport, packaging, standardising and process of organic products
h. Special references to successful practices
i. Specialised knowledge and information concerning diseases and other
problems
j. A bibliography on issues of organic farming and livestock production
k. Press releases concerning the latest trends in the domain
l. Information on the educational programmes that are running
m. Forum for the exchange of information and opinions
n. Links to relative websites
II. Organising Conferences, aiming to promoting organic products and to
informing the public on issues such as:
The advantages of organic products both for the consumers s health and for
the environment
The accreditation systems (how to recognize them)
III. Circulation of an informational magazine
Lastly, we present the reasons for which the producers of organic products should
use the Internet in the promotion of their activities.
The market, which they are addressing is constantly augmenting
Their audience has both the will and the means to look for information in the
Internet
Many of the products can be described and sold in the Internet
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Approaching costumers in many parts of Greece, where there are no
specialized stores, can diminish the cost.
3. Pricing Policy (cost, profit) of the Organic Products
The parameters that determine the prices of organic products are the following:
The offer and the demand: when the offer is sufficient, the prices ar e
relatively low, while when there are not enough products in the market
(especially during the first stages of the harvest) the prices are relatively
high. Thus, what is valid for the prices of the conventional products is
valid for the organic products as well. For the processed organic products
on the other hand, there is an increased demand, which usually not
covered by the domestic production, leading to high prices throughout the
year. This is mainly valid for the dairy products.
The competition with the conventional products: each organic producer
should take into account the price of the respective fresh conventional
products, any given moment, so as to try and keep the difference in
prices low. The surveys conducted and the producers experience,
indicate that the consumers are willing to pay a price up to 20-30%
higher for organic products (depending on the product, its quality, the
season, any special characteristics etc). An indicative example is feta
cheese, whose price twice the price of the conventional- makes its
purchase impossible for most of the consumers.
The cost of inspection and accreditation, which is fixed, depending on the
size and the number of the products produced. The producer should also
have in mind the extra cost of the laboratory control.
The cost of promotion and marketing, which are usually indispensable for
the selling of the products. The cost for informational leaflets, labels etc,
should be also taken into account.
The cost of production, which is usually higher for organic products due
various reasons. The production cost should be calculated taking into
account the produced quantity, so as to find the production cost per
product unit.
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In organic farming, the know-how which is needed, combined with the higher
intensity of the labour, the mechanical and manual essential tasks, the high prices of
the inflow and the decrease of the renderings, render the production cost very high,
especially during the first stages of the conversion of conventional holdings to
organic. During these first years, the lack of know-how, information and equipment,
combined with the prohibition to sell the products produced at this stage as organic,
render the final production cost per unit very high.
As time passes, though, the gr ound finds a dynamic balance and can be sufficiently
productive without demanding an increased inflow. The application of an adequate
method can decrease the production cost and change the financial situation of the
organic producer.
Finally, before determining the final price of a product, the targets that one wants to
achieve must be examined as well: the maximising of profit, the augmentation of the
market, the promotion of a new product etc.
4. Competition level and market share
Organic products may be initially considered as not having any specific competitors.
Nevertheless, the insufficient production, their low quantity compared to the
conventional, the few selling points and, mainly, the lack of information, render the
organic products less competitive than the conventional ones.
As far as the market share is concerned, it seems that organic products are
addressed to a specific type of consumers who are consciously oriented towards
foodstuffs of high quality (i.e. delicatessen), or of special reputation, exotic food and
in general, towards the best they can find on the foodstuffs-markets shelves.
Organic products are after better chances of competition and need to be compared
with other products (i.e. delicatessen, products with protected designation of origin)
so as to be distinguished for being healthy and eco-friendly.
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7/30/2019 Organic Marketing Plan
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EL/2004/B/F/PP-148258
Nevertheless, if we try to classify the main competitors of the organic products, we
see that these are mostly the conventional products and their low prices -combined
with the low wages and the limited purchasing capacity of the Greek consumers- and
not the other products of high quality and with respectively high prices.
22
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7/30/2019 Organic Marketing Plan
22/22