By Sarah Cornelisse
If you plan on direct marketing of your farm products, marketing research plays a crucial role in the development of a marketing strategy and plan.
There are three areas that you should research: 1) your target market (customers), 2) your competition, and 3) the industry. This article will discuss the basics for performing target market research.
Who Are You Marketing To?
“Everyone” is not your target market! Knowing and understanding your target market is crucial. The benefits of knowing your target market include:
- knowing who and where your customers are
- knowing how you can communicate with them and
- helping you to choose effective marketing channels
You want to spend your marketing budget wisely. By knowing and understanding your target market, you can focus your spending on the customers who will become repeat purchasers. In the long run, this will be more effective than continually
marketing to those who either won’t purchase or who are destined to only purchase once. Market research allows you to drill down from “everyone” to smaller groups that you will focus on. Not all customers are the same – look for niches. By identifying which traits are prevalent among those who want to purchase your product or service, you can then focus on promoting to that group, which would be your target market.
Division of the total market into smaller, relatively homogeneous groups is a process called market segmentation. Market segmentation is very important because no single marketing mix (combination of product, price, promotion, and place) can satisfy everyone. Therefore, separate marketing strategies, that is, separate marketing mixes developed from your research, should be used for different market segments.
- An effective segmentation must meet the following basic requirements:
- Market segments must be measurable in terms of both purchasing power and size.
- You must be able to effectively communicate with and serve a market segment.
- Market segments must be sufficiently large enough to be potentially profitable.
- Market segments must not change too quickly.
Commonly used segmentation factors are demographics, geographics, psychographics, and behaviors, but any segmentation is possible. To begin defining your target market, answer the following questions.
Who are the people that make up your target market?
This is demographic segmentation. Demographics are used to classify groups of people based on common characteristics. Typical demographic categories are:
- Age
- Gender
- Ethnicity
- Education
- Occupation/employment status
- Income
- Family status
Some resources for collecting demographic information include the Bureau of Labor Statistics and Census data.
Where are these people located?
This is geographic segmentation. Most business owners develop a target market within a specific geographical location. For some, tools like the Internet allow them to expand beyond a well-defined geographic market. In any event, answering the next questions will allow you to think carefully about where your targeted consumers are located.
- In what area (country, state, city, etc.) do they live?
- Do they live in a rural, urban, or suburban setting?
- What is the population density and growth rate where your target market lives?
What do they think?
This is psychographic segmentation. Psychographics are the values of customers and what motivates them to purchase your products. Knowing this can help you craft marketing messages for that group. For instance, knowing that your target customers value environmentally-friendly packaging indicates that you may be able to sell more of your product if you package it in that way. Likewise, knowing that your audience participates in certain types of activities - outdoor recreation, for example - can help you target a trail riding service appropriately. In general, psychographics can be evaluated by answering these general questions:
- What are the consumers’ opinions and values?
- What are their interests and lifestyles?
- What attitudes do they have about your product?
- What needs do they have that compel them to purchase your product?
What do they do that makes them unique (as a group) from others?
This is behavioral segmentation. Think about their actual behavior in the marketplace. If you can learn about the products they buy, how frequently they purchase them, and other key issues, you’ll be better able to provide the most attractive product/service for your audience. The questions you’ll need to address in this category are:
- What products do they typically use?
- What benefits do they look to get from the products they purchase?
- How often do they use them?
- How sensitive are they to price changes?
- How loyal are they to their preferred brands?
- How are the products usually purchased and from where?
As part of the research process, you may find it helpful to develop one or more “customer profiles.” A customer profile is a general description of the type of individual that makes up your target market. Let’s look at an example to illustrate. Consider an agritourism operation that consists of an on-farm market, corn maze, pumpkin patch, apple picking, baby farm animal petting area, and hard-cider tasting room. Through the market research process, you identify a customer profile as shown below.
Demographics
- Age: early 30’s
- Single father
- Early career professional
- Lower-middle-income Behaviors
- Takes a child on weekend outings
- Spends money on ensuring a child has a good time
- Uses social media to look for activities
Psychographics
- Active
- Values healthy foods
- Wants outdoor activities
Geographics
- Small city
- Doesn’t want to drive more than 45 minutes from home
Summary
Knowing who you will market and sell your product(s) to is vital to developing an effective marketing strategy for your farm business. Before a marketing strategy can be developed and implemented you must identify, evaluate, and select a target market. Recall that while a market is a group with sufficient purchasing power and willingness to buy, your target market(s) is specific segment(s) of the market most likely to purchase your product.
As part of the market research and segmentation process, you may find it helpful to develop customer profiles as a way to describe the “typical” member of a target market group. Remember, though, that you are describing general traits about this targeted group. Other individuals and groups, those outside your target market, may also purchase your product.