Thoughts on the FFA CDE - Ag Marketing Plan -- 2 of 5 Analysis of "The Written Marketing Plan"
The Written Marketing Plan "Local Yokel Ace Hardware Christmas Tree Lot"
The Market Analysis
I'll jump right in to how to interpret the written marketing plan. What sort of information do the judges want to see, the type of information that proves you know what you are talking about, and things to avoid.
Client's current status in the market
How many trees does he sell currently?How many competitors does he have in town? Are they tree lots or cut & haul? How competitive are his prices? What is his product mix compared to his competition? Who advertises currently and how? How does your town compare to your region of the state and the state as a whole? What is the size of the current market? Is it just the town, county, multi-county? How long has he been in business? How long has he sold Christmas trees? Does he work with one buyer or go to the big town farmer's market to pick his trees every Tuesday? Is he indifferent to the whole process and looks to just make more money or does he actively engage his tree buyers to not only see what they like but understand their needs so that he can buy the right type of trees for his customers?
Remember the answers to these questions are not wishes. It is what is actually happening with your business. If you don't have a real business, find a comparable business that is close in size, volume, and structure to use as your guide.
Industry Trends
Look for data from trade associations. For our example, the Christmas tree growers association, the state forestry department, and extension service should have some information on Christmas tree sales. Are there weather events effecting the available inventory (hint: that will raise prices) like wet conditions causing root rot, dry conditions slowing tree growth, flood events washing out major roads that lead to Christmas tree farm suppliers. Is more acreage being allocated for Christmas tree production (hint: that lowers cost)? Is there increased regulation due to chemical use or pest infestation? Are big box competitors driving the price down or getting their trees in the store earlier than local stores and lots? Are there any large corporations that control the Christmas tree market? Does green living help the industry or see cutting live trees as against their beliefs?
The judges want to see that you know Christmas trees as well as the owner. You should be able to speak intelligently on Christmas tree production, sale, distribution...
Buyer Profile and Behavior
Families, couples, college students, active seniors...who is his primary customer? Don't say everyone. This answer is based on the town and who shops at his store or drives by on their way to work, school, church or to the interstate. Do they buy trees right around Thanksgiving and stay steady until the week leading up until Christmas or is his lot a last minute gotta have something now place to go?
Example: His store is just off the main street through town near the high school. Tree sales start the week of Thanksgiving and quickly ramp up to its peak the week after Thanksgiving. A slight dip after that and stays steady until the week of Christmas. The primary customers are late 20's/early 30's couples with young children. Usually at least 1 child between the age of 4 and 10. The town is a suburb 1 hour away from the metropolitan city so these couples have two working parents with a modest house with 8 to 9 foot ceilings, which are very common in the town. His store is also on the way to the interstate so lots of traffic see when he is setting up his tree lot in mid November.
Competition's SWOT (strengths, weaknesses, opportunities, threats) THE TREE FARM, BIG BOX STORE
Strengths - the family farm out in the county has a reputation for being around forever. It's a farm experience with a tractor ride, a saw to cut your own tree down and room for kids to run between the trees. Controls his own inventory and can ship suppliers quickly if some are out of stock or of poor quality.
The big box store buys in large volume and gets great pricing. Each store has a huge selection. Constantly refreshes its inventory.
Weaknesses - it's on the other end of the county and on the way to almost nothing. You must plan a trip to go out there. Can not shop around for better trees, he has to sell what is in the ground.
The Big box has to get so many trees that they are all cut a week or so in advance of the first shipment. So the trees are not as fresh when they reach the store and are already losing a significant number of needles once they are bought by the consumer. Not a family photo opportunity.
Opportunities - The farm can expand acreage to spread out the operating cost and reduce the per unit cost of their trees. This will allow them to have competitive prices with a higher profit per tree.
The Big Box can partner with other in store promotions to increase tree sales. Their store staff can work extended hours to increase sales without effecting profit due to the large amount of merchandise also for sale in the store.
Threats - The farmer is getting old and the kids aren't interested in the business just the money. So the level of service is starting to slip. As the tree farm gets bigger it turned into an operation and lost its mom and pop feel which is reducing the appeal of the visit.
The big box has a reputation for dry trees is being noticed by the consumer. Trees are bagged long periods of time causing the limbs to stay bent. Flawed trees are not discovered until long after they are bought and in the home. Mom and dad stare at the gigantic hole where there are no branches on their big box tree. They tell all their friends.
Product's/client's SWOT (strengths, weaknesses, opportunities, threats)
Strengths - Established customer base. Personal relationship with his customers. Selects certain types of trees to meet the needs of his customers. Right by the road leading to the interstate and local schools.
Weaknesses - Must rely on what is available from the producers who bring trees to the large farmer's market. If his producers have a bad year he doesn't have much choice but to buy what they have. He's a small shop compared to the budget and staff of the big box.
Opportunities - He has more space to stock trees on site. His son is old enough to run the store in the evenings so that the workload is more manageable. The town population continues to grow. Mostly suburban families with young children. The bank increased his line of credit. The newspaper wants to feature his store in a news article in November.
Threats - Many young families don't often think about quality when it comes to Christmas trees. They'll buy the cheapest regardless of if it will lose all its needles on December 26th. Artificial trees with built in LED lighting are competitive in price and are easy to set up. The farmer is expanding his acreage to make competitive pricing for his trees.
Primary research results (surveys, focus groups, interviews)
Be specific. Focus your research on the target market. An online survey your dad lets you email to everyone at his tractor plant is not your target market. Get a clip board and go survey where your target market goes. Start with friends and family who meet that market, expand to others at local ball games or other town events, and identify any local stores that cater to your market and ask permission to conduct the survey out front.
Your questions should be short and to the point. Do you have an artificial tree or do you buy a real tree each year? If artificial, then why? If real, where do you get it from? Why? What would make a Christmas tree lot more appealing? (examples: free hot chocolate, inflatable reindeer for the kids to see, a fake snow lot...)
Do the research. You may need to speak with a few local Christmas Tree lot owners or farms. Or call the Christmas Tree Association and see what information they can provide or people to talk with. By any method, you need to do some actual research on the market. Everybody, well not everybody but still, buys a Christmas tree of some kind. Survey teachers, friends at church, stand in front of Walmart on a Saturday morning (ask first) and find out what kinds of trees they buy. These are people who would buy your product. I would not recommend going to a Greenpeace rally and survey people on what type of live Christmas tree they buy. Your data will be bad. Ask the people you survey the type, size, species (unless artificial),...estimate their age range (or ask), relationship status, and children if any. AND Why do they prefer the type of Christmas tree they use every year. After this research you should be able to walk into a busy store and look at different people and know instantly what kind of Christmas tree they prefer and have some idea why.
That's enough for one post folks. Concentrate on the parts above and you'll be ready for my next post very soon. Here you go...(Part 3 The Business Proposal)
-Brian
