Growing Magazine - April, 2014

FARMSTAND EDITION

Selling at the Farmstand

Presentation, pricing and packaging
By Tamara Scully


Asparagus spears, bundled for convenience, are a popular spring item.
Photo courtesy of the Hunterdon Land Trust, New Jersey.

With more growers becoming direct-market sellers, simply having your own retail venue - whether it's a roadside self-serve stand or an on-farm store - isn't enough to make a profitable sale. While you may think that fresh-picked produce should simply sell itself when it's properly handled, stored and maintained from field to point-of-purchase, it takes more than that to attract and keep customers.

Customers today are accustomed to purchasing glossy, picture-perfect produce arranged in attractive geometric displays from the climate-controlled environment of the supermarket. A few cucumbers in a bushel basket with field dirt still on them, sold from an open roadside shed, might appeal to a certain demographic, but for the most part you'll have to work harder to please your customers - and possibly to meet today's food safety standards.

While food grown and sold directly in a local market is value-added in and of itself, the presentation, packaging and pricing of the product also gives it value. In order to sell your product, it has to meet the needs of your customer base. How you offer that product for sale can go a long way in attracting and retaining your target customers.

Presenting your brand

"Who is your customer, and what are they looking for? It's very important to really recognize what value additions your customers value," said Atina Diffley during her presentation of a Practical Farmers of Iowa Farminar addressing the nuances of direct-market sales. Diffley is an organic farmer, educator and author.

Knowing who your likely customers will be and targeting them includes meeting their needs now, while educating them about your values and convincing them that your product is worthy of their purchase. Doing so while meeting the needs of your customer base is the key to farmstand success. This requires a multifaceted approach. Defining your brand and its values and communicating that to your customers is one part of the equation. Pricing, packaging and presentation are also crucial components.

Logos, signs and the atmosphere of your farmstand all help to tell your unique story and add value to your product. Developing a direct relationship with customers adds inherent value to the transaction. In addition, rather than competing with other local farmers whose products and values may be similar to yours, differentiate yourself with a signature item. Work from your strengths, and let your neighboring farmers work from theirs, Diffley advised.

"Be the go-to guy for this crop. Hype it up. Focus on and specialize in [it]," Diffley said. "Your neighbor is not your competition. You each have your own story. You each have your own role. You are not directly competing. Develop systems where your neighbor is your ally."

Adding value by making your product's attributes unique provides a way out of the "price-taking" inherent in traditional commodity marketing of agriculture crops. It allows the producer - with constraints, of course - to set the price.



Visitors to Ashley's Farm Market in Flanders, N.J., are greeted by a display with 4 quarts of apples in baskets lined with lift-out bags for ease and convenience, along with bag-lined quart containers of tomatoes. Appropriate signs and colorful seasonal displays complete the presentation.
Photo courtesy of Ashley Farms.

Pricing your product

Even if you're attracting customers, it does no good if something is preventing them from buying. That something could be price. The transaction costs of selling directly from your farmstand may not be the same as at other marketing venues, so no matter how you price items, transaction costs as well as production costs must be factored into the equation.

A resource for pricing strategies from the Agricultural Marketing Resource Center, "Pricing for Profit," can be found at http://bit.ly/1lC7Yc2.

Pricing can be approached in a variety of ways. You can base prices solely on the cost of production (including the transaction costs of selling the product), setting them so as to make a specific profit beyond that cost. Looking at the competition, whether a supermarket or other farmers, and taking your cues from their pricing is another method. While many believe that the supermarket selling price is the one to use to price their products, others prefer to exclude that price from the equation, arguing that local farm products, marketed directly from farm to consumer, are not comparable to mass-produced items from across the country.

Assuming you're offering quality, a brand identity to which they can relate, a positive relationship and relative accessibility, some customers will probably agree that your product is worth a "value-added" price. This customer-based pricing takes into account your buyers' values. Developing and promoting your brand and attracting a customer base that holds similar values allows you some freedom from the restrictions of competition pricing and can add value above and beyond what a solely cost-based pricing system would calculate.

"If you don't have some form of value addition, you become trapped in a commodity or a national price volume game, where you are forced to sell at that price," Diffley said. Adding value to your produce requires you to create an identity that can distinguish your products from those of others.

While this places you outside of the commodity grocery store pricing, there are customers who don't understand the principle, and its ability to add value might be limited. If your customer base doesn't perceive any extra value in locally grown, direct-marketed food, they might not be willing to pay higher prices than what they find in the supermarket's produce department. If you sell in a locale where this is the predominant mindset, and attracting a pool of customers who are willing to pay for the value-added attributes of your products is not a realistic option, staying in business may mean a change in sales venues, or sacrificing some per-item profit for steady volume sales.

You can easily price yourself out of any market if you don't match volume to price, Diffley said. If only a handful of your customer base is willing to pay your asking price, you aren't going to be viable. If you lower the price and reach more of the available customers, you'll move volume and still make a profit. Charging a lower per-unit price in order to increase the volume of sales is one strategy that can make sense in some circumstances, as long as you know your cost of production and are still making a profit, she added.

Avoid changing prices as the season waxes and wanes, Diffley advised. Set one price for the season, taking into account variables such as seasonal changes in volume, and stick to it. This strategy, rather than pricing low in peak season and high at other times, provides consistency and reliability that customers will appreciate, while allowing you to produce the product profitably all season long.



Bagged apples, informative and attractive information displays, and a smiling face greeting customers make the most of packaging, pricing and presentation.
Photo courtesy of Best's Fruit Farm, Hackettstown, N.J.

Packaging and displays

Beyond the basics of keeping things neat, preventing damage to products and clearly marking the price, a well-functioning farmstand display can increase sales. Tricks of the trade include keeping it full, grouping items together, paying attention to color, placing high-demand products in key locations and keeping items easily reachable.

Removing any product that becomes damaged, rotating stock frequently and refilling bins will provide customers with a positive shopping experience. Reaching into a bin and removing a less-than-fresh apple or rotting onion isn't pleasant. To keep customers from roughly handling fragile produce, display items so that there are enough to choose from, but in a manner that doesn't require digging through the produce to get the perfect tomato.

Try pairing items together in a display, even if the items need to be stocked separately. You can make up a "salad basket" display of radishes, carrots, cucumbers and tomatoes and use signs to remind customers that the lettuce will be found in the refrigerator. If you have melons to sell, pair them with blueberries and peaches and remind customers that it's "fruit salad season."

Signs can inform your customers about a unique variety, how to use it in a recipe and keep it fresh, along with any production information, such as "pesticide-free" or "hydroponically grown," that might distinguish it from other products. "Marketing Your Farm Stand or Farmers Market," a Cornell University Cooperative Extension publication by Bernadette Logozar (http://bit.ly/1nnk KQq), contains tips on adding signage to your farmstand as a way to increase sales, add to the value of your products and brand your farm.

Customers may be accustomed to purchasing items in certain units, or be more inclined to purchase if items are grouped in smaller or larger quantities. This will depend upon your target demographic.

If you normally sell potatoes loose by the pound, but your customers are primarily family shoppers, try packaging those potatoes in 5-pound bags. It's a convenience, and if you offer a slight "bulk" discount, sales should increase. If, however, you sell primarily to single urban dwellers with little room for storage, this would probably decrease sales. Packaging up a "snack-size" bag of cherries, or banding radishes into a salad-sized bunch, offers convenience and adds value. According to Diffley, a prime example of packaging as a method to enhance sales is putting small apples into a 3-pound bag.

"Putting them in a package really increases the value," she said.

Customers may prefer a per-pound price rather than a volume price. If you have a certified scale, you can offer an item like grape tomatoes in pint containers, along with some loose in a basket for selection "by the pound." Selling a bag of mixed sizes of onions could also add choice and prevent customers from digging through the bin to get the perfectly sized onion and leaving the odd sizes behind.

Packaging can also help customers transport items. Diffley encourages farmstand operators to think about how customers can get the product home hassle-free. Using packaging that keeps produce from being damaged, while also allowing it to be easily carried, can enhance sales.

Packaging, said Diffley, is one way of meeting the needs of your customer base, differentiating your product, and increasing sales and profit. "What I could charge, and how I marketed, and how I packaged the product, was really impacted by what [customers] valued," she said.

Whether you're selling at a full-service farm store or a roadside farmstand, knowing your customer is the first step to farmstand success. Learning how to find your target customer and meet their needs involves more than simply having items to sell. Employing creative displays, establishing appropriate pricing, offering convenient packaging and providing an attractive shopping venue are all important aspects of marketing. They brand your farm and products, communicate your values, differentiate your produce from all the rest and help you to make the sale.

The author is a freelance contributor based in New Jersey. Comment or question? Visit http://www.farmingforumsite.com and join in the discussions.