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Robin G. Brumfield, Specialist in Farm Management
E-mail: [email protected]

Without customers, the business does not exist. A marketing strategy or plan is about defining the customer or target market and tailoring the product, pricing, distribution, and promotion strategies to satisfy that target market. Greenhouse businesses that are product oriented—those that try to sell what they can produce without first looking at customers’ needs—risk growing plants and flowers that will not sell at a price that will produce a profit. Instead, most successful greenhouses are customer oriented—they design marketing strategies around the needs of their customers.

A marketing plan is the engine that drives the business. A marketing plan describes what the firm will market and how it is unique (product); how and when the firm will market the product (distribution and packaging), to whom (target customers), and for how much (price) the firm will sell its products; and how and what the firm will communicate to the customers (promotion). This includes what has been called the four Ps of marketing: product, price, place (distribution), and promotion.

Developing a marketing plan will help managers confidently answer the following questions: 

Markets: Who are the target customers and what do they value?

Product: What product will be offered and how is it unique?


Competition: Who are our competitors and how will we position ourselves to compete? Are there threats from new entrants?

Distribution: How and when will we move our product to market? What market channel will we use?

Packaging: How will we present the product to the customer?

Prices: How will we price our product? What is the perceived value of our product to the consumer? Is our price in line with the market’s perceived value?

Promotion: How and what will we communicate with buyers or customers? Do we have a marketing strategy with appropriate promotional, advertising, and branding strategies in place?

Markets: Who are the Target Customers and What Do They Value?To fully define the target market and corresponding marketing strategy, the firm will need to identify the target market segment (who the customers are and what they value) and sales potential (how much customers are willing to buy). Target markets are most commonly characterized as either individual households (direct marketing) or businesses (wholesale marketing). Direct marketing tends to be more profitable than wholesale marketing because of value-added opportunities and the lack of middlemen. Market channels are discussed in Chapter 16. Developing customer profiles or segmenting the market can help determine if a market segment is large enough to be profitable. By identifying and targeting specific market segments, a firm can also develop more effective packaging, price, and promotion strategies.

Market Segments
Markets can be segmented in a variety of ways. The most common form of segmentation is by 2

demographics (age, gender, income, race, ethnicity, disabilities, mobility [in terms of travel time to work or number of vehicles available], education, home ownership, and employment status). A market can also be segmented geographically, for example, domestic and international subgroups, various neighborhoods where consumers live, or location of different stores owned by wholesale buyers. Another common way of segmenting markets is by psychographic characteristics (attributes relating to personality, values, attitudes, interests, hobbies, or lifestyles). Another important question to ask is, what are the customers’ needs? This applies whether the product is going directly to the final consumer or to an intermediary. Do they need convenience? a particular size? Sunday delivery? unique products? high-value products? large volumes?

Size of the Market
To begin a business, producers need to ask, How many potential customers are there? How often and how much will they buy? What is the total size of the market? Is the market emerging, growing, or shrinking? Will this market yield a high-enough volume of sales? Analyzing USDA statistics, visiting potential buyers, and attending industry and university educational meetings to learn and network are good places to start answering these questions no matter what market channel is selected.


Wholesale deliveries are usually kept to a distance that a truck can deliver and return in one day, or about 200 miles. New producers will want to visit potential customers (usually another business). These customers will probably be willing to indicate how much they would be willing to buy short-term (one to two years) through either a written contract or a verbal agreement. Projecting long-term sales potential may prove more difficult. Projecting sales potential can be even trickier for direct marketers. As a general rule, 75 percent of direct market customers of a business will live within 20 miles of the business. Using this rule of thumb, a simple way to project direct market sales potential is to locate the business on a county map and draw 25- and 50-mile-radius circles around it. The manager can count how many towns or cities fall within the circles and add up the number of potential households in the nearby cities. These households represent the core potential customers. Then, with a feel for the number of potential customers, the manager can estimate the potential value of sales per household. This is the sales potential. The next step is to estimate the number of customers in each segment and project their weekly, monthly, or annual purchases. These sales estimates can come from household or county purchasing records (available at the public library), from the firm’s own surveys of potential customers, from in-person interviews, or from secondary sources, such as New Strategist Publications’ Household Spending: Who Spends How Much on What. Many businesses find it useful to hire a marketing consultant to develop surveys, lead focus groups, or conduct telephone interviews. The local Extension service or state Department of Agriculture may be able to assist in locating qualitative and quantitative information for a customer profile. They may have already done some studies that could be helpful. The Small Business Administration may also provide assistance. The Sustainable Agriculture Research and Education (SARE) program has a


competitive grant program for farmers and may be willi...

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