1. Then each concept has been tested by asking consumers “Would you be interested in this kind of product that would give you this benefit?”. Large companies use methods like focus groups, quantitative researches, CAWI, and so on, but if your company is small, you can also reach your objective by just asking a selected group of clients.
2. Once the concept test gives a positive result, the product is actually designed. Design involves recipe, size of portions, the materials for the packaging, which ensure the best performance from the transportation and storage point of view, and an efficient storage on retailers’ shelves. Once the packaging has been decided, with care over the colors in the design (different colors can convey very different messages: elegance, safety, happiness, etc.), of its visual impact, and of the way (with which combination of images and words), the key pluses (or, better, the unique selling points) are told. Each aspect can - and should better – be tested, because success can often come from details. Organoleptic aspects must be at their possible top, size, colors, and messages (language, tone) must absolutely be consistent with the characteristics of the selected target. If you are addressing single people, packaging sizes will be much smaller than when you address families (and if you address both, your product line will have to include both large and small packaging: each retailer will choose, according to his needs (you can check this by visiting two stores of the same chain, one in a place mostly inhabited by students, and one in a place mostly inhabited by families). A very important element of product design are: product name, and its brand. For example, “10+” has an extra guarantee because it is made by “Amadori”, a famous and well reputed brand in Italy.

Total consistency: price, distribution channel, communication

Consistency is very important, and it extends to the price (if it is too low, consumer will fear poor quality, if it is too high, consumers will think they cannot afford it), and to the place where it is sold (the same product may have a different image when sold in a discount store, in an average quality supermarket or in a delicatessen shop).

Not all needs are expressed, and we are not aware of all our needs when we go to a supermarket. Getting back to our examples, we might not be thinking “I want a Parmigiano - Reggiano cream for my childrens’ snack, but if we see such cream on the shelf, it realise that we often find it difficult to find a good, healthy snack for our children. The same goes with “10+” meat. Perhaps, when we see it on the refrigerated shelf, we were not explicitly looking for turkey meat with all those advantages, but nevertheless we feel that our unexpressed need to “do something good” for ourselves and the environment has been satisfied.

Things may seem a bit different with “Piadenelle” (people with intolerances are looking for special products). But this product offers many pluses, and perhaps consumers had not all of them in mind at the moment they bought the product.

The second P: PRICE

Definition: The amount of money charged for a product or service or the sum of values consumers exchange for the benefits of having or using the product or service (Kotler).

Function: he price of goods should be such that it could compensate for any given products manufacturing and construction costs and provide income for the company's normal operations.

It expresses the ratio between the value of different goods or services.

Principle of price equivalent value exchange

The enterprise should establish the price of a product in relation to the value delivered and perceived by the client.

That’s why a price should be "objectively explainable": it’s easy for the consumer to associate price with the values ??that determine it.
These values ??need to be well communicated by your company. For instance, they can be related to:

• Processing
• Quality of the raw material
• The time needed to prepare it
• Social values
• Etc.

Production cost evaluation

Total Cost is the total expense incurred by a firm in producing and marketing a product. Total cost is the sum of fixed costs and variable costs. 

Variable Cost is the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold. Examples include: direct materials and sales commissions.

Fixed Cost is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. Examples include: building, executive salaries and insurance. 

Competitors' products and product performance analysis

Rather than emphasizing demand, cost, or profit factors, a price setter can stress what competitors or the market is doing. The company should consider the price of the nearest competitor. If the offered product presents better characteristics than competitors one, the company could increase its price and vice versa.

Pricing methods are based on inside information. These methods are classified based on:

• cost;
• demand / supply (the market);
• competitors

1. focusing on cost
   Distinguishes the following cost concepts:
   • Permanent (fixed) or indirect costs, they are not directly related to the volume of production (administrative size, rent, mission, etc.);
   • Variable or direct costs associated with production volumes. If there is no production, no direct costs;
   • Other planned cost (technology acquisition, advertising);
   • Total or full costs (of all the above cost allocation);
   • The average cost (per unit cost).
   Pricing methods are based on taking into account the considering costs can be calculated and follows:
2. • Cost plus desired profit (%)
   • The average cost plus a profit - the average cost per unit plus additional items = (FC + VC) / Q + 20%
   • Average cost plus PLANNED PROFIT - oriented towards the capital costs and target profit norm.
3. focusing on demand and competitors (market methods)
   Oriented to the market price for commonly used goods and product differentiation consumer value determination.

Internal - External Factors

INTERNAL FACTORS

1. Company's objectives:
2. Marketing strategy:
   • the maximal price strategy (unique, limitations)
   • the maximum price to drop further in its strategy (appears on competitors)
   • low price strategy (competition, a great marketing)
   • low price of the further increase of its strategy (better than the competitor)
   • price volatility strategy (seasonality, product substitutes)
   • passive pricing strategy (watching the competitors' prices)
3. Company costs:
   • variable costs (VC)
   • fixed costs (FC)
   • Total costs (TC)
   • TC= VC + FC – VC + FC>TR (total revenue)
4. Product specificity
5. Production type
6. Product Life cycle
7. Additional service

EXTERNAL FACTORS

1. Market types
• clean competition (much to inform the participant)
• monopolistic competition (many players heterogeneous
• commodity, the substitution effect)
• oligopolistic competition (some large players)
• net monopoly (one participant)
2. Elasticity demand

   The assessment of the price change. Income will reduce the demand for revenue. Demand revenue increases will reduce demand elasticity.

3. Competition
4. Legislation
5. Other factors

Distribution Channels: A Definition

A set of interdependent organizations involved in the transfer of products from the producer to the consumer.

Functions

The most important function of a distribution channel is to provide a link between production and consumption.

There are several important key functions that must be undertaken in a market:

1. INFORMATION: market research
2. PROMOTION: offers must be promoted
3. CONTACT: communication with prospective buyers
4. MATCHING: offer must fit buyer's needs (taste, granding, assembling, packaging)
5. NEGOTIATING: adjusting the price
6. PHYSICAL DISTRIBUTION: transporting and storing goods
7. FINANCING: the funds must cover the costs of the distribution channel
8. RISK TAKING: the commercial risks must be assumed by the operating channel

There are many ways to make people try your products. The promotional mix is the special blend of promotional tools that can be chosen.
Here is a list of these tools:

Sales Promotion: coupons, contests, product samples, rebates, tie-ins, self-liquidating premiums ...;

Advertising is the presentation of products in a mass medium, such as television, radio, the press, billboards, in – store material (POP), etc.

Personal selling, which involves presenting the product one-to-one

Public relations: you can transform a fact about your product into news, and then “spread” the news by means of meetings, by taking parts in TV programs, etc.

Direct Marketing: it is a communication which goes directly to customers, with methods such as mobile messaging, email, interactive websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising

House Organs: small magazines published under the name of the brand

Sponsorship of an event or contest or race (but also of social / charitable initiatives)

Food sponsorship in sports

The aim of promotion is to communicate, to get consumers to try your product, to understand and to remember its benefits:

TIME TO THINK

• General advice
• Keep in Mind
• Financing

REALIZATION

• Content
• Format
• Printing

General advice

Know the precise purpose of your document and BE SIMPLE!

Use AIDA to conceive your ad.

• Should you create your own ad or have someone else create one for you?
  This is a choice that depends on economics and competence;
• Why not have a professionally made advertisement? How do you balance cost and quality? You profit on one side while losing on the other; it’s unavoidable. It is unlikely to create an ad of professional quality without any graphic or technical experience.

Remember

• It is extremely difficult to create a need!
• An individual exposed to 1000 messages each day, he sees 100, he retains 10.
• The average reader passes around 5 seconds to skim a document to decide whether or not he will read it. If your titles, text and graphics are annoying or not interesting, then few people will stop to read your document.
• Do not promote things that do not exist yet!

Financing

Your document can be sponsored (by the Council General, the Chamber of Agriculture or by individuals). In these cases it is expected you to publish the sponsors’ logos. Remember this, when planning your ad’s layout!

Content

Your document should inspire confidence and incite interest in the reader.

A three-part document

• Description of the client’s search, their known need
• Solution with the presentation of the product
• Explanation on how to find the product (local market, farm’s address, website, social networks)

Reminders

• The communication is for your clients, and not for you!
• Long texts sell... when well written and interesting

Be convincing

• Use a direct tone and simple tenses (imperative and present indicative).
• Avoid the conditional and future tenses.
• Avoid the negative.
• Technical descriptions quickly tire the reader

Format

Your ad could be:

The flyer
The 3 page brochure
The advertisement postcard

Remember

• Illustrations and photos: a picture is worth 1000 words.
• What interests your clients is to know if your products respond to their needs.
• Before beginning, assemble all of the photos and illustrations that you will use.
• Do you want to create your own brochure without any computer graphics experience? Even if it’s not recommended, you can try with the Download of the Microsoft Word and Publisher models of business posters and flyers directly from Microsoft’s website.

Once your creation is complete, present your draft to an outside opinion and accept their critique.

Printing

• Work realized by a printing company
• Using your own material
• You can use cardboard

Radio, television, press, internet ...

Advertising through the media to promote farm products is costly. This method is certainly used by producer co-ops.

On a smaller scale, you can gain press time by catching the interest of a journalist who will write an article about you for the newspaper or by getting on a local radio or television.
If you decide to organize an open house event to expose your products to potential clients don’t forget to invite the local press and radio station. Immediate action you can take is to purchase ad-space in the local news journals (read by a large public). You can equally create your own website or social network page if your products can be sold long-distance (foies gras, wine, preserves, etc.).

Events

Be aware that this is a large amount of work: coming up with regulations, printing of bulletins, description of prizes, presence of an official for the drawing, etc.
Promote your event in advance through as many methods at your disposition. Check with your insurance and be informed on regulations (bills, ticket office, etc.). Notify the local town hall and give your event date to the nearby fire station and medical facility in case of emergencies. At the end of the event a summary report with number of visitors, sales figures, number of addresses collected, strong points, weak points, things not to be done in the future, ameliorations, etc. should be drawn up.

Public relations

Newspaper articles are appealing because they give you exposure to a large number of people in a form both attractive and valorizing.
The principal is having something new or interesting to announce! Remember to propose an article whose subject sits within the domain of this rubric. Always leave a way to respond for more information.

Sign and leave your telephone number and e-mail address.

Placing free ads on the internet
Through banner/signs, articles, links, posters, news and announcements.

Radio, television, press, internet ...

Territorial Marketing has the purpose to increase the potential of a local system during time of Globalization

To reach the new frontiers of competitiveness and development, it’s important to go through adequate territorial politics of economic and social promotions, with the goal to increase the quality of life, attract visitors, investments and create new local jobs.

It is possible to promote local typical products by:

• relationship with local authorities
• communicating traditions
• developing a network amongst producers in the same area

Another example of territorial marketing in business consists of tourism departments and city councils with marketing teams competing to attract tourists and new residents use branding techniques. Also called place marketing or place branding.

Exercise 1

Write the selling point that is associated with these products. Write a comment by answering the following questions: Who do you think they are targeted at? Do you think they express a real benefit and are really distinctive? What benefit does it give? Does it offer nothing special? What benefit, in your opinion, did producers mean to offer?

Days of invoice collection and invoice payment

The financial equilibrium of your firm can depend on time.

A production process may require the purchase of raw materials, payments for utilities, expenses for services (e.g. certification, controls, analyses, accounting ...), the remuneration of the labour force. You may have to comply with most of these expenses before you sell the product and collect your invoices. This has to do with stocks (it is better if they “rotate” frequently, which means that you frequently sell your products and renew your stocks), but it also has to do with the comparison between the time that passes before you pay the invoices from your providers and the time that passes before your clients pay yours.

Even for the products you sell without producing them, there is a time before you pay the people you have bought them from, and you have to compare it to the time that passes before your invoices are paid.

What comes out of this comparison? Is everything smooth, are cycles overlapping well, or are there moments when you have problems, because you have still not received your payments?

These considerations are very important when planning your activity and negotiating days of collection and payment with clients and providers ...

Technical, economic, financial cycle

Your technical cycle is the length of the process with which your inputs are selected, bought transformed into outputs and then those outputs are sold.

Your economic cycle has to do with costs and sales, and a comparison between the two, which gives way to considerations about your cost structure, your efficiency, your margins.

Your financial cycle has to do with time, too, and with the survival of your activity. It concerns the equilibrium between revenues and expenses, in every moment and on average. Your cash flow can be negative for a while (which means that you spend more than you

Time before you reach the desired performance

Results do not necessary come immediately. Clients have to learn that you are offering something (and here communication plays an important role), then they have to evaluate your offer conceptually (and here good communication plays an important role). Then there is the trial phase, in which they evaluate their buying experience and then their consumption experience (and here quality is protagonist). If the product passes these tests, then there is a repeat phase, in which the product is bought again, and hopefully again and again, until it becomes part of this consumers’ habits (the challenge here is the constancy of quality: if quality varies, consumers may feel uncertainty as regards the consuming experience that awaits them).

So, before starting a new marketing “adventure”, while you are still building your business plan, make sure that you have assessed how long you are able to wait before sales and profit reach your desired level. Of course, there are no certainties about this, but you can reach an idea if you examine a few benchmarks (similar experiences lived by other farmers who have already performed similar projects).