Agriculture Business AlternativesRevised April 2003 Agdex 848-5

MarketingWill it Sell?

Ag-Alternatives is a series of factsheets designed to help you evaluate the feasibility of a new agricultural or ruralbased business. Worksheets in each factsheet help you personalize the information.

efore you begin a new enterprise you need tounderstand your market. To fully understandthe market you need to know who will buyyour product or use your service, how to sell

to buyers, the amount they want to buy and the rightprice. Good marketing skills are especially important fornew or unusual enterprises. This factsheet addresses thebasic research skills needed to evaluate the market for anew enterprise.

There is no magic to market research. It’s not a crystalball that can predict future sales with certainty. Researchprovides information to help you project future trendsand plan a marketing program. However, before youcan research the market, you must clearly define theproduct or service you intend to provide.

Product/Service Definition

The steps below follow the format of Worksheet 1:Product/Service Definition (page 12) and help you todescribe your product or service using product features,service aspects, marketing season and benefits to thebuyer or user. An example enterprise, called BrightFarms Birdseed, works through all the sections in thisfactsheet.

Product FeaturesDescribe the product, its range of size and quality,product mix, varieties or types, and other characteristics.

Example:

Premium black sunflower seeds, large and smallsunflower seed bird feeders.

Service FeaturesDescribe how you will handle delivery, processing,packaging, instructions or other services thataccompany the product. If you are providing a service,describe the range of services offered.

Example:

Sunflower seeds will be hulled, sized, graded, cleanedand packaged in 5, 10 and 25 kilogram bags, orcustomers can provide their own containers and receivea discount. Sales people will provide tips on successfulbird feeding and watching.

Marketing SeasonSelect a time frame when you will offer your product.

Example:

All year, but heavier demand in winter.

B

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Benefits to the Buyer or UserFind the real reason why your product or service isappealing. If you think the only reason people buy yourproduct is “because they need it,” you have probablyfailed to identify the benefits customers expect whenthey buy. Be careful not to define your benefits toonarrowly as it can lead to mistakes in market researchand promotion.

Example:

People who buy birdseed are buying recreation(attracting and observing birds) and a feeling ofsatisfaction that comes with aiding wildlife. Prices arebelow retail, so customers benefit from reduced cost.

What’s the Real Benefit of Your Product orService?1. When a consumer buys organically grown tomatoes,

is she buying food... or health?2. When a restaurant chef buys baby vegetables, is the

benefit profit... or prestige?3. When a suburban family buys pick-your-own

strawberries, is the benefit freshness... vitamins... orrecreation?

4. When a regular customer buys rhubarb juice fromyour farm stand, is he buying something to quenchhis thirst… improve his health… or please histastebud while passing the time of day with you?

Capsule Description or Purpose StatementTell your customer about your business in as few wordsas possible. Why do you exist? Roll all the characteristicsdescribed above into 50 words or less!

Example:

Bright Farms offers premium black sunflower seeds atbargain prices in three package sizes or in bulk, as wellas feeders and information on feeding wild birds, tocustomers who enjoy watching and helping wildlifeyear-round. (38 words)

Market Research Techniques

Once the product or service is clearly defined, learn asmuch as possible about your market. You don’t needany advanced training to do most market research.Good market research boils down to asking the rightquestions and looking in the right places for answers.

There are two good reasons to do market research:

1. In order to develop a successful marketing strategyyou need to understand your market, competitionand consumer trends.

2. Potential profitability of the new enterprise can onlybe calculated from projected potential sales volumeand prices.

There are two general types of market research: primaryand secondary. Primary research involves gatheringinformation by observing people, counting cars orpedestrians, taking surveys, performing interviews orother direct actions. Secondary research involvesstudying data that has already been collected andpublished. You probably need to use both primary andsecondary research to understand your market.

Secondary ResearchUsing Existing DataSecondary research is the easiest and least expensiveway to obtain market information. You can obtainsecondary research from libraries, government offices,chambers of commerce, universities, trade magazinesand computer databases.

DemographicsDemographics describe the characteristics of a group ofpeople including size, growth, or family structures. Youcan get population information such as the number offamilies within a 50 km radius of your new enterprisefrom Statistics Canada.

You can get current population figures from town andcity offices, planning boards, school district offices andother local agencies. National demographics areavailable through Statistics Canada. It also preparesreports on regional and local demographics whichdescribe income, age distribution and other basiccharacteristics.

If you would like very specific information, such as thenumber of people in your area who process food athome (canning and freezing), check with the resourcepeople you contact. Special reports are often preparedthat may add extra detail to your demographicinformation.

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ConsumptionInformation on patterns of consumption such as thenumber of pounds of broccoli consumed per personsince 1990, may exist but the level of detail varies. Thecommodities for which consumption data is most likelyto be documented include: commodities which havebeen marketed for a long time (e.g., apples, beef, eggs,potatoes and sweet corn); commodities which generatemany dollars or which involve many acres or farmers(e.g., beef, wheat and hay); and, commodities under theauspices of federal programs (e.g., chicken, milk, eggsand honey).

Be sure you are analyzing the data you collect correctly.Data for new products, such as yogurt or pumpkinseeds, may be out of date even if it’s only a few yearsold. Also, consumption data describes national trendsand may be less useful to your local market.

Future Market TrendsPredictions of future market conditions may includeproduction and consumption levels, prices, packagingand processing trends. Alberta Agriculture, Food andRural Development can assist you in findinginformation on future market trends. Remember,projections about the future are uncertain. Use your bestjudgment in interpreting them.

Primary ResearchDoing it YourselfPeople often find they can’t get all the answers to theirquestions through secondary research. To find answersto some of your questions you’ll need to do primarymarket research. Primary research is especiallyimportant when considering an innovative enterprise, anew market or a local market for which little publisheddata exists.

Good primary research can be simple and inexpensive.Having a small budget is no excuse for not doing yourmarketing homework. Be creative in developing themost cost-effective method for collecting theinformation you need. Some common methods used toconduct primary research include observations, survey,personal interviews and test marketing.

ObservationObservation is the counting of the number of products,people or events in a way that relates to your business.You may decide to hire people to do this task for you.It’s best if you do a few observation sessions so youunderstand the task and can train your workers. Youneed a pencil, a form or checklist with the observationsyou wish to make and a hand held mechanical counter.

You need to do many observations to be sure thecounting is representative of the situation.

Examples of Observation• Traffic counts are recorded in front of proposed farm

stand sites to observe the number, time of day anddirections of travel of potential customers.

• License plates are tallied by province of origin in aparking lot of a park near a proposed pick-your-ownstrawberry site. This information tells whether a localcrowd or tourist (out of province) crowd may havegreater need for services such as picnic tables, softdrink machines and berry containers.

SurveysSurveys ask potential buyers about their buying habits,likes and dislikes. You can write and distribute a surveyor call potential customers on the phone. Mail surveystake more time, but you usually get more information.Telephone surveys are quicker and inexpensive, butmany people no longer want to do telephoneinterviews.

Examples of Surveys

Written

• An organic farmer sends a written survey to allnatural food stores, specialty shops and regionalgrocery chain buyers in a nearby city to find out ifthey currently buy organic produce, if they wouldconsider buying it, if they would advertise theproduce as organic, if they require certification and ifthey would pay premium prices.

• A farm stand owner mails a survey to all of hiscustomers to find out if they would like to tour hisfarm, how much they would pay, when they wouldtake the tour, what they would like to see on a tourand how many people would attend.

Telephone

• A farmer places an ad in the local newspaper askinganyone interested in purchasing freezer beef to callhim. He asks callers a series of questions on their beefneeds, price preferences and current suppliers. Hethen requests an address and phone number forfuture reference.

• A dairy farmer has customized a piece of equipmentand wants to produce more customized parts forother dairy farmers. He randomly calls dairies to askwhether they would be interested in purchasing thepart, what types of equipment they currently ownand what equipment they currently use to performthe same task as his customized item.

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Designing a SurveyDesign your questions and format for the surveycarefully so you get useful information. Key elements ofgood survey design are the length, wording andstructure of questions asked.

Length

Keep it short. Two sides of a single sheet of paper isplenty. If it’s longer, fewer people will complete it.

Precise wording of questions

Ask questions where people need to give quantifiableanswers.

Structure of questions

Use checklists and multiple choice questions.Constructed questions give you answers you cananalyze more accurately. Limit the number of open-ended questions you include in the survey.

Personal information requested

Don’t be afraid to ask personal demographicinformation, but handle these questions carefully. Mostpeople are reluctant to share personal information. Askfor the information but don’t demand it. Tell how theinformation will be used and place these questions atthe end of the survey. Give the people categories of agesand income instead of asking them to write it out.

Instead of asking someone to openly send you a name,address and phone number in response to a survey,enclose a separate post card which offers to send noticesof special sales and events to those who return it. Peopleare likely to return the card since it’s separate from thesurvey. They’ll usually include the survey too.

Keep telephone surveys very brief. Design a script togive all the details to potential survey people so you areconsistent. Develop a checklist so you can quickly noteanswers and keep the call as brief as possible. Call at anappropriate time in the daily schedules of buyers in thetarget market.

The last step in designing the survey is to test it on asmall number of volunteers. You will probably findsome of your questions are misunderstood and need tobe restructured. A simple test on five to 10 people cangreatly improve your survey.

Designing Questions for a Survey

Phrase Questions to Receive QuantifiableAnswersWrong

How much fruit do you regularly buy?

Would you pay more for organic vegetables?

Right

How many pounds of peaches do you buy each weekthey’re in season?

How much more per pound would you pay for organicvegetables? (Circle one)0 $10 $20 $30 >$30

Multiple Choice or Checklists are Easy toAnalyzeUnconstructed

What would you like us to do at our next PumpkinFestival?

What selection of fresh-cut herbs would you like us toprovide next season?

Constructed

Check the one event you would most like us to provideat our next Pumpkin Festival:

Hay ride ________ Square dance ________Halloween Costume ________

Check the three most important fresh-cut herbs youwould like us to provide next season:________ Basil ________ Dill________ Chervil ________ Thyme

________ Parsley ________ Comfrey

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Ask for Personal Information by ProvidingCategoriesWrong

(Providing no explanation)

What is your annual income?

Right

The following questions help us better serve yourneeds.

Family income range:________ below $5,000/year________ $5,000 - $9,999________ $10,000 - 24,999________ $25,000 - 49,999________ above $50,000

How old are you?

Age of the shopper who buys most of the family food:________ 12 - 18________ 19 - 30________ 31 - 50________ 51 - 65________ over 65

Selecting a Survey SampleA sample allows you to get an idea of what yourcustomers are thinking without doing the extra legworkof contacting huge numbers of people. The trick is tomake your sample representative of the client group. It’simportant for the sample to represent clients as youneed to predict the characteristics and behaviors of theentire target market.

Interpreting Survey ResultsWhen you total all your various responses from asurvey you should get an overview of how the marketwill act. Be aware of the inherent problems withsurveys. For example, people who return a survey tendto support your product or idea. The ones who don’twill simply not return the survey. Take this factor intoaccount when you assess how supportive your marketis. A positive response doesn’t mean a positive action.Just because 80% of survey respondents said theywould buy your product doesn’t mean they will.

Personal InterviewsMany farm entrepreneurs use personal interviews to domarket research. Personal interviews can be the mostinformative and reliable type of survey, and oftendouble as a promotional technique. For example, if youinterview buyers of wholesale dried herbs and spices,the interview provides an opportunity to discusscompany policies, identify customer preferences andimpress the buyer with your professionalism.

Personal interviews are time consuming and must beconducted in an unbiased manner. Your responses willbe next to worthless if you or your interviewer hint atdesirable answers or explain issues so a desirableanswer is given. Many people are more hesitant toanswer personal data sections such as age or income inface-to-face interviews.

Factors to Consider When Selecting aSurvey Sample• The way you select people in your survey sample or

how they select themselves, can easily bias yourresults. If your sample includes only some types ofbuyers and excludes others, the results will notaccurately reflect the whole market.Example: A beef farmer wants to find out about thelocal consumer interest in purchasing lean, hormone-free beef. The results he would receive from membersof a local health food co-op would be very differentfrom the results he would receive by sending thesurvey to every tenth name in the phone book. Eitherchoice might be valid, but the first sample wouldinclude only certain types of shoppers; those alreadyknown to be interested in health foods. The secondsample would be more representative of the generalpopulation.

• The larger the sample size, the more accurate theresults. Typical sample sizes for professionalmarketing studies are 200 to 500 people for a simpleregional analysis of households. The size of yoursample will probably be much smaller and willdepend on the amount of money to be invested inthe enterprise.

• The response rate, the percentage of people actuallyreturning a survey, may be fairly low. A response rateof 25 per cent is good. Improve response rate bysupplying a stamped, self-addressed envelope,mailing a postcard with a reminder message 10 to14 days after the survey mailing, or callingparticipants on the phone. A well-designed surveygenerates a greater response rate than a poor survey.

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Design your personal interview using the sameprinciples as outlined for the written survey. Tips onconducting an interview are listed below. Compile theinformation you have gathered during your personalinterviews and evaluate the results.

Tips for Conducting a Personal InterviewSelect interviewees in an unbiased fashion. For example,if you conduct a door-to-door survey to learn theproportion of people in a town that might frequent apick-your-own raspberry operation, use a standardizedmethod of choosing doors to approach. For example,knock on doors with even or odd numbers, but avoidapproaching only fancier homes or houses wherefriends live.

• When interviewing chefs, produce managers andother professional buyers, make an appointment forthe interview. When making the appointment,communicate the expected length of the interviewand stick to your time.

• Limit the length of lists and choices. When providingmultiple choices as answers to questions, restrict thenumber of choices to three or four. Additional choicesare difficult to remember and make peopleuncomfortable. Keep check lists short for the samereason.

• Provide a token of your appreciation at the end of theinterview. An effective way to end a consumerinterview is to hand out coupons, bumper stickers, abag of carrots, or any other small gift as a thank-youfor participating. Commercial buyers should be givensamples of your product and sent a thank-you letteras a follow-up.

Test MarketingTest marketing offers your product or service to a smallamount of target customers to evaluate sales. Testmarketing may involve advertising a firewood service toa small sample of wood stove owners or offering tastesof your new jams and chutneys at farmers’ markets. Themore the test situation resembles your planned productor service market, the more reliable the results will be.

Test marketing is especially useful when researchingenterprises which offer an unknown product or service.For example, New Zealand growers introduced kiwifruit to buyers in the U.S. through test marketing.Imagine the poor responses they would have receivedvia a written survey if their introduction to the fruitconsisted of this description, “An oval, brown, fuzzyfruit about three inches in length that is bright greeninside and tastes sour and sweet at the same time.”

Test marketing is very effective, but it’s also expensiveand time consuming. Use test marketing as a follow-upto market research techniques. First you need to assesswhether market demand exists and define your productor service. Then you can use test marketing to fine tunesales projections and to project production costs andproblems.

Marketing WorksheetsThe following sections help you practice the marketresearch techniques described earlier. If you areplanning for a lower risk enterprise it may take less timeto perform market research. However, if the newenterprise is high risk it’s important you spend enoughtime to perform detailed market research.

Before beginning your research, look over the lists ofquestions on each marketing research worksheet. If timeis limited you may decide to focus on the questionsmost applicable to your business. You may decide todevelop your own market research priorities andmethods. Secondary research may help you answersome of the questions while others may require one ormore primary research techniques.

Make photocopies of all the worksheets as needed andsave the originals for master copies. If necessary, adaptthe worksheets to fit your needs.

Target Market Description

Your target market includes the people or businessesyou are trying to attract. Identifying and understandingyour target market can prevent costly mistakes as youdevelop and promote your product and service. Tounderstand the target market you need information ondemographics, lifestyle patterns and expectations ofpotential buyers. Enter your results on Worksheet 2:Target Market Description (page 13).

DemographicsUse secondary research to find the characteristics ofyour target group. A demographic search will provideinformation such as typical age of buyers, their incomelevels, where they live and work, whether they havechildren, if they belong to a particular ethnic group andtheir level of education.

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Example:

A farmers’ market vendor could use a recent studyentitled Profile and Economic Impact of the Farmers’ Marketsin Alberta to profile a target customer. After reading thestudy, the vendor knows the target customer is a 25 to46-year-old female. The target customer is loyal to themarket and visits it regularly to buy vegetables, bakedgoods and meat products.

Lifestyle PatternsMany marketing professionals call lifestyle patternspsychographics. The descriptions for psychographicsinclude interests, beliefs, values and behavior patterns.Your business may appeal to one psychographic typeand be rejected by another. Knowing this, you can avoidwasting time trying to promote the business in thewrong market.

Example:

Further reading of the study Profile and Economic Impactof the Farmers’ Markets in Alberta provides details on thelifestyle patterns of target customers. The entrepreneurlearned that most customers visit a specific vendor eachtime they go to the farmers’ market. The wants of thetarget customer are freshness, product quality and tosupport local farmers and the community.

ExpectationsAsk yourself why your target group would be interestedin your product or service. What expectations do theyhave regarding quality, service, product mix,convenience and price?

Example:

A restaurant that expresses interest in your seasonalselection of fresh basil, baby squash, baby carrots andother speciality vegetables may also expect you toprovide a traditional selection of produce year-round. Ifyou are unable to provide both types of produce, thebuyer may use another grower or distributor who canprovide the desired range of products and services. Inthis case, the specialty enterprise is used to increasesales of a traditional product; it doesn’t stand alone.

Marketing Options

A marketing option is any method you use to sell ordistribute your product or service.

Research helps you find other options that allow you tomost effectively reach your target market.

If your new enterprise is fairly conventional, you maydecide to use dealers, co-operatives, processors orauctioneers. Farmers who have developed innovative ornontraditional enterprises often decide to use a totalmarketing process. They are involved in the marketresearch, production, promotion, distribution and sales.

Processing and marketing have higher returns thanproducing a raw product. Many growers and producersof nontraditional goods prefer to keep the extra returnfor themselves. By taking an active role in marketing theproduct or service, you maintain more control overquality, image and price.

Active marketing is important, but it takes commitment,skills and dollars. Focus on the most promising options,but be sure to use more than one market. Relying ononly one market can lead to disaster. Try to be flexiblewith your marketing options to operate in the marketnow and in the future. Compile your completedresearch and enter the results in Worksheet 3: MarketingOptions (page 14).

Examples of Marketing Options• selling directly to a restaurant• marketing by telephone• selling at a local farmers’ market• developing your own label or brand name• selling at special events, such as fairs and festivals• harvesting and selling via pick-your-own• finding other producers whose products you can

market• joining or forming a marketing co-operative• selling wholesale to a distributor, broker, or processor• operating a roadside farm stand or retail shop• marketing through catalog• selling directly to supermarkets or a supermarket

warehouse• developing a tourist attraction on your farm

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Existing Market Demand

To assess existing market demand for your product orservice, estimate the number of buyers in the targetmarket and how much or how often they purchasesimilar products or services. Is it an extensive marketwith large numbers of buyers or is it very restricted atthis time? Are your buyers spread over a largegeographic area or are they concentrated locally? If yourmarket is so new that there really isn’t an establishedmarket yet, you need to create a market by educatingpotential buyers.

Example:

Direct retail or service businesses like roadside farmstands and pick-your-own operations usually draw95 per cent of their customers from within a 50 kmradius of the business.

Look at the issues in market demand and select theresearch methods necessary to answer all relevantquestions. Enter the results of your research in yourcopy of Worksheet 4: Existing Market Demand (page 15).

Competition

An analysis of your competition is an important part ofmarket research. List your competitors, the types ofbuyers they serve, and their strengths and weaknesses.You may discover the type of buyer you planned totarget is better served by a competitor and a bettermarket exists for your efforts. Remember, there is nosuch thing as no competition. Even if a product isunique, there are other options available to satisfy abuyer’s needs and wants. Competition can be eitherdirect or indirect.

Direct CompetitionThis includes those businesses that offer the sameproduct or service to prospective buyers as you do.

Direct competition for retail or service businesses wouldconsist of businesses offering the same product orservice within a 100 km radius of your business.

Indirect CompetitionThis is anything your target market can substitute foryour product or service. Buyers may choose a similarproduct or service, or choose to do without the product.Some may decide to perform a service for themselves. Itmay be impossible to measure indirect competition, butbe aware of the many alternatives buyers have available.

Example:

The Animal Farm planned to operate a boarding/kennelservice for pet horses, ponies, dogs, goats and sheep.During their marketing analysis, the owners discoveredone competitor; Merrydale Horse Farm, a boardingservice 40 km away. Knowing how many pet livestockowners were nearby and that little direct competitionexisted, the Animal Farm hung out it’s shingle.

Surprisingly, business was poor. Soon the ownersrealized they had neglected to consider indirectcompetition. People leaving extra food for dogs,neighbors feeding stock while families vacationed andfamily members staying home to care for the stock wereall forms of indirect competition. Potential customersfelt that “do-it-yourself ” actions were more competitivethan The Animal Farm boarding service. In this case,indirect competition was so severe The Animal Farmowners were unable to successfully establish theenterprise.

Many primary research techniques can be used toevaluate your competitors. As you do market researchthink about the product or service like a customer. Placeyourself in the role of a customer to become moresensitive to the factors both big and small, that make animpression on buyers.

Example:

If you are considering a roadside stand business,become a regular customer at several local farm stands.Go on different days and at different times of the day.Evaluate the quality of the products and the amount ofsales. Buy products. Are the products of uniform qualityfrom day-to-day, hour-to-hour? What is the attitude andturnover rate of employees? Note prices, packaging,educational displays and the ease of parking. What sortsof buyers are they attracting? What do they do well, andwhat do they do poorly?

Competitors may be your most important source ofinformation. Many competitors will agree to meet withyou. Some competitors will try to influence yourdecision, some will try to dissuade you and some willprovide helpful advice. Be particularly attentive tosuggestions that the market is small or oversupplied assuch warnings may be worth heeding.

You could find a competitor who suggests you increaseyour production or services to make the industrystronger. Once an entrepreneur has opened up a newmarket, demand can exceed production. If yourcompetition can’t increase production to meet demand

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they may welcome a serious newcomer. Competitorsmay suggest minor changes in your enterprise thatcould decrease competition between you both.

Example:

You visit a farmer in the next county who has beenconducting farm tours for five or more years. When youtell him about your plan to start a similar business thefarmer says:

“Our specialties are draft horses, hay rides, fall bonfiresand winter sleigh rides. We don’t do much in the springbecause I’m busy on the farm. If you have a tour that isgood in the spring and early summer, we might both doall right. We could even do some co-operativeadvertising as people who visit our place sometimes askfor names of other places to visit. If you set up a goodtour, we could recommend you. Doing a favor for ourcustomers would make us look good.”

Identifying, studying and evaluating your competitorswill take time, but the results will be worth the efforts.Enter the results of your research on your copy ofWorksheet 5: Competition (page 16).

Three major competitors may be evaluated on eachform. Make sure to include at least one source of directcompetition.

Market and Consumer Trends

Value ChainsAs you study market trends and your competition, youshould be aware of a move toward value chains in theagri-food industry. A value chain, in its simplest form, isa way of responding to the demands of the customer.It’s giving customers what they are asking for throughthe collaboration of agri-food producers, processors andretailers.

Market trends illustrate that value chain formation is atimely and effective response to demanding marketconditions. Here are some of the forces driving valuechain development:

• concerns with food safety and quality assurance• assurance of supply – the right product at the right

time• the need for increasing flexibility and the ability to

respond to changing consumer demands• continuing drive to reduce transportation, handling,

transaction, inventory and storage costs

• the increasing ability and need to differentiateproducts

• environmental factors and changing consumer needsand demographics

• the need to equitably share profits amongst allparticipants in the agriculture and food system

Value chain formation takes time. The process involvesbuilding trust around a common objective, developingnew information and analysis systems, conducting apilot project to measure and test new approaches, anddefining a new business relationship.

Example:

Several ostrich producers in Shady Valley realized thatthey were all working individually to develop newproducts. By sharing information and ideas theydecided on a common objective to develop processedproducts for high end restaurants. Over time theyfound a processor who they could work closely with,and a restaurant chain that was interested in someunusual menu items. They are now sharing informationand ideas, and have started the value chain process.

Find out all you can about the trends in consumption,the competition and pricing for your proposedenterprise. Look for information about the past, as wellas projections for the future. Has per capitaconsumption been increasing? Is it expected to level offor is there a consumption boom ahead? Are the factorscausing the increase likely to disappear in the next fewyears or is this a long lasting consumer trend? Has thenumber of competitors also been increasing? Are priceslikely to plummet as more people get into the business,or is this a fairly well established, stable market? Findinginformation on market trends for new or unusualproducts and services is difficult. Don’t rely on yourintuition as it may tell you there has to be a terrificmarket for this great product. Instead, study the markettrends for similar or related products or services.

Example:

A grower is interested in producing certified organicpoultry meat to sell locally. She can’t find any statisticson trends in organic poultry consumption, productionor pricing. Should she give up? No, she should look forinformation on trends in the organic vegetable marketand changing consumer attitudes toward pesticides,hormones and antibiotics in food. This information,although it’s not specific to poultry, can help her projectmarket trends.

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Most questions about consumer trends are answeredusing secondary research. For the best results, studymarket trends over the last five to 10 years, as well asfuture projections, for your proposed product orservice. Once you have gathered your results, enter theinformation on your copy of Worksheet 6: Market Trends(page 17).

Expected Price

There are many formulas and strategies for settingprices. Market research tells you what pricescompetitors are setting, how prices have fluctuated overthe seasons and from year-to-year, and how prices areaffected by supply and demand, product quality,marketing savvy and service.

Your pricing strategy needs to reflect your competition,costs of production, the level of quality, service andconvenience provided and the types of buyers targeted.For example: a low price doesn’t mean you will sellmore as some buyers think low prices suggest poorquality. Some growers have found that they can actuallysell more goods by setting prices at the high end of anacceptable range.

Be conservative about prices when projecting revenuesfrom a new enterprise, especially for future years. Findout all you can about the range, variation and trends inprices of the product or service. Money? Enter theresults of your market research on your copy ofWorksheet 7: Expected Price (page 18). At the end of theworksheet, specify an expected price to be used as youcontinue evaluating your new enterprise.

Expected Sales Volume

The final step in your market research is to estimatehow much of your product or service you will be able tosell in an average future year. The average future year isthe one where you expect your business to be wellestablished and stabilized.

First, study all your information on target markets,marketing options, market demands, competition,trends and prices. Second, through comparison andanalysis of your results, project the volume of sales youexpect to generate when you enter the market. Estimatethe minimum and maximum volume you believe youcould sell and then set a realistic goal for sales in anaverage future year. Enter the research results on yourcopy of Worksheet 8: Expected Sales Volume (page 19).

Evaluating Your Research Results

Evaluation of the market for your new enterprise shouldanswer the following questions:

• What are you selling or providing?• Who will buy or use this product or service?• What is the best way to market this product or

service?• What is the demand for this product or service?• How strong is the competition in the target market?• What are the future trends for this product or

service?• What prices are you likely to receive for the product

or service?• What volume are you likely to sell in the target

market?The answers to these questions should help you tomake a judgment on the status of the target market. Anew product or service in a market where consumptionis increasing could achieve substantial growth. If youare entering a well established market with little growthpotential, you will have to be creative and develop amarket niche to successfully sustain the business.

If you aren’t completely confident about your marketingprojections, don’t be discouraged. There’s no way topredict the future with certainty. By analysing andunderstanding as much information as possible, you arein the best position to guide a new business successfullythrough the inevitable changes in the market.

Green Light – GoIf the market seems promising, congratulations! Marketanalysis represents a lot of hard work and you arefortunate to discover a need in the marketplace. Proceedto the next step to assess whether your product orservice can be provided with available resources.

Yellow Light – CautionIf your research shows there is already stiff competitionfor the target market, it may be best to revise yourproduct definition and try again. Use the informationgathered in your market research to uncover otheropportunities. For example, you may have discoveredthat existing pick-your-own strawberry acreage hasreached the maximum that the population can support.What about wholesale strawberries? What about pick-your-own raspberries? All that diligent marketinghomework need not go to waste.

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Red Light – StopIf your market research shows supply exceeds demandor the trend is toward declining consumption and pricesyou shouldn’t pursue your idea any further. If youdecide to pursue another enterprise (perhaps yoursecond-ranked idea), you may be able to recycle themarket research you already gathered. Marketingtechniques such as performing personal interviews anddetermining expected prices will be easier the secondtime around.

Summary

Marketing research includes everything you do tounderstand and predict the market for your enterprise.In this factsheet you learned some of the basic questionsthat are addressed by market research, techniques forperforming the research and ways to interpret theanswers. By working through the marketingworksheets, you will gain a clearer understanding of themarket for your new enterprise and skills that can beused again and again as your business grows.

ReferencesThe Ag-Alternatives factsheets have been adapted withpermission from: Farming Alternatives – A Guide toEvaluating the Feasibility of new Farm-Based Enterprises(NRAES-32, October 1988, ISBN 0-935817-14-X). Thispublication was a project of the Farming AlternativesProgram, Cornell University, Warren Hall, Ithaca, NY14853 (607) 255-9832; and Natural Resource, Agricultureand Engineering Service (NRAES), Cornell University,152 Riley-Robb Hall, Ithaca, New York (607) 255-7654.

For More Information

Ag-Alternatives Series:

Personal and Family Considerations: Where do YouWant to Be? (Agdex 1834-10)

Identifying Alternatives: What are the Possibilities?(Agdex 811-2)

Marketing: Will it Sell? (Agdex 848-5)

Production Requirements: Do You Have the Resources?(Agdex 811-4)

Financial Feasibility: Can You Afford to Do It? (Agdex 811-3)

Profitability: Will it Make Money? (Agdex 811-6)

Decision Making: Will You Start a New Enterprise?(Agdex 811-5)

Other Publications:

For these factsheets and other publications, call AlbertaAgriculture, Food and Rural Development’s PublicationsOffice at 1-800-292-5697.

The Essential of Pricing. 1999 (Agdex 845 - 1)

Methods to Price Your Product. 1999 (Agdex 845 - 2)

Pricing Processed Food Products. 1999 (Agdex 845 - 3)

Pricing Horticulture Products. 1999 (Agdex 845 - 4)

Developing a Promotional Plan. 1999 (Agdex 846 - 1)

Websites:

Alberta Agriculture, Food and Rural Development’swebsite at http://www.agric.gov.ab.ca

Diversification information athttp://www.agric.gov.ab.ca/diversify

Phone:

To access specialists, information and services withinAlberta Agriculture, Food and Rural Development,contact the Alberta Ag-Info Centre at 1-866-882-7677.

R11/04/500

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Worksheet 1: Product/Service Definition

As you write the descriptions, keep an image in mind. Try to communicate what the potential buyer wants toknow about your product and why he or she should be interested in it. Condense the four descriptions into abrief, but precise capsule definition of no more than 50 words.

Product features (Describe the product, size, quality mix, varieties, types, etc.)

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Service features (Describe delivery, processing, packaging, instructions, range of services offered, etc.)

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Marketing season (Describe the months in which the product or service is offered and explain.)

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Benefit to the buyer or user ( Describe how the product or service fills a buyer’s needs.)

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Capsule definition (Combine the above description into a definitive paragraph of less than 50 words.)

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Worksheet 2: Target Market Description

Describe the characteristics of the people for whom you are trying to provide your product or service:

Demographics

(Typical age, income level, geographic location of residence or work place, number of children, marital status,ethnic group, education level, etc.)

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Lifestyle patterns

(Common interests, beliefs, values, behavior patterns, etc.)

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Expectations

(What do buyers want and expect from your product or service?)

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What sources of information did you use in completing this worksheet?

(List references, site survey results, etc.)

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Worksheet 3: Marketing Options

What options are available where you can market your product? Slaughterhouses, processing plants, wholesalers,direct markets and on-farm stands are some of the possibilities. Use appropriate research methods to find outmore about those options and additional ones that may occur to you. Select three options that appear mostpromising for your enterprise and describe each below:

Option #1:

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Option #2:

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Option #3:

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What methods or sources of information did you use to select these three options?

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Worksheet 4: Existing Market Demand

How many potential buyers are included in your target market at this time?

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What is the average purchase volume or frequency of service per buyer per year in your target market?

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What is the total purchase volume or number of services per year in your target market?

(Multiply the number of buyers by the average volume or frequency.)

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What sources of information did you use in completing this worksheet?

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Worksheet 5: Competition

Competitor A Competitor B Competitor C

Business name and location _______________________________________________________________________

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Estimated sales volume ______________________________________________________________________________________________________________________________________________

Quality of product or service ______________________________________________________________________________________________________________________________________________

Price of product or service ______________________________________________________________________________________________________________________________________________

Customer satisfaction ______________________________________________________________________________________________________________________________________________

General appearance _______________________________________________________________________

(cleanliness, neatness, image) _______________________________________________________________________

Type of buyer targeted ______________________________________________________________________________________________________________________________________________

Summary of strengths ______________________________________________________________________________________________________________________________________________

Summary of weaknesses ______________________________________________________________________________________________________________________________________________

What methods did you use to gather this information on your competitors?

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Worksheet 6: Market Trends

Describe the following market trends over the last five to 10 years for your product or service and project futuretrends for the next five to 10 years:

Per capita consumption (or production):

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Prices:

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Competition:

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What are your projections for market trends in the next five to 10 years?

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What are the underlying reasons that account for these past and future market trends?

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What sources of information did you use to answer the above questions?

(List references, resources, people, etc.)

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Worksheet 7: Expected Price

Based on your knowledge of past, present and projected prices, answer the following questions:

What is the lowest price you are likely to receive in the near future?

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What conditions would create this low price situation?

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What is the highest price you are likely to receive in the near future?

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What conditions would create this high price situation?

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Expected price (price you are most likely to receive in an average future year):

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Worksheet 8: Expected Sales Volume

Based on your knowledge of past, present and projected market trends, answer the following:

What minimum volume of product (number of units) do you believe you could sell in a poor year?

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What production and market conditions would create this situation?

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What maximum volume of product (number of units) do you believe you could sell in a good year?

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What production and market conditions would create this situation?

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Expected sales volume (volume you are most likely to sell in an average future year):

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