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Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
Pushing the pencil   high tunnel economics 11 22 2010
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Pushing the pencil high tunnel economics 11 22 2010

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  • First 5 weeks profit and rest of season is breakeven to year
  • Talk about Kevin CFFM and their consultant – features vs. client benefits Farmers may have a different perspective on the “cool” parts of software than Win
  • The visual side of roundup ready fields Bailey’s view on the taste of his wine – what about a French lady bug All things being equal what can you add in this realm – HP Calculators Experience Engineering Inc. - Michael Vance and Walt Disney
  • Guy with railroad injury – emotional trigger – grain marketing
  • Transcript

    • 1. Pushing the financialpencil with hightunnels Statewide High Tunnel Conference Mankato - 12/3/2010 Karl Foord Pushing the financial pencil: - Karl Foord - 1 12/3/2010
    • 2. The most important aspect The most important aspect of any crop is the ability to market it for a profit after considering the added costs when using a high tunnel Every area has different pricing pressures. Pushing the financial pencil: - Karl Foord - 2 12/3/2010
    • 3. Flow of this talk Price, margins, profitability Customer issues  Perceptions, behavior, total experience  Seller buyer perspective Pushing the financial pencil: - Karl Foord - 3 12/3/2010
    • 4. Price, margins, profitability First of season products  price premium = higher margins  greater profitability Maintain price premium Monitor labor efficiency Pushing the financial pencil: - Karl Foord - 4 12/3/2010
    • 5. What Are We Really Selling? “Revlon sells chemicals Women buy glamour” Fruits and vegetables Flowers Pushing the financial pencil: - Karl Foord - 5 12/3/2010
    • 6. What Are People ReallyBuying? Health, Taste The experience of the market itself Support of local growers What are your customers really wanting? Pushing the financial pencil: - Karl Foord - 6 12/3/2010
    • 7. Exchange Something of value for an amount of satisfaction The perceived value > the price Largely behavioral not mathematical Usually an emotional trigger Buy and justify Pushing the financial pencil: - Karl Foord - 7  12/3/2010
    • 8. PRICING DECISION CHART COMPANY VIEW Our Asking Price Our Costs - Our GoalsPricing Goal No ($) Exchange Profit WIN - WIN Profitable Enterprise Exchange Price Range Total Costs LOSE - WIN Exchange Fixed Costs Overhead Salaries, Etc… Variable Costs Direct Costs Materials Pushing the financial pencil: - Karl Foord - 8 12/3/2010
    • 9. PRICING DECISION CHART Customer CUSTOMER VIEW Value Satisfy a Want Determination Perceived Value > Price WIN - LOSE Line of Perceived Value ExchangePrice WIN - WINRange Exchange Focus of Marketing Efforts Perception Factors Convenience Philosophical Match - Ecological Emotional Health Benefits Benefit Quality - Reputation - Dependability Selection - Uniqueness Confidence: no frustrations, headaches Reference Prices Context - Urgency Functionality Low Perceived Value Pushing the financial pencil: - Karl Foord - 9 12/3/2010
    • 10. PRICING DECISION CHART COMPANY VIEW Customer CUSTOMER VIEW Our Asking Value Satisfy a Want Price Our Costs - Our Goals DeterminationPricing Perceived Value > Price Goal No WIN - LOSE ($) Line of Perceived Value Exchange Exchange Profit Profitable Enterprise WIN - WIN Exchange Focus of Marketing Efforts Total Costs LOSE - WIN Perception Factors Exchange Fixed Costs Convenience Philosophical Match - Ecological Overhead Salaries, Etc… Emotional Health Benefits Benefit Quality - Reputation - Dependability Selection - Uniqueness Variable Costs Confidence: no frustrations, headaches Direct Costs Materials Reference Prices Context - Urgency Functionality Low Perceived Value Statewide High Tunnel Conference 12 2010, Karl Foord Pushing the financial pencil: - Karl Foord - 10 12/3/2010
    • 11. Customer Perception Key customer perception factors How buyer uses product & impact of attributes on value Value varies among buyers - all will not use it in the same way Pushing the financial pencil: - Karl Foord - 11 12/3/2010
    • 12. Perception management Manage customer perception Proactively to influence the gap between price paid and value received Pushing the financial pencil: - Karl Foord - 12 12/3/2010
    • 13. Improving customerexperience 5 Sense your market  Taste, touch, smell, sight, sound Do you provide recipes?  Sensory extrapolation Pushing the financial pencil: - Karl Foord - 13 12/3/2010
    • 14. Customer overview Understand key customer perception factors for your products Consider impact of emotion on the total customer experience Pushing the financial pencil: - Karl Foord - 14 12/3/2010
    • 15. Pricing Issues Capture the early premium Understand the true impact of price reductions Vary your crop mix with an eye to margins and profitability Pushing the financial pencil: - Karl Foord - 15 12/3/2010
    • 16. High Tunnel Revenue 3,000 2,500 Determinate Revenue Indeterminate Revenue 2,000Dollars 1,500 1,000 500 0 1 2 3 4 5 6 7 8 9 1 1 1 Weeks of the Season Beginning July 1 Pushing the financial pencil: - Karl Foord - 16 12/3/2010
    • 17. Price changes through the Tomato Season July August September Price Weeks Weeks WeeksStrategy Revenue Season 1 2 3 4 1 2 3 4 1 2 3 4 Difference Revenue Hold (Hold vs. $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 Totals Price Drop)Yield - 14 lbs./plt Revenue from Hold Strategy 373 $1,119 $1,119 $1,119 $1,119 $1,119 $1,119 $1,119 $1,119 $1,119 $1,119 $1,119 $1,119 $13,428 $1,306 Drop $3.00 $3.00 $3.00 $3.00 $2.75 $2.75 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 PriceYield - 14 lbs./plt Revenue from Drop Strategy 373 $1,119 $1,119 $1,119 $1,119 $1,026 $1,026 $933 $933 $933 $933 $933 $933 $12,123 ($1,306) Statewide High Tunnel Conference 12 3 2010 - Karl Foord Pushing the financial pencil: - Karl Foord - 17 12/3/2010
    • 18. High Tunnel Crop Mix Mini Bell Item Tomatoes Cut Flowers Cucumber Peppers Number of 320 1350 630 384 plants Total crop 0 2,700 25,200 11,520 produced Unit size Pound 10 stems each each Price/unit $3.00 $3.50 $0.40 $1.00Gross income $0 $9,450 $10,080 $11,520Income/foot ² $0.00 $4.92 $5.25 $6.00 Season 7/10-10/5 6/25-9/15 6/30-9/15 7/10-9/15 96 x 20 high tunnel Pushing the financial pencil: - Karl Foord - 18 12/3/2010
    • 19. Go to spreadsheets Pushing the financial pencil: - Karl Foord - 19 12/3/2010
    • 20. Author and Reference Karl Foord Ph.D. MBA Regional Educator, Horticulture foord001@umn.edu (651) 480 7723 High Tunnel Production Manual Pushing the financial pencil: - Karl Foord - 20 12/3/2010

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