Product

vegetables might be a niche market. But
PRODUCT POSITION as you can see, the market potential
eventually becomes so small that an eco-
nomically viable operation is not pos-
by Russell Tronstad1 sible.

Should I look for a market niche or take a
product position of low prices and large
volume sales? Answers to these ques-
tions will vary depending on the goals of
your firm, local competition, and resources
available so that no generalized answer
can be given. But the importance of some
quality issues, food safety, rural appeal of
The one who aims at nothing
consumers, and location considerations
generally hits nothing.
are given below as an aide for selecting a
product position and possibly identifying
a niche market.

P
roduct position refers to what the Quality Issues
consumer thinks of your product
(e.g. lowest price, best service, Figure 1 shows the importance of some
freshest produce, “certified residue free,” quality characteristics as identified by the
easy access, etc.) when they are making Packer’s 1992 Fresh Trends Profile Study.
a purchase decision. A concept often Items of appearance/condition, taste/fla-
related to product position but different is vor, and freshness/ripeness were indi-
niche marketing. Large retailers like Wal- cated as extremely or very important items
Mart, Best, and Target have taken a prod- to at least 96% of all respondents. This
uct position of low prices, but none of result suggests that special care should
these are niche marketers. A niche mar- be taken to ensure that you can ad-
ket refers to a small segment of the total equately meet these top three quality
market that is being ignored by others. items for your consumer when marketing
Two items are involved with developing a produce. Even though you may have
market niche; 1) identifying the wants of taken a market position for always having
a small group of consumers that are be- the “lowest price,” minimum standards
ing ignored by others, and 2) taking a for appearance/condition, taste/flavor,
product position that meets the wants of and freshness/ripeness should be set.
these consumers.
The next most important items identified
In a broad sense, direct farm marketing to were price, certified safe (pesticide resi-
consumers could be referred to as niche due testing), and nutritional value. About
marketing since so little produce is sold 65% to 70% of all respondents indicated
directly to consumers. But to be a niche that price, residue testing, and nutritional
marketer of direct farm products you re- value were extremely or very important
ally need to be unique from other com- quality characteristics to them. It is inter-
petitors. Growing ethnic vegetables could esting to note that only 22% of the re-
be an example of niche marketing, pro- spondents indicated that organically
vided that no other local grower is selling grown was extremely or very important to
ethnic vegetables. If someone is already them but 68% indicated that “certified
selling ethnic vegetables, organic ethnic safe” was important. Brand name ranked

Market Analysis and Pricing 1995 7

Figure 1. Quality Components.

How important is appearance/condition
70
when selecting a specific produce item? Taste/flavor
70 60
60 50 64%
50 64%
40
40
30
30
33% 20 33%
20
10 2% 1% 10 3% 1%
0 0
Extremely Very Somewhat Not very/not at all Extremely Very Somewhat Not very/not at all

70 Storage/shelf life
60 Freshness or ripeness 40
50 35
39%
62% 30
40
25 33%
30 20
20 34% 15 21%
10 3% 1% 10
5 8%
0 0

45 Size In-season
40
40
35
35 45% 40%
30
30
25
33%
25
32%
20
20
15 15

10 10 19%
5 12% 10% 5
10%
0 0

Judging freshness/ripeness
FRUITS FRUITS
Easiest Most Difficult
Bananas 61% Watermelon 36%

Apples 30% Cantaloupe/muskmelon 30%

Melons, other types 30%
Peaches 15%
Oranges 16%
Strawberries 14%
Pineapples 14%
Grapes 13% Apples 12%

Oranges 5% Honeydew 11%
0 10 20 30 40 50 60 70
Peaches 10%
VEGETABLES
Easiest
VEGETABLES
Tomatoes 35% Most Difficult

Lettuce 31% Potatoes 10%

Carrots 9% Corn 7%

Broccoli 8%
Onions 6%
0 5 10 15 20 25 30 35
Source: The Packer's 1992 Fresh Trends Consumer Profile Study.


Figure 1. (cont.)

Valued characteristics Extremely/very important
Appearance/condition 97%

Taste/flavor 96%
Freshness/ripeness 96%
Price 70%
Certified safe by residue (pesticide) testing 68%
Nutritional value 66%
Storage/shelf life 60%

Convenient to eat/Prepare 51%

Size 45%

In-season 41%

Displayed loose 37%
Calorie content 26%
Organically grown 22%

Growing region/state/country of origin 19%
Prepackaged 11%
Brand name (of the grower or marketers) 10%
0 10 20 30 40 50 60 70 80 90 100

the lowest with only 10% of the survey ries, 5-10 days; and raspberries 2-3
participants indicating this as an extremely days) can be a great opportunity for local
or very important characteristic. How growers in meeting freshness require-
consumers relate buying in one produce ments demanded by consumers. It may
outlet to buying in another may not be the be tempting to put two week old sweet
same as brand name acceptance though. corn on display since it looks good, but a
The decision of which store to shop in is bad experience can do more harm to
generally different than what produce future sales than the current sale. Rec-
items to buy. Thus, the reputation and ognize that spoilage and waste will be
customer satisfaction attained at your greater for highly perishable products and
business probably has more of a residual don’t advertise or display as “freshest
effect than that demonstrated for brand produce” if you know it isn’t.
name.

If you want to be known as having the Food Safety
“freshest produce,” try to find varieties
that mature at slightly different times. For How important of a concern is food safety?
example, you don’t want to have all your The Packer’s 1992 survey addressed this
blackberries come ripe in one week (see issue. Years of 1990 through 1992 were
article entitled," Geyers’ Specialty is compared and these results are shown in
Marketing Small Fruits"). The 1993 Figure 2. In 1990, 21% indicated that
Produce Services Source book gives a “certified safe” residue testing was ex-
post harvest life for blackberries at 2-3 tremely important and this percentage
days. Know what the post harvest life of increased to 32% by 1992. In looking at
your produce is along with proper storing education demographics, the concern for
temperatures and relative humidity. Pro- residue testing decreased with higher
duce products with a short post harvest education levels. An extremely important
life (e.g., sweet corn, 4-6 days; strawber- rating was given by 86% of high school


Figure 2. Food Safety.

How important is certified safe by residue testing when Demographic breakdown - importance of
selecting a specific produce item? certified safe, 1992.
40
36% 35% Education 86% 12% 2%
35 32% 31%
29% 29% Some high school
30
26% 71% 24% 5%
25
24%
21% High school grad
20
67% 25% 8%
5 13%
Some college
0 8% 7%
6% 57% 27% 16%
5 2% 2%
College grad
0

Extremely Very Somewhat Not very Not at all

0.00

100.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
Not very/not at all important Extremely/very important
1990 1991 1992
Somewhat important

How important is organically grown when selecting a Demographic breakdown - importance of
specific produce item? organically grown, 1992.
35%34% 35% Education
33% 31% 35% 34%
31% 31%
Some high school
24% 34% 42%
High school grad
16%15% 20% 34% 46%
14%
12%13% 13%
Some college
8%
5% 6% 18% 31% 51%
College grad
Extremely Very Somewhat Not very Not at all
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
1990 1991 1992 Somewhat important

Income
32% 31% 37%
Sex Less than $12,500
27% 33% 40%
27% 33% 40%
$12,500 - 22,499
Women 22% 35% 43%
$22,500 - 34,999
12% 34% 54% 16% 40% 44%
Men $35,000 - 49,999
14% 30% 56%
$50,000 or more
0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

Somewhat important Not very/not at all important Extremely/very important
10.00

30.00

60.00
20.00

40.00

70.00

80.00

90.00

100.00
0.00

50.00

Somewhat important


Figure 2. (cont.)
Reducing Chemical Use
"Based on what I've seen, read or heard, growers of fresh produce can greatly
reduce their use of chemicals in production without diminishing quality."

Disagree/disagree strongly(6%) Disagree somewhat(12%)

Agree/agree strongly(47%) Agree somewhat(35%)

Health vs. Pesticide Risk
"The potential health benefits of eating fresh fruits and vegetables
outweigh the potential risks from possible pesticide residues."
Disagree/disagree strongly(24%)

Agree/agree strongly(32%)

Disagree somewhat(17%)

Agree somewhat(27%)

graduates versus 57% of college gradu- that 1% of US consumers said they ate
ates. Of the high school graduates, only more organics in 1992 than the previous
2% said that residue testing was not year. This is down from the 2% of
very important compared to 16% of col- consumers who said they ate more or-
lege graduates. ganic foods than the previous year in
1989, 1990, and 1991 (McKinney). The
Most consumers don’t feel that organi- importance of organically grown does
cally grown is that important for food vary by education, sex, and income.
safety, although most consumers are Consistent with residue testing, organ-
concerned about pesticide residues. The ics are believed to be less important for
future and growth of organic foods is still more educated individuals. Are most of
uncertain. Organically grown foods ac- your purchase customers men or
count for about $1 billion of the $3 billion women? Women rate organics more
natural foods market. Organics are less important than men. More than twice as
than .2% of the $600 billion spent annu- many women rate organics as extremely/
ally on food. The Food Marketing very important than men (27% versus
Institute’s annual consumer survey found 12%).


Although most consumers don’t feel that ation offers more income potential than
growing organically is extremely/very food farming because consumers can
important most consumers feel that “grow- never get too much of it! We’re in the
ers of fresh produce can greatly reduce entertainment business now.” The Agri-
their use of chemicals in production with- cultural Tourism in Cochise County sur-
out diminishing quality.” Over 80% of all vey also revealed that what local and
consumers agree somewhat or strongly non-local respondents liked most about
with this statement. Thus, it is important their visit to farm outlets was a rural or
to be sensitive to the consumer and in farm experience. This ranked ahead of
your use of chemicals. If you use pesti- “freshness” and “quality” of produce.
cides in your operation, some education Thus, developing a rural attraction out of
on how much and when you spray might the “farm encounter” consumers have at
be good public relations and ease some your business may be the most important
of the concerns of your customers. Be product position decision you make.
able to describe how long and how the
chemicals that you have applied break Some activities like nature or farm trails,
down. antique displays, and petting zoos can be
more “self-guided” so that you can de-
The 1994 Fresh Trends survey asked velop these activities in the off-season
individuals if they recalled hearing about when labor is available. Other activities
the “National Academy of Sciences re- like hay rides, and guided education tours
port on the effect of pesticide residues on require more labor during the busy sea-
produce on children and infants.” Sixty- son. An advantage to having “guided
five percent of the respondents said they tours” though is that they can be an effec-
had heard of the report. Of these respon- tive public relations and promotional tool
dents 52% said they have altered their for your products. The section of “Oppor-
behavior. Washing produce more thor- tunities for Adding Additional Value to
oughly before eating was the biggest Your Products” offers several ideas for
change in behavior. Having a place where making a “farm experience.” Some pro-
consumers can wash their produce to duce outlets might specialize in “children”
their level of satisfaction could be a low activities while other specialize in “adult
cost attraction for increasing sales. If education.” The type of activities se-
consumers experience how sweet and lected or not selected determine your
fresh tasting that newly purchased apple product position in the marketplace and
or peach is before they leave your pro- the goal of marketing as the “best pro-
duce outlet, they may buy more. duce” in the State may not be enough.

Rural Appeal Location

The importance of having a rural experi- A critical but sometimes overlooked as-
ence or farm attraction appears to be very pect of any marketing mix is location.
important and growing in importance all Place is one of the 4P’s often referred to
over the country. Gary Tehrune, who in a marketing mix. It is placed on the
offers classes, farm tours, U-pick, or al- same level as the other 3P’s of product,
ready picked apples and peaches from price, and promotion in the marketing
his New Jersey orchard says, “The main mix. Place involves all the people and
attraction for people coming here is the activities that move the product from the
farm itself. People come here rather than producer to the consumer. Location to
to the supermarket because they enjoy the direct marketer is definitely more cru-
the farm experience.” Eric Gibson in Sell cial than for the wholesale grower since
What You Sow describes other entrepre- as a direct marketer you have to meet all
neurs like Al Bussell who operates a the marketing functions that are gener-
California U-pick. Al says, “rural recre- ally carried out through a series of middle-


men that move your product to the con- mon suggestion for improving farm out-
sumer. lets from the Agricultural Tourism study
for Cochise County was related to im-
As a direct marketer, recognize that your proving road signs. Identify shining as-
potential market is probably more limited. pects of your location compared to com-
Some direct marketers have overnight peting outlets, like more beauty, solitude,
express mail delivery so that they are spring water, or charm. Then you might
able to ship all over North America, but use a combination of words like say,
these opportunities are the exception “Charming Farms Fresh Produce” for pro-
rather than the rule. Studies that have moting your produce. Identify your loca-
been done in the mid-West (Courter and tion and product as having desirable as-
Stutzman) suggest that 75% of all cus- pects that set you apart from other com-
tomers live within a 20 mile radius. How- petitors. Names are commonly used to
ever, almost 80% of the visitors to farm identify a produce outletand they can
outlets in Southeastern Arizona in 1993 imply more personalized service, but they
had traveled over 80 miles. Thus, there is are generally more difficult for individuals
no clear cut rule for how far one should to recall if a friend told them about your
use when estimating a market. Rather outlet in conversation than a more famil-
determine what your competition is and iar descriptive name. An easily recog-
size up your consumer. If individuals nized name will also do more harm for
have no close alternative, they will un- your business if customers feel that your
doubtedly travel a much greater distance. products don’t fit your name. If your outlet
Also, if your consumers want the rural is named “Charming Farms Fresh Pro-
experience more than fresh produce, they duce” you should at least have clean rest
are more likely to travel for the “get-away” room facilities, a shaded area with picnic
feeling. A woman called Nita Gizdish in tables and chairs, and a few flowers
Watsonville, California looking for pump- around.
kins. Nita suggested a place near the
lady’s location and she said, “Oh no, I Evaluate county and on-farm road condi-
want to go out to a farm.” So Nita sug- tions before picking a site. Better roads
gested another place that was a 15 mile was right next to better road signs in the
drive and that was fine. Other tourist most frequent suggestions offered for
attractions in your area may be a locational improving farm outlets in Cochise County.
asset for you in attracting customers. Although group efforts are generally re-
Travelers on the freeway may be enticed quired for improving county roads, on-
to stop for a break at a produce outlet that farm road improvements may also be a
has convenient freeway access and rest wise investment. Reducing the dust from
room facilities, but this market is gener- nearby gravel roads through sprinkling
ally limited. Most travelers are out to water on heavy traffic days, applying ap-
reach their destination in a hurry and propriate oil treatments, or planting trees
have little time to explore or cooler space can also make a better experience for
for storing produce on the road. customers. If you have good paved roads
up to your farm and to your parking lot, a
When sizing up your local competition, name like “paved road farms” would con-
assess your location to others. Before vey to consumers the message that your
picking a site ask, “Will everyone exit off outlet is readily accessible. This could be
the freeway and drive by 10 other farm a draw for many elderly and disabled
outlets before they reach my outlet? If individuals.
this is the case, a better traffic location
should be explored. If you are already Determine if any zoning regulations might
committed to a site that is out-of-the-way, prohibit you from locating where you want
you will have to promote with good road to. Also check into easement rights that
signs and adds with detailed maps that might apply for a nearby freeway, tele-
pinpoint your location. The most com- phone line, or power line. It would be a


shame to have to move or tear down a duce. Identifying a target market, secur-
produce stand, or outlet store due to an ing the resources needed to exploit the
old easement right. market, and continually adapting to an
evolving market are the steps necessary
The product consumers are looking for to develop and maintain a successful
goes beyond the price and quality com- product position.
ponents of a bag of apples that sell for say
$.20/lb. Consumers are evaluating ser-
vices offered, location, and their overall References
experience associated with their rural
outing. Because consumers have differ- Courter, John W. “Estimating the Trade
ent preferences, it is virtually impossible Area and Potential Sales For a Pick-
to develop a product position that has Your-Own Strawberry Farm.” Coopera-
appeal for everyone. Develop a product tive Extension Service, Horticulture Facts,
position that is consistent with your goals HM-6-82.
and resources available that will identify a
market niche for your business. Mike McKinney, Luther C. “Workable Food
Horton in Phoenix Arizona developed a Safety Regulation.” Choices, Second
market niche of delivering fresh lettuce to Quarter 1994, pp. 10-14.
resorts. His operation started with three
acres of leased land in the city of Phoenix Stutzman, Curtis. Farming Consultant
that is minutes away from several resorts. with the Rural Innovation Center in
Mike developed a thriving business by Amana, Iowa.
identifying a target market and matching
the necessary resources to give his busi-
ness a good market niche. He tried
several products other than just lettuce at
first, but now concentrates on delivering
fresh leaf lettuce that is packaged and 1
Russell Tronstad, Assistant Specialist,
ready to serve. Note that he first identi- Department of Agriculture and Resource
fied his market and then determined his Economics, Cooperative Extension, The
product position before he grew any pro- University of Arizona, Tucson, Az.


FROM:

Direct Farm Marketing and Tourism Handbook.

Disclaimer

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and its cooperating Departments and Offices.

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do not imply endorsement by The University of Arizona.

Issued in furtherance of Cooperative Extension work, acts of May 8 and June 30, 1914, in cooperation with
the U.S. Department of Agriculture, James Christenson, Director, Cooperative Extension, College of
Agriculture, The University of Arizona.

The University of Arizona College of Agriculture is an Equal Opportunity employer authorized to provide
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