Niche and alternative markets for poultry producers.

It is my belief that the single most important consideration for a producer of non-conventional poultry products is marketing. Without the capacity to actually sell the product, no sales oriented business is going to survive. Whether you produce golf balls or luxury motorcars, if you don’t have an identified market with a desire and capacity to purchase your product, you don’t have a viable business.

See a need

The dynamic nature of agriculture has seen the development and introduction of many innovative and ingenious concepts and products. Normally, the catalyst for the development of these ideas is the recognition of the need for such an item, normally through experience. Many great agricultural tools and implements in general use today, are the brain-child of an individual who has experienced a difficulty and developed a better way.  This same general principle applies to agricultural produce, where producers believe they can produce a ‘better’ product, and set about developing a production system to suit. This development inevitably costs the producer time and money, and at the end, what do they have? A product that they believe everyone will want, but will they?

This has been the experience of many people involved in alternative poultry production.  They’ve had a great idea, developed a production system, then started selling product.  For some, this approach has worked, but for many, unforeseen issues have become apparent that have changed the potential viability of their operation, and in some cases forced them to abandon their enterprise altogether. This is unfortunate, because a little more planning and better understanding of the market place could have prevented their demise.

Marketing is a huge, diverse and sometimes complex discipline, with thousands of books and millions of words being devoted to the subject. This article will not therefore, be the authoritative document on the marketing of non-conventional poultry products, what it will do however, is try to highlight those issues, which a producer must face in order to efficiently and sustainably sell their product.

Who are your potential customers?

The first and most important task is to identify and understand their potential customers. “Why is there an increasing demand for non-conventional agricultural produce, and what exactly do consumers want?” In answering this seemingly simple question, growers and potential growers will also go a long way toward understanding and identifying their potential customers.

The increase in demand for alternative produce is the product of a number of factors, with arguably the biggest, single contributing factor being the increasing exposure of the general public to issues relating to health, agricultural practices, animal welfare and the environment. Whether through digital or hard copy media, the volume and depth of information grows daily.  Individuals absorb this information, and make decisions based on their own understanding and/or perception. Remember, “perception is greater than reality”, and nowhere is this more evident than in animal welfare issues of today.

Given the image of a single hen, “trapped” in a cage, or that of a group of birds foraging in a pasture, it is obvious which holds the most appeal. This perception has changed the face of intensive livestock production, with conventional battery cages being phased out, or upgraded, across much of the world, including Australia.

The reason I stress the point of ‘perception’ is simply this – whilst exposure of the public to this increasing body of information is inevitable, and the public certainly has the right to know exactly what is going on, sometimes the decisions that are made aren’t always based on a scientific evaluation of all the facts, rather, they are normally made as a response to an image or ideal, dependent on the individual.

There are two issues here that producers should address as they develop their marketing plans:

The first is to try and ensure that they, either individually or corporately, disseminate correct and appropriate information for the public to digest. When people are genuinely interested in a topic, they will happily seek and absorb large quantities of information, and producers should endeavour to provide this information. Not that long ago, marketing experts advised that labelling should be bold and simple, without too much information. This may still hold true for many conventional or ‘mainstream’ products, but where the producer is offering an alternative, the consumer needs to understand why the product is different, and what advantages that product has to offer over its conventional counterpart (if it has one).

The second issue concerning perception is to understand the enormous amount of ‘weight’ popular trends can have on consumer demand. This means that producers must be constantly listening to their customers, understanding their needs and identifying any change in trends or perception, so that they can make appropriate adjustments if necessary.

Whilst the subject of ‘consumer needs’ and ‘perception’ may appear to be a little nebulous, their impact on the profitability of an organisation can be very real.

Now that we are looking at our potential customers through more ‘sensitive’ glasses, let’s consider the difference between ‘niche’ and ‘alternative’ markets.

What is a niche market?

At the risk of stating the obvious, a niche market is just that, a very specific or unique consumer demand that can only be satisfied by a very specific or unique product. As communities throughout the developed world become more centralised, and certain levels of the social stratum have more disposable income, consumers are demanding very specific types of products to meet their particular needs. Add to this the increasing depth of cultural diversity, and the demand for traditional food types, along with the consumer meeting specific dietary requirements on health, ethical or religious grounds, and it soon becomes apparent that there is a potential customer out there for just about anything.

To be successful at supplying one of these niches, the bucolic entrepreneur must first identify and then blend two distinct entities. The first entity is that product which the grower believes they can produce not only to an appropriate standard, but also efficiently and profitably.

Is this something you really want to do?

A major consideration when contemplating this issue, is to try and decide if this is something you really want to do – are you passionate about your abilities, your unique location, your particular skills or your superb livestock, or do you simply recognise the potential to earn some extra dollars. The reason I highlight this point is that many niche marketers do their own marketing, and blatant and transparent passion goes a long way when dealing with people who have similar feelings about their particular needs.

One also needs to remember that they may be working on their operation 6 or maybe 7 days a week, a task made bearable or even enjoyable when tempered by a passionate desire to do what you do.

The other entity in this equation is of course, the market. Not only must this market have a clear and demonstrable demand for your product, it must be within reasonable reach geographically, and most importantly, it must be measurable. If you can’t quantify the market, then you will never fully understand its particular dynamics or potential. It is in fact, this lack of market research that has caused the downfall of many, small producers, who did not have the scale or capacity to meet a change in demand pattern, or seasonal fluctuation.

Be aggressive in your approach to market research.

Try and understand the specific needs of the consumer and then go out into the marketplace and see what’s happening.  Who is selling what, how much and at what price? Now is the time to expend energy and some dollars, before you have invested in your production system. What is the use of a brilliant facility and product without a customer?

The more thorough your investigations of the market, the better equipped you will be to enter that market, and compete in a successful and sustainable manner.

Niche markets should be treated as such, isolated pockets of demand, supported and driven by specific individuals or groups satisfying particular needs. To be a successful niche marketer, growers should be prepared to meet their customers face to face. Whilst this may not be absolutely necessary, it helps to cement relationships and build trust, it also gives the producer first hand access to a very valuable marketing tool – customer feedback.

Feedback enables the grower to observe any trends that may be developing in the market, or identify any problems that may be occurring in the production system.

The unique dynamics of niche markets require a different mindset with regards to pricing.

In the conventional marketplace, pricing is not only a simple product of supply and demand, but also the ability of the other players in the market to sustain minimal levels of profitability and then try to increase market presence and share. With niche markets, there may be few or even no competitors, and the issue of pricing becomes a little less clear cut.

As with any product, growers needs to have an accurate understanding of their cost of production, and have in place a system whereby any change in input or other production costs can be quickly converted into a change in the cost of production.

Armed with this information, the grower can now plot a price, which should take into consideration the amount of return they would like to see for the effort they have put into the product, as well as reflecting its uniqueness and difficulty of procurement.

Be aware of your turnover (the amount of product you can sell any week, month, year), as this will also have an impact on your final price. For example, if you sell 100 units a week at $10 each, your turnover will be $1,000. However, if your cost of production is $8 per unit, your profit for a week will be only $200. However, if your selling price is $16, your profit for the week is $800. When you consider that your customers really want this specific product, will the difference between $10 and $16 be enough to turn them away?  You may be surprised to learn that the higher price may in fact encourage them to purchase, because of the perception (there’s that word again) that the higher price reflects higher quality. Be realistic about what you want your business to do, be confident that your product is everything you claim it to be, and set your price without apology.

What is an alternative product?

The niche marketer identifies and satisfies very specific needs or wants, whereas an alternative product is one that offers something a little different from that which is normally available on the supermarket shelf.

In poultry products, the most widely recognised would be free-range eggs, offering a clear distinction between the lower-priced conventional or caged eggs. There are, however, many other poultry products that could be described as alternative, and these include organic eggs, specialist eggs (e.g. omega 3). The different types of chicken (e.g. free range, corn fed and organic). The different types of duck and turkey could also be added to this list, which is by no means exhaustive, and some of the products listed could also be described as niche.

Generally speaking, alternative products compete with conventional products on the supermarket shelf, normally side by side.

This situation creates some interesting marketing issues that need to be understood and addressed. The first and most obvious issue is “why?”, why purchase the ‘different’ product, particularly when the conventional one is normally right beside it. The alternative product must be able to quickly and clearly differentiate itself from the conventional. With alternative products, this differentiation is the singularly most important issue. Alternative products normally command some sort of price premium over the others, why should the consumer dig deeper into their pockets, without being given a clear reason for doing so?  This is the whole thrust of differentiation, providing the consumer with a reason for making the purchase decision. We have already determined that there is demand for food that offers health/flavour/ethical/cultural advantages, and these MUST be clearly displayed on or by the product. Obviously, the issues of packaging and labelling come into question at this point, and these will be dealt with a little later. For the time being, bear in mind that single word – differentiation.

The next issue with alternative products is price.

Niche products may have few or even no competitors, so the decision as to the pricing (as already discussed) rests largely with the producer. Alternative products on the other hand, have a pricing benchmark in the form of the conventional product next door, so pricing becomes a significant and measurable factor in the purchasing decision. In very simple (and not 100% accurate) terms, the alternative producer has to strike a balance between two elements of his chosen product. That is – to produce something significantly different, with clear, measurable and accountable differences over conventional product, with higher costs of production, probably reasonably modest turnover in terms of volume of product, and a significantly higher purchase price over the conventional. In this scenario, the producer is obviously relying on the difference of his product to justify the price. At the other end of this illustrative scale, is the producer who supplies a product that is only moderately different, with larger volumes of turnover, lower costs of production, and a price that is only moderately higher than that of the conventional. Obviously this producer is relying on a lower margin and higher turnover to provide profitability.

These are only illustrations, but they do provide the appropriate mental imagery of the two extremes.

Quality Assurance

Alternative products normally end up on the shelves of conventional retailers (supermarkets, butchers etc.), and these organisations have very high standards in terms of product quality. This means that alternative producers must be able to display their accountable quality assurance credentials on the product for them to have a place on the shelf. Therefore, the producer needs to decide how high they are going to place the Q.A. ‘bar’, but my advice would be to place it as high as is practical. Obviously, you could set the highest standards in the world, but create an administrative and production ‘monster’, pricing your product out of the market. A good place to start is to ask your potential customers what their minimum requirements are, and exceed them. This will almost certainly mean an accredited H.A.C.C.P. (Hazard Analysis Critical Control Point) plan for your product, as well as possibly a nationally or even internationally recognised quality assurance accreditation e.g. ISO 9001.

Whilst initially these measures may seem incredibly difficult to implement and administer, most producers agree that they have been a tremendous boon to their business, giving them a clearer understanding of their business operation, as well as providing an essential safeguard against sub-standard product.

Remember, when dealing with animal products, and in particular meat and eggs, food poisoning is a real issue. I’m sure I don’t have to point out the ramifications of a salmonella outbreak traced back to YOUR product.

These recommendations for quality assurance are also applicable to niche markets, with the significant difference being that your customer may not demand them from you.

Now that we’ve had a very general look at niche and alternative markets, the next thing to consider are those issues that are common to both – processing, packaging, labelling, distribution and promotion.

 

 

Featured photo of quail. Credit Feather and Bone Providore Sydney https://featherandbone.com.au/