A Niche Marketing Guide for Lamb Cooperatives
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~ ~ United States ~ ..~ Department of G Agriculture A Niche Marketing Rural Business and Cooperative Development Lam~~_ Service Guide for ~TV c~~ ~'!!'ll,'~'E!""O- ~\ Research Report 142 Cooperatives \1. DOce .::,,' " II 8k~ 12 1996 I I'r.PAUl b P(;bAlJA-4- ············.\ Abstract The two types of niche markets targeted by lamb marketing cooperatives are described in this 1 guide. The first type includes specialty middlemen outlets that cooperatives used to market !, lamb to specialized niches within the traditional meat marketing system of retail food stores, restaurants, food service outlets, and specialty distributors. The second type includes those out lets that cooperatives used to market lamb directly to the consumer, such as freezer markets, farmers' markets, mobile markets, and mail order sales. This guide also describes the advertis ing, promotional, and other marketing programs used by cooperatives to target these markets. Finally the competition, product differentiation, capital requirements, market development, man agement, processing, changing goals, and member commitment challenges faced by these cooperatives are briefly discussed. Key Words: Cooperatives, lamb, niche marketing, marketing programs A Niche Marketing Guide for Lamb Cooperatives Tamra Kirkpatrick Kazmierczak and James B. Bell Department of Agricultural and Applied Economics Virginia Polytechnic Institute and State University Blacksburg, Virginia Research Report 142 OCtober 1995 Price: Domestic-$4.00; Foreign-$4.50 Preface Low market prices for lamb caused many producers to look for alternative market outlets. Between 1989 and 1993, at least 12 producer groups explored the possibility of forming lamb marketing cooperatives to target niche market outlets. Niche marketing differed from traditional lamb marketing because it targeted market outlets demanding unique product characteristics, packaging, and/or other convenience aspects not readily obtained through traditional suppliers of lamb such as auction buyers, order buyers, packer buyers, and commission sales representa tives. Targeting these markets represented a significant change in the role of marketing cooper atives in the sheep industry. Four of the above 12 producer groups organized as cooperatives and a fifth group operated through a l<X:al development agency with the goal of becoming a self-sustaining cooperative. A 13th group of lamb producers had already been operating as a niche marketing cooperative since 1984. Mention of company and brand names in this publication does not constitute endorsement by the U. S. Department of Agriculture. Acknowledgements The authors acknowledge the contributions of several people and organizations to this publica tion. This publication was prepared under a Cooperative Research Agreement. Charles Hunley and Gerald Ely of the Cooperative Services served as an informal advisory committee providing assistance during all stages of the project. Elipio Mercure of Pastores Lamb, New Mexico; Anita Richards of Livestock and Meat Brokering Cooperative, New York; Charlie Cathcart of Green Valley Lamb, Inc., Pennsylvania; Bonnie Young of Mountain Lamb Cooperative, Utah; Scott Duffy of Yankee Shepherds Cooperative, Vermont; and Leo Tammi of Virginia Lamb Cooperative, Virginia, also helped the authors gain a better understanding of their groups' marketing programs and the challenges they have encountered. Joe McNamara of American Sheep Industry Association (ASI) and Jim Bradley of Agri- Marketing, Utah, provided insights into the sheep industry and traditional meat marketing channels. Contents Highlights .iv WHAT IS NICHE MARKETING? 1 MARKET NICHES FOR LAMB 2 Marketing to Specialty Middlemen Outlets 2 Retail Food Stores .4 Restaurants .4 Food Service .4 Specialty Distributors .4 Marketing Direct to the Consumer .4 Freezer Market 4 Farmers' Markets 4 Mobile Markets 9 Mail Order 9 Quality Niches 10 Lean Meat 10 Organic Certification 10 Gourmet Palatability 11 Halal and Kosher Certification 11 Regional Identity 11 Value-Added Products 12 MARKETING PROGRAM ACTIVITIES 13 Specialty Middlemen Outlets 13 Personal Sales Calls 13 Quality Guarantee 13 Samples 14 Promotional Leaflets 15 Brokers 15 Food Shqws 15 Product Delivery 15 Branded Products and Labeling 15 In-5tore Demonstrations 17 Point-of-Purchase Materials 16 Joint Promotions 17 Direct-to-Consumer Outlets 17 Logo 17 Educational Materials 19 Customer Service 20 Quality Guarantee 20 ii ~ "~,';--_'-;;-'F::;7fe:;;;J;S:~~i/?::';i:;~!G(~;:~~,-:~~~f.f~~)';.~.:r)~~J:-~~7l~~r~ft~tfI~t'~;~~~~it~~A~~~ Contents Custom Slaughter, Cutting, and Packaging 20 Product Delivery 21 Word-of-Mouth 21 Cooking Demonstrations 21 Festivals and Fairs 22 Direct Mailings 22 Package Labeling : 22 Signs '" ; 22 Consumer Guides 23 Newspapers 23 Magazines 23 Radio 24 Press Releases 24 Joint Promotions 24 CRITICAL ISSUES 25 Competition 25 Product Differentiation 25 Capital Requirements : - 25 Market Development 26 Management 26 Slaughter and Fabrication 26 Changing Goals 27 Member Commitment 27 SUMMARy 28 REFERENCES 29 APPENDIX A Ethnic/Religious Market 30 APPENDIX B Lamb Cut Basics 34 APPENDIX C Lamb Freezer Basics 37 iii Highlights The information in this guide on niche marketing opportunities for lamb cooperatives was obtained by interviewing four marketing cooperatives and one producer group that were actively marketing lamb. In addition, five producer groups planning to market lamb in the future were contacted and interviewed. These interviews were conducted in the fall of 1993 to collect infor mation on products sold, market outlets, and marketing programs used to target these outlets. This guide briefly describes the specialty middlemen and direct-to-consumer outlets targeted by these cooperatives. Specialty middlemen outlets included retail food stores, restaurants, food service outlets, and specialty distributors. Direct-to- consumer outlets included the freezer mar ket, farmers' market, mobile market, and mail order sales. The specialty middlemen outlets were used by the cooperatives more extensively than were direct-to-consumer outlets. Quality niches that occurred in both types of outlets included lean meat, organic certification, gourmet palatability, religious certification, and regional identity. Various value-added products were also offered by cooperatives to market outlets in both specialty middlemen and direct-to-con sumer outlets. The marketing programs used by cooperatives targeting both types of market outlets are also described in this guide. These programs were advertising, promotional, and service activities designed to increase the visibility, acceptance, and quantity sold of a specific product. Specialty middlemen outlet marketing activities included personal sales calls, quality guarantees, sam ples, promotional leaflets, brokers, food shows, product delivery, branded products, in-store demonstrations, point-of-purchase materials, and joint promotions. The direct-to-consumer marketing programs typically used logos, educational materials, customer services, quality guar antees, custom processing, product delivery, word-of-mouth promotion, cooking demonstra tions, festivals, direct mailings, package labeling, signs, consumer guides, newspapers, maga Zines, radio, press releases, and joint promotions. This guide also describes the critical challenges these niche marketing cooperatives encoun tered in their organizational and marketing efforts. These critical issues included competition from established suppliers, difficulty differentiating product to buyers, inadequate capital for the startup period, unrealistic time horizons for market development, inexperienced management, dependence on custom processing facilities, changing member goals, and weak member com mitment to the cooperative. iv A Niche Marketing Guide for Lamb Cooperatives Tamra Kirkpatrick Kazmierczak James B. Bell middlemen. Marketing requires much more time and effort WHAT IS NICHE MARKETING? than selling lambs at auction or through other traditional markets. The producer or employee actually doing the mar Niche marketing is defined in this guide as targeting keting needs to have an outgoing, determined, people-ori marketing opportunities that require unique product char ented personality along with substantial knowledge about acteristics/ packaging, and/or convenience aspects not readi such things as advertising, merchandising, display, quality ly attainable through more traditional lamb marketing chan control, pricing, and packaging conventions of the existing nels such as auction sales, order buyers, packer buyers, and meat marketing system. Production practices have to be commission sales representatives. The word "marketing/" adjusted to provide special product attributes and in most and not "selling/" is used intentionally in this guide to cases year-round product availability. Additional costs to describe a concept being cQnsidered by more and more agri niche market a product include advertising and promotion, cultural producers in an attempt to increase farm profits. The slaughter and processing, packaging, delivery, product concept involves determining the needs of specific niche development, inspection, liability insurance, and labeling. markets and then adapting current production and market The type of niche market(s) realistically targeted by ing practices to provide the desired unique product charac individual producers or producer groups depends upon: teristics and services more effectively and efficiently than • the