Place is the third “P” in the traditional 4 Ps Marketing Mix ( refer to Marketing 101 section for more details) and refers to the outlets for bringing products together with customers. Those outlets are called Channels of Distribution. Several factors are associated with selecting the best channels of distribution for your product or service. These include:

• Examining how your competitors products are sold
• Analyzing the strengthens, weaknesses, opportunities and threats different channels afford your business
• Evaluating the costs of different distribution channels
• Determining which options match your overall marketing strategy.

It’s fairly easy to change many of your marketing tactics and tools on a periodic basis. Pricing, promotion and product mix are fairly flexible choices. However, distribution and sales decisions are much more difficult to change, once set in motion. How you choose to distribute your products affects your overall marketing plan.

The range of distribution channels in the U.S. market is at once vast and yet at the same time restrictive. Some products will thrive in a variety of channels while other products can be successful only when distributed through one particular channel. There is a wide variety of possible distribution channels, including:

• Retail outlets - direct sales to the consumer or direct sales to retailers
• Wholesale outlets- contracting with independent distributors or brokers
• Mail order- selling your product through your own catalog or brochure
• Cybermarketing- selling via the Internet

Distribution choices for a service business follow the same lines as those for a physical product. For example, a photographer may offer his services, film, and framing in his own shop, have his services sold by a bridal shop, be part of a group that markets their services as a “package”, or sell his photos as hard-copies by mail or digital photos on-line.

Choosing Distribution Methods

Since distribution is the means of getting your product into the hands of your customers, first look at how your competitors’ products are sold. Make a list of any competitors in your marketing area that could compete directly with you for the same list of customers. This list should then be divided into different distribution channels. For example, direct farm markets, farmers’ markets, Internet sales, business-to-business, specialty stores or niche markets.

• What strengths, weakness, opportunities or threats do these and different distribution channels pose for your product?
• What are the barriers or difficulties of selling my product in each of the distribution channels? Can you become a vendor in the farmers market where your target customer shops? What are the costs or ramifications of building or leasing retail space?
• How much do various distribution channels cost to successfully enter? Over what period of time is the money being spent? Does your marketing channel require slotting fees for shelve space or volume discount pricing?
• Should you distribute your product locally, regionally, nationally? Multiple channels or one primary focus?
• Are some or all of my products subject to varying product life cycles? Will the market reach saturation in a few months? Do I only need seasonal distribution?
• What is the size of my competitors and their financial resources? Should I consider tailoring my product to a different audience and move into entirely different channels or concentrate on one channel exclusively?

A key factor in your distribution plan is the availability of your product. Start-ups usually are not geared for large scale production and need to consider introducing their products in small geographical areas or to one or two select distribution channels. Match your distribution channels to your production capabilities. Overextending yourself and selling to too many outlets too soon, will exhaust finances, can cause quality control issues, exaggerates labor problems, and may cost you hard-sought sales contacts.

Market Outlets and Tools

DIRECT MARKETING: Any marketing method whereby farmers sell their products directly to consumers. Examples include roadside stands, farm stands, U-pick operations, community supported agriculture or subscription farming, farmers' markets, etc. Growers who market their products directly to customer usually receive a higher price than those who sell wholesale.

On the Web

• Find Your Market First. University of Wisconsin Extension, 1999.
  Full text: http://www.uwex.edu/ces/agmarkets/findmarket.html (accessed 8/8/05)
  Description: Chapters: Conducting Market Research; Following Trends; Developing a Marketing Plan.
• The Key to Successful Direct Marketing: Use Your Head! by Laura Sayre. New Farm (2003).
  Full text: http://www.newfarm.org/depts/talking_shop/0104/food_farm.shtml (accessed 8/8/05)
  Description: Report from the 5th Annual Future of Our Food and Farms Summit, advanced course in direct marketing.
• Marketing Strategies for Farmers and Ranchers. Revised edition. Sustainable Agriculture Network (SAN), 2003. Note: Also available with accompanying PowerPoint presentation on CD ROM.
  Full text: http://www.sare.org/publications/marketing.htm
• Farm Direct Marketing: Guide to Educational Resources, by David Chaney, Gail Feenstra, and Jeri Ohmart. University of California, Sustainable Agriculture Research and Education Program (SAREP)/Sustainable Agriculture Research and Education (SARE), 2004. Full text: http://wsare.usu.edu/pub/index.cfm?sub=mktsearch (accessed 8/8/05)
  Description: “This annotated listing includes practical, high quality resources such as print publications, videos, and Web resources...”
• Direct Marketing of Farm Produce and Home Goods: Direct Marketing Alternatives and Strategies for Beginning and Established Producers, by John Cottingham et al. University of Wisconsin Extension, undated. 28p.
  Full text: http://cecommerce.uwex.edu/pdfs/A3602.PDF
• Direct Farm Marketing Resources. USDA, Agricultural Marketing Service.
  State-by-state directory of contacts.
  http://www.ams.usda.gov/directmarketing/DM_states.htm

On the Web

• Selling Directly to Restaurants and Retailers, by Gail Feenstra, Jeri Ohmart, and David Chaney. University of California, Sustainable Agriculture Research and Education Program (SAREP), 2003. 5p.
  http://www.sarep.ucdavis.edu/cdpp/selldirect.pdf (accessed 8/8/05)
• Selling Local Food to Restaurants and Food Services: Why and How. (Report Brief) University of Missouri Outreach and Extension, Food Circles Networking Project, undated. 1p.
  http://www.foodcircles.missouri.edu/selltorestaurants.pdf

On the Web

• CSA Across the Nation: Findings from the 1999 CSA Survey. (2003) Center for Integrated Agricultural Systems (CIAS), College of Agricultural and Life Sciences, University of Wisconsin-Madison. Provides the first comprehensive portrait of the CSA movement in the US. Findings from a 1999 national "census" survey show commonalities and diversity among CSA farms.
  http://www.cias.wisc.edu/pdf/csaacross.pdf
• CSA Resources for Farmers. (updated 2006) U.S. Department of Agriculture, AFSIC. List of selected books, articles, videos and web links focusing on the business of CSA farming. http://www.nal.usda.gov/afsic/pubs/csa/csafarmer.shtml

• How to Direct-Market Farm Products on the Internet, by Jennifer Claire V. Klotz. USDA, Agricultural Marketing Service (AMS), Transportation and Marketing Programs, Marketing Services Branch, 2002. 50p.
  Full text: http://www.ams.usda.gov/tmd/msb/pdfpublist/internetmarketing.pdf (accessed 8/8/05)
  Description: This publication provides basic information and suggestions for direct farm marketers on selecting and tailoring a Web site to meet their marketing needs and goals, including: Reasons for considering using the Web for direct farm marketing; How to develop a marketing plan; How to research the market; How to set up and market the Web site. References are cited to enable producers to undertake additional research on Internet marketing. Feedback from producers who use the Internet is included to demonstrate the challenges and the benefits of using this marketing tool.
• E-Commerce for Farmers: Yes, You Can! by Michelle Frain. New Farm (2003). Full text: http://newfarm.org/depts/midatlantic/Fact%20Sheets/e-commerce.shtml

• Western Profiles of Innovative Agricultural Marketing: Examples from Direct Farm Marketing and Agri-Tourism Enterprises, by Russell Tronstad. (Publication, AZ1325) Western Extension Marketing Committee/University of Arizona, CALSmart, 2003. 128p. Full text: http://cals.arizona.edu/AREC/wemc/westernprofiles.html

• Wholesale Marketing - Penn State University. Collection of fact sheets, marketing tips, and resource links.
  Full text: http://agmarketing.extension.psu.edu/Wholesale.html
• USDA Agricultural Marketing Service. AMS at USDA, Fruit and Veetable Market News Service. U.S. Wholesale (Terminal) Market Price Reports • International Wholesale (Terminal) Market Price Reports • Shipping Point Price and Supply Reports ...
  http://www.ams.usda.gov/fv/mncs/fvwires.htm
• Steps to Ag Business Development – Marketing. MARKETING. Chapter 27 .... Wholesale? Other? The answer to that question is largely dependent upon your needs.
  Full text: http://www.extension.iastate.edu/valueaddedag/info/stepsagbusmarketing.htm

WHEN ADVERTISING IS A WASTE OF RESOURCES: Beware of “pouring money down the advertising hole!” Tailor your advertising and promotions to your current and prospective customers. Evaluate the results so you don’t keep spending money on ads or promotional campaigns that aren’t working.

Ask your customers where they saw your ad. This can be done by “pretesting” through simply asking family or friends what they think of your ad before you run it. Tabulate sales and try to make a judgment as to how many of the sales resulted from the advertisement. If it doesn’t work, don’t repeat it.

Before spending money on advertising, utilize all the free publicity that’s available, such as press releases and feature stories. A story written about your product and published in the local newspaper can be worth hundreds of dollars.  An industry rule-of-thumb is that editorial coverage is seven times as valuable as paid coverage.

TRANSLATE TRENDS INTO PROFITS: Fads are something people talk about, but trends are something people do. Look for market niches created by consumer trends. Popular trends include anything to do with health and nutrition, convenience, ethnic products, foods for the weight-conscious or elderly and food safety concerns.

To track these and immerging trends read “people” oriented publication’s such as USA Today, Cooking Light and Consumer Reports. Trend-driven niche markets are highly competitive and demand the highest quality product and packaging to differentiate your product from the crowd. Some trends have a very short or seasonal life-cycle while others may continue for several years.

Be prepared to change your product mix, packaging or distribution with changing
consumer preferences.

SELLING A SERVICE: Services and jobs in the service sectors are booming in the United States. According to United States Department of Labor statistics, the long-term shift for goods-producing to service-providing employment is expected to continue with projected growth in education, health, professional and business services exceeding 30% annually through 2012.

So selling a service should be easy, right? Wrong. Consumers buy services differently than products. When you sell a jar of salsa, consumers can see, smell and taste your product. When you sell a handmade wool blanket, the buyer can hold and feel it. But, when you sell a service, you’re selling something that doesn’t exist yet. When you visit the lawyer, accountant or barber, you can’t try their services before you buy them.

Other services such as home repairs and website design and maintenance attract customers because it usually costs less to pay them for their services than to learn how and then spend the actual time to do it ourselves. The sale of a service is basically the sale of specialized time. Someone with a specific knowledge or ability sell hours which deliver solutions required by the client. Consumers buying this time can’t kick the tires first.

Overcoming intangibility is a unique challenge in marketing a service verses a product. There are several actions you can take to help market your services by helping customers better understand and value your offerings. To reduce intangibility, buyers look for assurances of service quality. They need to be reassured that they are not making a mistake.

Offering a money-back guarantee reflects a promise to the customer that they can buy your product with confidence. This is especially important when marketing services on-line where customers might perceive Internet sales as risky. Companies that guarantee to do a job right the first time or do it over with no questions asked, help customers buy with confidence.

It’s smart to include a deadline with your guarantee though. Otherwise, some folks can abuse it months after the service was rendered. If you’re a new business owner, you may have to practice some generosity to get customers to try your service. Whether you’re operating a customer spraying business or offering hay rides, giving a free “trial” may recruit new customers. If satisfied with the service, these folks can also provide word of mouth advertising for you. Offering the “free trial” can be targeted to first-time buyers or can be used as part of a seasonal promotional campaign, such as a free hayride when you first visit the farm to pick-your-own strawberries.

Service professionals, such as graphic artists, use portfolios of their work as evidence of service quality. Show potential customers photos of any completed projects, marketing brochures, ads and testimonials from satisfied customers to help reduce anxiety in the decision making process. These materials also work well for both face-to-face sales calls and in your web marketing plan. Any company whose services results in a physical product can add tangibility this way.

Not all services produce a physical product that can be showcased. Mediators can’t show clients a resolved case. Service-based professionals can often add tangibility to their work by letting clients know what their credentials are. For example, doctors and lawyers almost always display their diplomas in their offices. Testing laboratories list their accreditations. If some one is a certified organic inspector, that information helps assure producers that the recommendations offered meet the National Organic Production Standards.

As in all marketing, you need to differentiate your services from the rest of the pack. You can add tangibility to your service by providing a physical product with your service. Dentists often give patients a toothbrush after a checkup. Service companies give customers cups, caps or key chains; all embossed with their company’s name and often with their address and phone number.

A very economical way to add tangibility to a service is with a letter. Services can send a thank you note detailing the service provided and thanking the customer. This note can also help differentiate your company from others in the customers mind. When insurance agents or real estate agents send you a calendar, they are providing a reminder of the services they provide. Because services are intangible, people may not always know what went into the service or when they may need to use it. When Jiffy Lube puts a reminder sticker in your window, it not only tells you when your next oil change is due, but adds perceived professionalism to their services.

One of the great things about selling the intangible is it has the ability to change and grow on the spot. Your service can change and improve overnight. Most niche marketing involves staying ahead of the curve when it comes to what customers want. In a service business you can ask your customers, “What am I doing right?” and “What needs to be improved?”. Then you can put those changes into effect immediately.

If you religiously collect input from your customers, your service will constantly improve and you’ll garner a wealth of ideas on how to make the invisible more tangible.  

Marketing Toolkit (under construction- more to come)