Here is why you must keep on searching for new markets for your products

Typically, every product has twin goals. To raise market share, which increases revenue and decreases the cost of selling the product, in turn increasing profits. There are two ways to increase market share: first, sell more to current customers which increases volume, or second, sell to new customers in new markets which increases market share by geographic expansion.

I do not recommend you try to do both simultaneously. Exhaust your current market while innovating for the new one. Consumers want the newest, latest model — that goes for food too.

When we determine market share, there are two key considerations to keep in mind. First, you have competitors no matter how small or large your farm is.

As such, you are either “stealing” customers from your competitors or you are “creating” new customers who never bought the product before from anyone.

Second, each strategy has a cost. It is easier and less costly to take on a consumer disgruntled with a competitor than it is to convince someone to take a chance with you. Pricing can be based on any of the following five competitive strategies for adding value to your product line, farm business, or brand name:

1. Focus on and exploit quality differences between your product and everyone else’s. Is your produce a bigger, more colourful, tastier, prettier and better smelling, hardier more resilient variety? Do a consumer taste test to determine what sets your produce or flowers apart from all the others. Find that one thing and exploit it in advertising.

2. Plan some form of vertical integration into the marketing or wholesaling chain; this is called value addition. Value addition like quality brings a higher price.

3. Develop new markets: For every one new client you steal from a competitor, at least three will be stolen from you by a new entrant. You must keep identifying new markets. Markets are dynamic. You either recognise new territories and adapt your product to new consumers (do a consumer survey of the new market and find gaps and dissatisfaction) or you understand that your market share is limited.

4. Add service lines to your product lines. This is also called value addition and it not only brings a higher price but also it often brings a higher profit margin. Can you deliver straight to the wholesaler, distributor or directly to the retailer or end customer? Can you unload and stock? Can you provide your own shelving and set up at aisle ends or window displays? Can you package your product for other brands?

5. Manage and reduce operating risks through stabilisation mechanisms such as crop insurance, diversification, added crop land, or forward contracting. In Kenya, hedging may not yet be available to horticulture producers except for orange juice concentrate future contracts.

Depending on the strategy you choose to determine your pricing plan, I urge you to hire competent help or take classes to learn how to analyse and determine your market share goals, transform those goals into production yields, and understand how to turn projected yields into packaged goods for final consumption.

Published By Daily Nation

Originally posted 2015-09-12 12:36:58.

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