TWO TYPES OF PRODUCERS

Marketing Strategies
ANSC 406 LAB

COMMERCIAL PRODUCER PUREBRED PRODUCER

COMMERCIAL PRODUCER

PUREBRED PRODUCER

Relative inflexible market Price established by pound Little can be done to change price Historically sells through auction or stockyards

Affect price of product, both up or down greatly Sells by the head from commercial prices to millions of dollars Product will sell within price range determined by merchandising program

ALLIANCES
COMMERCIALLY FOCUSED MARKETING STRATEGIES
ALLIANCES: Allow cowcow-calf producers to
share equally in potential profits through retained ownership, and improve beef cattle consistency by grouping together animals of like type, finish and cutability. cutability.

ALLIANCES

ALLIANCE CONSIDERATIONS

Alliances are generally developed around some common goals or values: *Health and management program *Specific breed *Geographic identity *Emphasis on specific traits

Important considerations with retained ownership Producer size. Many producers will not have enough calves of similar kind to fill a pen at most feed yards.

Cost of production. Knowing your cost of production is critical to making decisions regarding profitable opportunities in the market. Information. Good, reputable information and awareness of current trends is helpful in marketing decisions. Financial requirements. Retained ownership requires additional capital and delays income. Can your cash flow be adjusted to deal with these issues?

MARKETING COOPERATORS

MARKETING COOPERATORS

A cooperative is a producerproducer-owned, democratically operated business structure with written byby-laws. Cooperative marketing arrangements among cattle producers often take the form of packaging cattle in pools for sale. Packaging means that cattle are merchandized by putting them into groups with particular characteristics to meet the needs of buyers.

According to the 2002 Census of Agriculture, the majority of farms with beef cattle have fewer than 50 head. (USDA (USDA NASS, 2002) 2002) The average cowcow-calf operator, after accounting for weaning percentage and held replacement heifers, probably has fewer than 30 calves to sell each year yearof both sexes and with a range of weights. Packaging cattle into uniform lots of optimum size is therefore not possible for most individual cowcowcalf operators.

MARKETING COOPERATOR STRUCTURE

Each member of the coco-op indicates the number of steer and heifer calves he or she will provide to the pool the coming year. The calves are prepre-priced through a video auction using videos and descriptions of "representative" calves On the day of delivery, producers are responsible for bringing their calves to the loading/unloading facilities The coco-op is paid by the video auction company and the coco-op issues a check to each producer based on the total weight they contributed to each calf pool.

ALTERNATIVE MARKETING STRATEGIES

NICHE MARKETS

NICHE MARKETS REQUIREMENTS

The successful niche marketer will target those poorly served consumers Identify their needs, and produce a consistent, highhigh-quality product that satisfies those needs.

Requires different personal skills Tremendous time commitment. Be honest in a selfself-assessment. Do you really have the desire, dedication, skills, and willingness to deal with consumers, retail buyers, and government agencies?

ALTERNATIVE BEEF MARKETING

TYPES OF BEEF MARKETING PROGRAMS

Lean Organic Natural PasturePasture-finished (or grassgrass-fed or grassgrassfinished). Other common selling points for alternative beef include: no antibiotics, antibiotics, locally raised, raised, family farm, farm, and humanely produced. produced.

LEAN BEEF ORGANIC BEEF NATURAL BEEF

LAURAS LEAN BEEF

LAURA LEANS STRUCTURE

Based in Kentucky, Laura Lauras markets lean beef in nine states. No preservatives, salts, or fillers are used in packaging. Started in 1985 as a value adding experiment to a family stocker operation, operation, by 1995 the company was debtdebt-free, worth $20 million, and employing 30 people. Today, Laura Lauras Lean Beef is sold in 3,000 stores in 33 states.

Genetically lean breeds such as Limousin and Charolais Natural feeds only No antibiotics or implants Low stress handling Grass fed with short term grain feeding in the end

ORGANIC BEEF

ORGANIC STRUCTURE

Until recently the USDA did not permit organic organic labels for livestock products, pending federal standards for organic certification. Even farm names with the word organic organic were not permitted on the label However, in January 1999 the USDA approved the use of a federal label for the interstate sale of organic meat. meat.

Animals for slaughter must be raised under organic management from the last third of gestation Producers are required to feed livestock agricultural feed products that are 100 percent organic No hormones or growth promotants

ORGANIC STRUCTURE

ADDITIONAL ALTERNATIVE MARKETING

Producers are prohibited from withholding treatment from a sick or injured animal; however, animals treated with a prohibited medication may not be sold as organic All organically raised animals must have access to the outdoors, including access to pasture for ruminants Animals may be temporarily confined only for reasons of health, safety, the animal animals stage of production, or to protect soil or water quality.

Natural Beef
Under current USDA policy, meat may carry the "natural" label if it contains no artificial ingredients (color, flavor, preservatives, etc.) and is minimally processed

ADDITIONAL ALTERNATIVE MARKETING

PUREBRED MARKETING

Pasture Raised Beef PasturePasture-finished beef (PFB) is lean beef. Sometimes it is finished entirely on pasture; sometimes there is a short period of graingrainfeeding (as in the case of Laura's Lean Beef). The essential elements of highhighquality PFB are highhigh-quality pasture, appropriate genetics, young slaughter age, attention to factors that affect flavor, and aging of the carcass.

Private Treaty Production Sales Consignment Sales Bull Tests

ASPECTS OF MARKETING
SELLING MARKETING MERCHANDISING

SELLING

Product Driven Getting rid of your product Concentrate on product and program

MARKETING

MERCHANDISING

Customer Driven Have what the customer wants Main focus is satisfying the customer Willing to initiate change

Presenting your name and product in an attractive and agreeable fashion Concentrate on customer satisfaction and moving your product effectively

QUESTIONS FOR YOUR CLIENT

PRIVATE TREATY SELLING ADVANTAGES

What type of cattle do you want to raise? Is there a market for this class of cattle? Do you have customers? Where are your customers located? Do you have any competition? Can you produce and sell in the portion of the total market? What are your customers specific needs? Are you willing to concentrate on quality?

You don dont have competitors vs consignment You don dont have to sell You determine the value You decide who to sell to No expenses for auctioneer, sales management etc.. Although most are not good at it some can make large sums of money You decide what to sell and when

PRIVATE TREATY SELLING DISADVANTAGES

STRATEGIES FOR CONSIGNMENT SALES

You have to know your product Its hard to establish a price or value Customers don dont have competition from other buyers You have to let people know you exsist in order to be successful Have a chance of not getting the whole offering sold

Producer must be willing to sell some of their best animals. Have attitude that they would want to purchase what they are selling Superior presentation

CONSIGNMENT SALE ADVANTAGES

CONSIGNMENT SALE DISADVANTAGES

Your product is seen by a large group of people. Smaller operators can sell their product Establish your name or ranch Leave an impression upon potential customers.

Unorganized management Past sale offering was poor so low expectations by buyers Livestock didn didnt bring what they were worth Sale has bad reputation

FACTORS TO CONSIDER FOR PRODUCTION SALES

KEYS TO SUCCESSFUL SALE

Do you have enough cattle to sale (60 lot minimum to cash flow) Past success of private treaty sales Past success of consignment sales Name recognition Quality of offering

Establish sale budget Advertising budget (3(3-5%) Have auctioneer (1%) Prepare facilities Obtain buyers Have ringmen, ringmen, loadouts, loadouts, P/A system, clerks, restrooms Block talker Prepare for health requirement arrangements Arrange for refreshments or lunch HAVE LIVESTOCK PREPARED