marketing natural meats: targeting consumer segments in your marketing plan dawn thilmany national...
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![Page 1: Marketing Natural Meats: Targeting Consumer Segments in Your Marketing Plan Dawn Thilmany National SARE March 2008 Collaborators: Wendy Umberger and Amanda](https://reader035.vdocuments.site/reader035/viewer/2022070415/56649c885503460f94940f15/html5/thumbnails/1.jpg)
Marketing Natural Meats: Targeting Consumer
Segments in Your Marketing Plan
Dawn Thilmany
National SARE
March 2008Collaborators: Wendy Umberger and Amanda Ziehl
Ag and Resource Economics, Colorado State University
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Previous Literature
• Successful products are commonly created with the demands of the target consumer in mind during all stages of product development (Hill et al., 2004; Rowles, 2000).
• Consumer interest in beef with production assurances, such as quality and local designations McGarry-Wolf and Thulin, 2000; Lusk and Fox, 2002
• Sunding (2003) focus on publicly-oriented characteristics nutritional content, purity, and freshness; “free-range”, “organic” & “locally-produced”
Civic agriculture issues
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Colorado Homestead Ranches
• 5 ranches started selling freezer beef in 1997
• Product attributes: local, naturally grazed beef, no feedlot antibiotics or hormones
• Began selling processed meats in year 2000
• Participate in two farmers markets
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Colorado Homestead Ranches
• Started with freezer beef, then moved into farmers markets, then retail
• Opened Homestead Market in May 2002 Value added products
• Sell products to restaurants • New meat processing facility
Complements past wild game processing • Increasing pressure for higher volume sales
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Background Information
• Goal: return $1400/head ($2.00/lb. per carcass) CHR producers contribute sweat equity (they
are not paid for their mgmt. labor contribution 5 years ago, began paying hourly labor for
retail and sales effort• Future goal: pay each producer for contributed
labor as market and sales expand• Market analysis to determine smartest sales
growth strategy
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Market Analysis: Identifying Competitors
• CHR owners identified 3 specific areas of competition for their products:1. Generic, unbranded beef marketed through
large-scale supermarkets2. Branded beef products, with some
combination of genetic, quality, production practice or production location claims.
3. Direct market beef sales, such as purchasing directly from producers, farmers markets, mail order, etc.
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Primary Location for Meat Purchases
Supermarket89.3%
Internet/Mail0.1%Health and Natural
Food Store2.1%
Meat Shop6.2%
Producer1.9%
Farmers Market0.4%
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Secondary Meat Location
Supermarket16.6%
Health and Natural Food Store
16.4%
Meat Shop47.0%
Farmers Market9.7%
Producer4.7%
Internet/Mail5.5%
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Market Analysis: Determining Influencing Factors
• Factor analysis was run to determine the top four factors influencing consumer purchases of natural, regionally-produced beef1. Concern about production practices2. Willingness to pay3. Meat attributes (premium brand, fresh
product, pre-seasoned)4. What motivates willingness to pay more for
local, natural products.
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Factor Analysis: A Summary
• One: 14%, Personal Needs Dominate No “public good” interests except BSE, convenient shopping
& low willingness to pay
• Two: 60%, Public-Minded, Civic Motivation High loadings on all alternative production attributes, Shopping at health food and farmers markets
• Three: 20%, High-End Market Highest WTP, secondary shopping, natural purchases
suggest low price sensitivity
• Four: 6%, Public Health Concerns Uniquely concerned about health-related production attributes
and testing, less WTP
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Market Analysis: Consumer Segmentation
• Cluster analysis was used to create 5 consumer groups:
1. High-income professional quality seekers (13%)
2. Health conscious urban parents (13%)
3. Moderate consumers (30%)
4. Empathetic Value Seekers (22%)
5. Price conscious singles (22%)
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Market Analysis: Cluster Demographics
• The sample is primarily female (over 70%), but the High Income Professional Quality Seekers are significantly more male.
• The High Income Professional Quality Seekers and Health Conscious Urban Parents are significantly younger than the sample average.
• On average, all clusters except the Price Conscious Singles fall within the income category of $40,000–59,900.
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Respondents who Had Purchased Natural Beef Previously,by Cluster, Colorado N=412
0%
10%
20%
30%
40%
50%
60%
70%
High-Income Professional Quality Seeker
Health Conscious Urban Parent
Moderate Consumer
Empathetic Value Seeker
Price Conscious Singles
Average of Full Sample
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Share who Make Some Meat Purchases at…. by Cluster, Colorado N=412
0%
5%
10%
15%
20%
25%
30%
35%
40%
Health/Natural FoodsStore
Retail Meat Shop Farmers Market Direct from Producer Internet and Mail Order
High-Income Professional Quality SeekerHealth Conscious Urban ParentModerate ConsumerEmpathetic Value SeekerPrice Conscious SinglesAverage of Full Sample
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Market Analysis: Product Positioning
• In addition to identifying potential customers, one must simultaneously consider the appropriate product position for the company’s beef products. Affects production choices, labeling, claims
• Consumers were asked to rate how important different production practices and meat characteristics were to them.
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Importance of Beef Production Practices, by Cluster, Colorado N=412
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
No Antibiotics No GrowthHormones
Natural Organic Grassfed
Imp
ort
ance
of
Att
rib
ute
, 1-5
wit
h 5
bei
ng
mo
st im
po
rtan
t
High-Income ProfessionalQuality SeekerHealth Conscious UrbanParentModerate Consumer
Empathetic Value Seeker
Price Conscious Singles
Average of Full Sample
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Importance of Production Practicesby Cluster, Colorado N=412
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
StreamPreservation
Protection ofEndangered
Species
HumaneTreatment
Tracibility fromFarm to
Consumer
County ofOrigin Labeling
BSE Tested
Imp
ort
ance
of
Att
rib
ute
s, 1
-5 w
ith
5 b
ein
g m
ost
Imp
ort
ant High-Income
Professional QualitySeekerHealth ConsciousUrban Parent
Moderate Consumer
Empathetic ValueSeeker
Price ConsciousSingles
Average of Full Sample
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Desirability of Meat Attributes by Cluster, Colorado N=412
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
CertifiedOrganic
Good Value NutritionalValue
Percent Lean Fresh (notfrozen)
Imp
ort
ance
of
Att
rib
ute
s, 1
-5 w
ith
5 b
ein
g m
ost
imp
ort
ant
High-IncomeProfessional QualitySeekerHealth ConsciousUrban Parent
Moderate Consumer
Empathetic ValueSeeker
Price ConsciousSingles
Average of FullSample
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Desirability of Attributes When Purchasing Beefby Cluster, Colorado N =412
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Aged ≥ 14Days
Boneless PremiumBrand
Ready toHeat
Size ofPackage
Pre-seasoned
Impo
rtan
ce o
f Att
ribu
tes
(1-5
, 5 B
eing
Mos
t Im
port
ant)
High-IncomeProfessional QualitySeekerHealth ConsciousUrban Parent
Moderate Consumer
Empathetic ValueSeeker
Price ConsciousSingles
Average of FullSample
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Market Analysis: Pricing
• The last analysis needed to develop a marketing plan relates to pricing. Divided by clusters and product line.
• Consideration must be given to competitors prices.
• Must also assure a price that covers costs.• Consumers were asked their max WTP for
natural, local beef products.
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Maximum Willingness to Pay for Natural, Local Beef Products by Cluster, Colorado N=412
0
1
2
3
4
5
6
Max. WTP for Ground Beef Max WTP for Ribeye Steak Max. WTP for Stroganoff Max. WTP for Chili Verde
Max
imu
m W
illn
gn
ess
to P
ay (
1-11
, by
pre
miu
m in
crem
ents
)
High-Income Professional Quality Seeker
Health Conscious Urban Parent
Moderate Consumer
Empathetic Value Seeker
Price Conscious Singles
Average of Full Sample
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Natural Ground Beef Market Share as a Function of Premium Price Front Range Returns
(Bootstrap T= 500; Sample N= 263)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$2.29 $2.79 $3.29 $3.79 $4.29 $4.79 $5.29
Price (conventional =$2.29)
Mar
ket S
hare
(pro
port
ion)
Low 1 pct
Low 5 pct
mean
High 95 pct
High 99 pct
Median
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Target Consumers
• Quality Seekers and Health and Natural Consumers (13% each) willing to pay a premium for natural, local beef. Quality Seekers’ expect quality Health/Natural Consumers are more altruistic
Ranked production attributes such as “no antibiotics,” “no hormones,” and “humane treatment,” significantly higher
Significantly lower percentage of their premium due to personal benefits
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Future Target Consumers
• Empathetic Value Seekers (22.6%) Not willing to pay a premium price Value production processes more than any other
segment, but less capacity to pay CHR has still garnered some of their business
Lower price points on some meat cuts (roasts, ground beef) that otherwise do not sell as quickly,
• Overall, these results indicate the continuing role for production claims as product differentiation criteria.
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Market Analysis: Implications
• Consistency was found amongst consumers across places: from US to Colorado to the Western slope of Colorado.
• CHR established themselves as a premier beef producer and marketer, as well as a loyal community citizen and steward. Appropriate targeting is essential as they grow Attract new customers through word of mouth,
promotion and retention of loyal customer base