Moving products from the producer to final consumers is a vital function of marketing. This requires an effective distribution channel, therefore it is the producer’s obligation to ensure their products are available to the consumers at the right place, right time and at the right price which then ensures that they get the highest possible profit margin.
Advantages of using the Food Markets
consistent distribution channel available to sell their product to consumers directly.
Selling in food markets allows farmers to focus on selling their produce based on quality and not quantity. When farmers choose to distribute using supermarkets they tend to lose as supermarkets tend to focus only on quantity and not quality. The end result is that they will lose as supermarkets engage in price wars driving prices down which also drives farmer’s profit margins down. The price war on milk prices between supermarkets is already evidence that might be marking a trend of times to come for farmers. The main point here is that when a farmer sells through food markets they are in a better position to manage risk, better still by marketing the quality of their locally grown produce they can set a higher price and even build up their own brand name.
The farmer’s markets are a growing market. There is promise that once they attain their full growth the will still remain viable. About 80 percent of the farmers with stalls have reported positive economic benefits
Food markets have huge potential as distribution channels as with the right marketing strategy farmers can increase their customer base through word of mouth referrals from their loyal customers. Word of mouth is low cost and more effective than relying on Supermarket’s ads to sell more of the farmer’s produce.
Disadvantages of using farmers market
Operating in food markets takes much preparation and time which most farmers do not have. The decision of whether to distribute via farmer’s markets or not can only be made after running tests and then running a cost benefit analysis to see which distribution channel brings the farmer more value at the lowest cost. There are other factors that farmers need to consider such as bad weather and competition against other stall owners. If a farmer has higher quality produce they can potentially win over more customers than their competitors.
For Markets to be successful:
Promote locally produced foods
Located in busy and central areas where it is easily accessible to consumers
Have a good mix of products as well as a few number of stalls.
A good strategy for farmers is to complement their supermarket distribution with farmer’s markets. This allows them to experiment and run tests with their food market stalls without ruining their profits. When they get their food market stall distribution right they can afford to close the supermarket distribution.
Iacobucci, D, 2013, MM4, South-Western Cengage Learning, Mason, OH.
Department of Agriculure and food (no date) availabele at > https://www.agric.wa.gov.au/market-development-access/direct-selling-channels-small-producers?page=0%2C2
The Greens (2014) available at > http://greens.org.au/helping-farmers-sell-direct
Vicky Woodburn ( 2014 ), available at http://farmersmarkets.org.au/sites/default/files/RIRDC%20Understanding%20Australian%20Farmers’%20Markets.pdf>