U.S. Trout Farmers Association NICHE MARKETING

U.S. Trout Farmers Association NICHE MARKETING • Aquaculture in the U.S. is a small business exception: Catfish in Mississippi, Arkansas and Alabama are made up of small businesses. • • • • 660,000,000 pounds catfish raised in the US. 40% of catfish sold in Texas. California second consumption state. Illinois third consumption state of catfish. • Catfish is a commodity not a niche market in these states. However, there are catfish niche markets within these areas. • All other aquaculture in the U.S. is too small for the commodity market and is best served by niche markets. • If all of the trout raised in the U.S., 60,000,000 pounds were sold as a commodity one major city could use it all. WHAT MAKES A NICHE MARKET? • A niche market is any market that requires something special BALANCING PRODUCTION TO SALES • The most difficult aspect of fish farming is balancing supply of product to sales. • In selling most products there is an unlimited volume to sell. If you double sales, the boss tells you to double sales again. Product supply is usually not a limiting factor for a salesman. With all of us there is a limited volume of product to sell. We must find markets small enough for the us to supply – niche markets • • YOU CAN NOT SUPPLY ALL OF THE MARKET • • • • • You can not supply all of the markets. You should pick the markets you want. It may not be the highest price market. It should be the market that makes you the most money in the long run. You are not interested in a quick buck unless you are getting out of the business. Money is made in this industry by selling to a customer twice a week for years. GOALS • Your goal is not to raise fish • Your goal is not to sell fish • Your goal is to make money • However, in order to make money you must raise and sell fish for a profit HAPPY WITH PROFITS AND WANT TO DOUBLE PROFITS • Assume you are growing 1,000,000 pounds. Happy with profits and you want to double your profits. • Average profit, production and processing, is 10 cents per pound, 6 cents to farmers, 4 cents to processor. True of Idaho trout industry and true of catfish in the south. • Why are profits the same? – just enough to keep from going bankrupt. HAPPY WITH PROFITS AND WANT TO DOUBLE PROFITS (continued) • Average investment is $1.00 per pound for production and another 50 cents for processing. • Borrow 1.5 million dollars, mortgage farm and give bank all you make from both farms for at least 10 years. In addition you run the risk of loosing it all. If you make it work you double your production and profit. • Another way to double your profits is to simply raise prices 10 cents per pound. FISH FARMERS WERE NOT TRAINED AS SALESPEOPLE • College of Southern Idaho Ag Department had a future planning workshop. • How many of you were working in an industry they were trained in. Most said yes. This was not true. Most were like me. Trained as a fish culturist. I now run a business. I have never had a business course or a sales course in my life. WHAT SELLS FISH? Three things which sell fish 1. Price 2. Quality 3. Service Most people list them in this order Not true Reverse the order 1. Service is most important 2. Quality is second 3. Price is third TYPES OF MARKETS • Price Market Buys lowest price. • Price Quality Market Price is a factor but will pay a little extra for quality and service. • Quality Buyer Will pay considerable more for quality and service. IF YOU ARE SELLING ALL OF YOUR PRODUCT TO A PRICE BUYER YOU WILL GO BROKE • • • There is a need for a price buyer and every processor needs one. He is needed to get rid of surplus products. There is always someone with surplus products. They want to get rid of it at any price. • The price buyer can do that for you, but you will never make money selling to him. He can not be your main market. QUALITY OF SERVICE VS. QUALITY OF PRODUCT • It does not make any difference how good the quality of the product is, if the restaurant has the product on the menu and the product does not arrive. • Quality of service is the most important element in selling fish. The product quality has to be good, but the service has to be better. DISTRIBUTION • With beef we age it 20 days this gives us 20 days for distribution. • We call this aging process tenderizing. • With fish we call that process rotting. • Distribution is the most difficult part of selling fish. If I can get it there I can sell it. • A large company in Idaho built a tilapia farm. They had a nationwide trucking company and believed they had an advantage over everyone else because of that distribution system. They ended up shipping through established fish trucking firms because they found their entire truck fleet had to be arranged around the fish distribution if they trucked their own product. NICHE MARKETS • • • • • • • • • • Pay lakes fee fishing Private stocking for private interest Growing for Fish and Game Mitigation fish for power plants, etc. Supplying aquariums, bass pro, Cabelos etc. Biological research labs (growing diseased fish, ICH) School science classes for dissection Fish for ornamental purposes (back yard pools, landscapers, aquariums) Health food markets Live fish for ethnic fish markets. Tanks must be colder for trout Live fish sales for food on farm site Ethic community • • NICHE MARKETS (Continued) • Hispanic Americans eat 24% more fish than the average American • Americans eat 15 pounds fish per year, some ethic groups eat 80 pounds per year • Kosher fish for Jewish community • Restaurant and super markets that specialize in local product “Buy Idaho” • Gas station deli, MS catfish $2.50/lb for fillet, Louisiana farmer selling 300 pounds a week in one deli at $3.30/lb • In Hagerman, Idaho, Bud Deacon used 700 pounds of catfish a week serving 5 meals a week NICHE MARKETS (Continued) • The customer wanting something special that a major processor does not want to do  Catfish with the head on or skin on          Red meat trout Golden trout High omega 3 trout Health food trout Gift package trout Smoked trout Trout jerky Multiple further processed product Local markets that you can deliver to that a major processor has distribution problems with  Customer that wants to be able to say his product is different, catfish from Idaho  Sturgeon to a restaurant on Lake Michigan MULTIPLE SPECIES • Adding a species is the greatest marketing tool you can give your sales people. • Adding a species is the biggest headache you can give production and processing. • With multiple species one species always becomes the spastic stepchild that no one wants to take care of. It becomes a manager’s nightmare. • Multiple species create inefficiency. WHY CUSTOMERS LEAVE  1% Die  3% Move away  5% Develop other friendships  9% For competitive reasons  14% Due to product dissatisfaction  68% Quit because of an attitude of indifference toward a customer by some employees