Market Research

Market research is the process of gathering, analysing, and interpreting information about a market, or about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service.

Far too few farmers and agricultural enterprises give detailed thought to exactly what they are trying to achieve through marketing. Clear marketing objectives are needed to aid operational decisions. Marketing objectives should be set with keeping the following in mind:

• The marketing objective should fit in with the broader objectives of the farm.
• They should be realistic, considering internal resources and external opportunities, threats, and constraints.
• Everyone in the company should be aware of the marketing objectives so that everyone can relate these to his or her own work.
• They need to be flexible since many business decisions are made under conditions of partial ignorance.
• They should be reviewed and adapted from time to time to take changing conditions into account.

Efficient marketing is essential to the success of a farming enterprise. Producing the best quality produce is of no use if it does not meet the requirements of the market.

When considering the establishment of a farming enterprise, it is critical to ask the following questions:

• What can I produce that the market will want?
• Is there a market opportunity for the range of crops and cultivars that I can produce on my farm?

Very simply, when considering whether to embark on a new agricultural enterprise or diversify to new crops on an existing farm, the very first step is to carry out market research. Market research may also be required for adapting existing production processes to be able to service a different, possibly more stable or more lucrative market.

The simple questions asked above are not that easy to answer and different people have different answers to those questions. On top of this, crops produced in South Africa are marketed in many countries around the globe and today's global agricultural trade environment is one of over-supply and an extensive diversity of produce.

In South Africa, Growers’ Associations have been established by their farming members to research and develop the technical expertise to improve access for Southern African crops to international markets.

These growers’ associations are aimed at opening new markets for South African produce as well as ensuring that existing markets are retained.

You should also remember that each of the many export markets that are accessible to South Africa is further divided into wholesale and retail sectors. The performance of these many different markets varies from year to year depending on such factors as the type and volume of competitive products.

The situation is further complicated by the fact that it is not always possible to produce high-quality produce of the kind the export market requires in the specific climatic area in which the farm is located. Market opportunities for fresh produce especially are highly dependent on the quality and timing of delivery.

From a business point of view, it is advisable for a grower to spread the risk of his operation, by securing a range of markets.

This can be achieved by producing a variety of crops and cultivars because:

• No produce producing area can produce the ideal quality fruit at the ideal time for all crops and cultivars; and
• Fresh fruit markets may change over the course of a season and are not always accessible to all fruit types.

Selecting crops and cultivars that are suited to specific markets given the geographical and climatic constraints is a critical challenge. For this, high-quality market research is vital.

The Process of Market Research

The market research process involves the following key steps:

Resources Required for Market Research

Market research is expensive because it requires the services of dedicated specialists. It is too expensive and impractical for every farmer to do his own market research. In the case of fresh fruit exports, the budget for carrying out such a full market analysis can run into hundreds of thousands of Rands. Farmers can form farmer groups together with exporters and jointly fund such analyses or decide to carry out only parts of the total process. This would depend on the specific objectives of the research program. Where a growers’ association exists, the farmer can join such association and reap the benefits of market research and access services provided by the association. Normally the Growers association and its activities are funded through a levy that is charged on the produce sold or exported.

In most cases where an individual farmer is faced with planting decisions based on marketing prospects, he will consult colleagues, technical experts, exporting companies and market agents. In this way, he is able to build up enough general information to guide his decision without incurring the cost of hiring marketing professionals.

Where investment in the opening of new production areas or the launch of a new cultivar is contemplated, the market research process, whether it involves a group effort or even a relatively small-scale investigation, may require the services of specialists, either as those within an established grower association or as consultants.

Managing Market Research

Market research has to be managed, meaning that each stage has to be carefully planned, with appropriate target dates and milestones put in place. Out-sourced services can be costly and careful budgeting must be applied to every phase of the marketing plan. It must also be carefully decided which aspects to include and which to leave out of the process.

Once market research has been completed and a marketing plan has been developed the recommendations of the plan must be followed. Implementation does not only refer to basing decisions for new plantings on the results of the market research but also implies the adjustment of ongoing production practices to agree with the requirements of the market.