By Carole R. Engle*
Aquaculture has resulted in a more consistent supply of quantities and types of seafood products, but the growth of aquaculture has occurred in an era of rapidly changing consumer preferences.
Aquaculture businesses, no matter how large or small, must continuously modify market strategies to strategically position their products to continue to be profitable.
This column will discuss some of the factors and trends that are changing the nature of markets in general and seafood in particular. Specifically, it will discuss effects of globalization, social media and an increasingly fragmented society, and future changes that may be driven by the millennial generation. The column after this one will then present specific steps that a business should go through in developing a successful strategic marketing plan.
Seafood markets historically have been local with the supply being the day’s catch. However, with advances in seafood packaging technologies and reasonably priced air freight charges, seafood caught in the North Atlantic and other waters are now shipped to China to be processed into fillets for subsequent sale around the world. The ability to ship seafood products across the globe in good condition has contributed to a rapid increase in the total value of international trade in seafood. Major seafood importing countries, like the U.S. that imports more than 90% of the seafood consumed, may experience price effects from increasing volumes of seafood that are now available. While lower prices for seafood can be beneficial for consumers, decreasing prices often pose challenges for domestic producers.
At the same time that globalization has brought countries closer together, society has become increasingly fragmented. Social media makes it easy to find and interact with others who share similar views. Thus, chat rooms, blogs, twitter accounts, and other types of social media sites can be found to share opinions on topics such as the healthiness of seafood versus red meat, the mercury content of seafood, the environmental impact of aquaculture, or any other topic that one chooses. People tend to gravitate towards groups with similar interests. This increased fragmentation creates greater marketing challenges as various segments develop and reinforce preferences within their group. No one species, product, or marketing strategy will work effectively across all segments.
Finally, the millennial generation is a large group of consumers that is just beginning to exert itself in the market place. The few surveys that have been done point to an emphasis on the overall quality of life, not just environmental quality. Local foods, safe foods, natural and organic foods, community-supported agriculture (CSA), and farmers’ markets, all match this sense of quality that may become a more important driver as millennials exert their influence in the coming years.
Thus, developing an effective marketing strategy requires more analysis, thought, and creativity than ever because a one-size-fits-all approach will not work. However, the fragmentation of consumer preferences also means that there are more marketing opportunities emerging than ever before. The challenge is to continuously plan strategically to position the business to take advantage of these opportunities.
The end marketing strategy will include which products to sell in what quantity and to whom they will be sold (processor, livehauler) (Fig. 1). Different processors sell to different brokers and distributors who then sell to a variety of different supermarkets and restaurants in different cities. However, before choosing which supply chain to align with, strategic marketing first requires internal scrutiny of specific goals of the business and its owners, availability and access to capital, and clear definition of what the business can uniquely provide to customers. For example, younger farmers often feel driven to push the business to grow and expand, whereas older farmers may be content to farm on a smaller scale as long as the farm generates enough profit to support the family. Thus, a younger farmer may set a goal to expand overall production of the business while an older farmer may set a goal of taking weekends off to spend time with grandchildren. Once specific business goals are established, a careful and honest assessment must be made of the availability and access to capital for that particular business. For example, the young farmer who seeks to expand the business may not have the equity needed to convince his/her lender to approve the loan needed to build additional production or marketing facilities.
A clear definition of what exactly the business will sell requires more thought than many people realize. Lack of in-depth understanding of why a customer will spend money to purchase from the company is a common reason for market failure. If the product of the farm does not provide a unique benefit, why would someone purchase from that farm and not purchase what they want elsewhere? Is the farm’s product the freshest of all because it was harvested the day it was sold? Is it better than that from other farms because it was produced in the local community by neighbors? Should a customer buy from a particular processor because it provides the very best customer service in the industry? Clearly defining what it is about the farm’s product that provides greater benefit to the buyer than that of any other supplier is key to success. Of course, whatever claims are made about the product must be backed up by the product itself.
The next economics and marketing column will present a step-by-step approach to develop a strategic marketing plan. It will follow up on the above first steps of clearly defining: 1) one’s specific business goals, and 2) the unique benefit that the farm’s product will provide to the customer.
Carole Engle holds a B.A. degree in Biology/Rural Development from Friends World College and M.S. and Ph.D. degrees from Auburn University where she specialized in aquaculture economics. Dr. Engle is a past-President of the U.S. Aquaculture Society and the International Association of Aquaculture Economics and Management. She is currently a Principal in Engle-Stone Aquatic$ LLC, and can be reached at firstname.lastname@example.org