University of Maryland Extension

Collaborative Marketing-A Process; Not an Event

Author: 
Ginger S. Myers
Putting puzzle pieces together

Mastering Marketing - Special Edition May 2020


Many traditional and seasonal marketing channels have been closed or greatly modified by the restrictions imposed by the Covid-19 pandemic. Producers and craft foods entrepreneurs have pivoted to online sales and on-site recommended safety protocols to continue as many direct sales as possible. Now may be the time to explore collaborative marketing opportunities to develop one more direct marketing outlet.

Collaborative marketing can be structured in different formats that can be used to grow sales volume, increase efficiency, lower costs, and enter new markets. Collaborative marketing business structures range from very simple, contract-like agreements to the formation of new corporations. Small farms should consider temporary, limited-scale collaborative projects before developing substantial business agreements.

Something as simple as a consignment agreement allows one farm to sell through another’s market channels while collaborations don’t need cooperatives or formal, any collaborative marketing effort should include answers to these basic questions: who, why, what, when, and how the collaboration will work.

  • Who will participate,  what products, and in what quantities will they provide?
  • When will orders be placed and fulfilled?
  • Who is responsible for pickup or delivery of the agreed upon products?
  • What are the pre-agreed prices and payment schedule to producers and when will it be paid?
  • If a single entity provides the marketing outlet and all administrative duties and is granted an administration fee from the producers’ payments, how much will that fee be for each producer?
  • Who has the responsibility for confirming product quality and refusing a product of questionable quality?
  • How will disagreement amongst collaboration members be handled?

This marketing season that has been truncated by the pandemic provides an opportunity to explore possible joint ventures in collaborative marketing. A joint venture agreement is usually a limited term project so perhaps multiple farmers could contribute to an existing CSA farm with expanded shares or to a farm market looking to increase inventory for more direct sales. This could be for a set time, say the 2020 growing season. At the end of that time, all parties can evaluate how well it did or didn’t work. If it works well, they can consider a more formal agreement or continue with a joint venture agreement.

Some key things need to be considered with a joint venture agreement.

  • You need to identify the producers who will participate.
  • You will need clearly define objectives.
  • Who are the customers currently not being served?
  • You may need to maintain product availability across several farms.

Collaborative marketing arrangements vary in type, purpose, size, and effectiveness. No particular structure guarantees the potential for profitability. Rather, compatibility, equitable contribution of resources, and proper planning, seem to be the keys to success. Keep communications robust, with an eye toward reaching defined sales goals.

Resources:

Collaborative Marketing for Small Farms
https://cvp.cce.cornell.edu/submission.php?id=98

Collaborative Marketing

https://extension.psu.edu/collaborative-marketing

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