Marketing Specialty Forest Products

Most markets for specialty forest products can be characterized as niche markets. That is, they may be relatively small, occasionally seasonal or easily saturated by overproduction.

Mushrooms (top) and mulberry (above) are two examples of food products that can be grown and marketed as part of a specialty forest product system. Photos: Nebraska Forest Service.

Markets may range from wholesalers and retailers to local farmers' markets. Some products can target niche markets (e.g. specialty nuts or jams) on a mass market scale via large distributors and supermarkets. However, there is one characteristic all specialty forest product markets share: they all require greater marketing efforts than traditional crop markets. Therefore, it is important for producers to educate themselves about their product's markets and how to sell product in these markets.

Newcomers to specialty forest product marketing may have trouble finding production or marketing information. Established existing producers may be hesitant to share their techniques for fear of losing their niche in the market. With some work, however, there are many market opportunities for a wide variety of specialty forest products.

Some specialty forest products have seasonal markets. For example, holly is a decorative floral that is popular during the holiday season, pussy willow is popular in spring floral arrangements and fresh fruit must be sold during the short period when it is ripe. Other products, such as nuts and dried florals, have year-round markets.

Getting Started

When you market specialty forest products, you are creating your own business. As with any business, the first thing to do when starting out is to develop a business plan. Part of developing this plan involves conducting personal and financial evaluations.

Personal evaluation

Hydrangea (top) can be grown and marketed for use in floral arrangements. Ginkgo (above) is used in a variety of herbal and medicinal products. Photos: Nebraska Forest Service.

When you begin thinking about marketing specialty forest products for profit, conduct a personal evaluation to determine how you can fit your business into your lifestyle. Ask yourself the following questions:

If you understand your goals, skills and available resources, you can begin developing a financial plan for your business.

Financial evaluation

A financial plan should include projected fixed and variable costs, as well as expected gross and net revenues. You can get help at this stage by contacting your state forest service; county extension office; local and regional economic development organizations; state department of agriculture; local university or community college; or existing businesses or producers.

Consider your estimated start-up costs. If necessary, determine where you will secure financing to cover these costs. If you don't want to take out a loan, consider applying for state or federal grants. The following government programs may offer grants for land improvements that can include trees and shrubs that produce specialty forest products:

Strategies for Successful Marketing

Focus on marketing before and during production. This allows you to determine what you should produce and how much of your product you will need. Spend time brainstorming to identify your potential customers and market opportunities. The following steps will help get you started.

Know your customer

The first, and most important, part of a successful marketing plan is knowing your customer. Know their needs, wants, problems, frustrations, hopes, dreams, perceptions and expectations. This information can be obtained through personal interviews, questionnaires, Internet research and focus groups. Remember, people buy an item to meet their needs and to receive its benefits. When you market your products, inform potential customers about your products and their consumer value.

To learn about your customers, ask the following questions:

As part of your customer research, it is also important to study your competitors and their marketing techniques. This will help you understand your competitors' strengths and weaknesses and identify market areas where you can successfully compete.

Customers can often be divided into two groups: light users and heavy users. Heavy users are typically 20 percent of the consumer population, but use 80 percent of the product. Identifying and targeting the heavy users among your customers can provide you with a key advantage over your competitors.

It is important to develop marketing strategies that are tailored to each type of customer. For example, a Web site is a great way to reach a large number of people, but it doesn't reach people who don't use the Internet. Identify multiple strategies for promoting your products, such as the Internet, word of mouth, fliers and newspaper ads.

Identify your marketing options

There are several marketing options for selling your specialty forest product(s):

All of these methods may not be appropriate for your product(s) or match your personal and business goals. To decide which marketing option is best for you, conduct a thorough market analysis that examines demand, competitors and price structures.

If you decide to enter the wholesale market, you may need additional labor and capital to fill large orders. Wholesalers want a dependable, continuous supply of a high-quality product at competitive prices. Using an intermediary distributor to market your goods takes much of the marketing burden off you, but they often charge a fee and a percentage of the sales.

Marketing your products directly to consumers is a personalized way to build a business one customer at a time. This method requires considerable time and interpersonal skills to attract and maintain customers. It also requires knowledge of all applicable regulations and required permits. This is particularly true for food products. Direct marketing can be advantageous, however, because it allows small producers to secure the highest prices and profit margins for their products.

When selling your product at fairs, farmer's markets or shows, offer a small sample to potential customers and make the most of your display space. Spend time looking through trade, food and decorating magazines to learn about the latest trends in color and form. This is especially important when you are marketing woody decorative florals. Use height, depth and texture to maximize your display's visual impact. If your product has multiple uses, display each of them for your customers. Include vivid written descriptions of products in your display and make sure all prices are clearly marked. Stay at your display to answer questions and keep plenty of pens, pencils, order forms and scratch paper handy.

If you sell your products at a retail location and also at a fair, show or farmers' market, be sure to charge the same price in all locations. You may alienate your retailers by selling your products for a reduced price elsewhere. This could result in the loss of a valuable business relationship.

Secure markets ahead of time

Secure markets before you invest time and money in producing your specialty forest products. A solid marketing plan and quality product consistently earn producers greater profits. This requires you to work closely with your customers to ensure that your product meets their needs. Providing your customers with a quality product will help you earn their respect and loyalty.

Develop niche products with multiple markets

Producing a specialty forest product with only one market increases your risk as a producer. If the market for that product fails or becomes saturated, you are left with few options. Producing specialty products with multiple markets reduces your risk and provides you with greater flexibility.

For example, elderberry fruit may only have a limited jelly or wine market, and the berries must be quickly harvested and delivered to the processor when they are ripe. Hazelnuts, however, can be sold in their shells or as crushed nuts, pressed for oil, used in confections or stored for later sale. These multiple markets provide producers with greater security and flexibility.

Think small-it can pay off big

When starting out in the specialty forest product business, it is usually best to start small. Find a test market for your product, focus on quality and build your business over time. Starting small doesn't mean staying small, however. Producers of specialty forest products can build a successful business with multiple smaller markets.

Identifying the needs of underserved or ignored markets can mean prosperity for small producers. Producers who cater to smaller-niche customers can spend more time attending to their needs and provide them with a quality product they won't be able to find elsewhere. Beware of focusing on a market that is too small, however. If a small market appears unlikely to grow, you may be forced to set prices far above what the market can bear just to cover your costs. If this happens, you will need to diversify your operation or develop and produce products with a larger market.

Set your prices

Do your research before you begin setting prices for your specialty forest products. Ask retail and wholesale buyers what they pay for their products. Wholesale prices are generally half of retail prices. Buyers usually pay shipping costs, but this may not always be the case. It will also be useful to learn what quality characteristics affect price, as this is an area where you may be most likely to compete.

Don't under price your products. Before you set a price, give careful consideration to all your operating costs, including hired labor and overhead costs, such as rent, utilities, insurance, mileage, postage, advertising and packaging. If you are unable to keep your prices low enough to appeal to wholesalers, consider marketing your products on the retail market.

Regulations

The United States Department of Agriculture, United States Food and Drug Administration and your local health department, among other groups, have regulations that are designed to protect the producer and consumer. As a businessperson, it is your responsibility to understand current registration, licensing and zoning requirements that affect your operation. Check with federal, state, county and city agencies for specific information. The following Web sites and phone numbers may be helpful as you begin your search:

• Getting from Idea to Implementation: A Checklist for Producers Starting a New Value-Added Agriculture Business. Ag Innovation Guide, Agriculture Business Development Division of the Missouri Department of Agriculture.
• Fruits and Vegetables: A Niche Market for Small Farmers. (Fall 2001). Small Farm Digest, 4:2, 1-4. Cooperative State Research, Education and Extension Service (CREES), USDA, Washington , DC.
• Marketing Specialty Forest Products. University of Minnesota Extension Publication FO-07278 1999.
• Marketing Specialty Forest Products. University of Nebraska-Lincoln Cooperative Extension Publication.
• United States Forest Service (1993). Income Opportunities for Special Forest Products. Agriculture Information Bulletin AIB-666.