ADDING VALUE TO FAMILY FARMING PRODUCTS PRACTICAL GUIDE VOLUME 04
ADDING VALUE TO FAMILY FARMING PRODUCTS PRACTICAL GUIDE • VOLUME 04
Chapter 1 Introduction • 04
Chapter 2 The perception of value • 08
Chapter 3 Value creation in family farming products • 12
Chapter 4 Value also needs to be communicated • 24
Chapter 5 Value creation where to start? • 28
Chapter 6 Final considerations • 32
Bibliography • 36
SUM MA RY
IN TRO DUC TION CHAPTER 1
INTRODUCTION
Every organization that has
And an important motto in this theme is to identify
He still considers that if we remove one of these five
things that people need and offer them what they
factors, we will no longer have a business. And he
are looking for. An organization cannot do business
goes even further. In his view, every business is a
unless it has something of value to offer its custom-
collection of five interdependent processes: value
Something that brought
ers. In this manner, we can say that the best orga-
creation, marketing, sales, value delivery and finance.
some improvement
nizations in the world are those that create value
achieved success has created something of value at some point.
to people’s lives.
for people. Josh Kaufman, in his book Criação de valor – Qual o preço da sua ideia (Value Creation – What is the Price of Your Idea), defines a business
In this fourth booklet, we will show the possibilities of how to create and add value to family farming products.
as a cyclical process that: 1 Creates and delivers something of value... 2... that people want or need... 3... at a price they are willing to pay... 4... in a way that satisfies the needs and expectations of customers... 5... and generates enough profit to maintain the company’s operations.
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INTRODUCTION
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PER CEP TION CHAPTER 2
THE PERCEPTION O F VA LU E
The perception of value
Value is not only present in things, but in what the
The first step would be to understand the needs of
consumer/client perceives as a value-generating
these customers. We have already discussed, in
attribute. So first of all, it’s important to develop a
booklet 01 of this series, how to perform a survey to
basic understanding of what people are looking for.
identify these needs with the distribution channels.
a product or service fulfills
Understanding human desires and the impulses that
Therefore, it is worth emphasizing that the first step
the attributes necessary
lead to their decisions and actions are extremely
would be to understand the market.
is directly linked to what people want and how much
to meet their needs.
important. Taking the logic of consumption, impulses lead to the purchase process. The more an organization connects its product to the impulses that drive
Now we will show you some possibilities of adding value to family farming products.
its customer to purchase a product or service, the more attractive its offering will be. In a few words, the more a product or service is committed to meeting a need of a particular group of consumers, the greater the chances of success for that organization.
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THE PERCEPTION OF VALUE
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CRE ATION CHAPTER 3
VA L U E C R E AT I O N I N F A M I LY F A R M I N G PRODUCTS
For this to happen, it is important
1. PRODUCTION MANAGEMENT TO HAVE A PRODUCT WITHIN THE CHARACTERISTICS REQUIRED BY THE MARKET
For organizations
that the organization has mastery
that produce and market
of the entire production
products, as is the case
process, including criteria and
with most family farming
production models that can bring
Production processes can be complex for certain
cooperatives, a product
to the product, in addition to the
products. Most of the time, they require proper man-
can be a tangible
quality expected by the market,
form of value.
attributes that can generate
agement so that their result – the product – is within what the market demands. It encompasses the defi-
• purchase of seeds, seedlings, matrices of good quality; • existence of good practices in production processes to ensure good productivity, homogeneity in production batches, etc.; less expensive production at a relatively low or competitive cost, reducing losses in production processes;
nition of the production model to be implemented
or create value. Some guidelines
• selection and classification of products
by the organization, the purchase of inputs within
within the standards required by the market;
are possible to try to create value
acceptable standards and levels of quality, the good
for a family farming product:
practices used, a quality system that ensures the
• storage and packaging of products
quality of what is produced, the standardization of
in stocks and packaging that allow their integrity
production batches, among others. It is unlikely for a
during transport; maintaining a basic stock
deficient production process or lack of management
of finished goods to fulfill customer orders
to produce a product within certain standards re-
as they are made.
quired by the market. For example, when we mention the quality attribute, it is no longer a way of adding or creating value, but a basic attribute to be offered in any type of product destined for the market. Some
Therefore, these steps must be carefully designed and planned. A large part of value-generating attributes may be in the production process.
ways to ensure that the production process generates a value-added product are:
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2. ORIGINALITY OR A CERTAIN SPECIFICITY INHERENT TO THE PRODUCT
3. ABSENCE OF PESTICIDES, COMPONENTS AND CHEMICAL PRESERVATIVES, AMONG OTHERS
Some characteristics or attributes can be factors of
in the market, they can be perceived as elements of
Another specificity that can be worked on in the
differentiation or value creation in family farming prod-
value. After all, they can be treated as something orig-
value creation in a family farming product is the
ucts. They can be products with a certain originality,
inal or different from competing products in the same
absence of pesticides, components and chemical
produced in regions or locations with certain soil or
existing product category or even as something that
preservatives, absence of sugar or salt, saturated or
climatic characteristics that give the product a specific
is not present in the market. It is important to mention
trans fats, lactose, gluten, transgenics, among oth-
appearance, color, flavor, texture. These characteris-
that some of these specificities, when evaluated in
ers. These are concerns of contemporary consum-
tics can add value as long as they can be perceived by
terms of nutrients to a greater or lesser degree, must
ers, who seek to change food consumption habits in
the customer. We can also consider a huge range of
be proven by tests and laboratory exams, especially
order to improve or preserve their health.
regional products from the various Brazilian biomes,
if they are connected to health information, immunity,
which in general also present these specificities. Once
or low levels of fat, sugar, salt, etc.
well defined, proven and adequately communicated
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4. LOW PRODUCTION COST AND SELLING PRICE OF THE PRODUCT
5. MISCELLANEOUS CERTIFICATIONS Certification adds value to the product. It is import-
Low production costs reflect in low prices charged
product to the display racks and retail shelves. And a
ant to understand which would be the important
for the product in the market. This generates value
question is worth asking: does the final price charged
certification(s) for the product and its organization
for the distribution channels throughout the chain,
for the product at the points of sale meet the prices
depending on the market in which it wants to access
which, for the distribution channels, allows them to
that customers are willing to pay for the product?
and operate. Each market has a logic to operate
set their margins and still practice more competitive prices for the product in relation to the competition. Distribution channels end up having more flexibility to work on their costs and margins, depending on market demands. It is important that the organization can have real knowledge of its production costs and properly calculate its sales prices, also thinking
and, depending on this logic, some certifications are Pricing strategies adopted by marketing can also
more important and priority than others. For some
contribute to value creation. And then other pa-
products, certifications create and add value. Na-
rameters are taken into account to define the sale
tional markets may require certain certifications and
price. It’s a good idea to evaluate pricing strategies
international markets may or may not require oth-
and comprehend how they can help set the prices
ers. For the market where your organization wants
for your product.
to operate, which certification is most important or
about the distribution chain and the final price of the
priority at the moment? Some certifications that can create value are: organic, fair trade, food safety, among others. Very specific markets still demand other certifications, like markets that serve people of Jewish origin and religion (Kosher Certification) or Muslims (Halal Certification).
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6. SUSTAINABILITY, SOCIAL RESPONSIBILITY OR OTHER ATTRIBUTES
7. SERVICES ADDED TO THE PRODUCT
8. BRAND, PRODUCT PACKAGING AND LABELING
Adding services to the product can create value.
A well-developed brand, associated with packaging
Much has been said about the conscious use of
are produced are well evaluated by the market. This
There can be many ways to create value through
and labeling with appropriate information and de-
natural resources, the preservation of nature and
is a trend that should continue to grow in the coming
the services offered. Services can vary from
sign, can create value. That’s why the importance of
the environment, as well as respect for those who
years. Therefore, organizations engaged in purpos-
channel to distribution channel in the distri-
product conception goes far beyond its character-
produce. These are themes and concerns that, over
es greater than simply generating profit start to have
bution chain, as well as to the end consumer.
istics. Invest in design, sustainable packaging that
the last few years, have questioned the food product
greater prominence and preference in the market.
Some services can increase the organization’s
protects products, keeps them longer, and is easy to
and its production method in the world. Concerns
These issues can and should be communicated to
operating costs, which would require a deeper
handle, recyclable and aesthetically pleasing. Such
about a more conscious way of consuming have
the market if your organization is engaged with such
analysis of which services could be added to
attributes give another appearance and perception
been driving new practices at the time of purchase.
causes or concerns. Here’s another way to create
the product in its sale and distribution. For dis-
of the product to those who buy and consume it. A
The contemporary consumer has become more
value. We can even say that some of these attributes
tribution channels, some services add value:
labeling that brings important information to those
conscious and also concerned about the effects of
may no longer be elements of value and, later on,
competitive prices, agile and adequate logis-
who will consume the product helps a lot in their
inappropriate practices on production processes.
become mandatory elements for any supplier in cer-
tics, meeting deadlines, warranties, discounts,
purchase decision, in addition to creating a benefit,
Any initiative in organizations to generate change in
tain distribution channels or markets.
among others. For the end consumer, some
even before being required by regulatory bodies.
the way resources are treated and in the way they
services can create value: ease of purchasing the product, customer service, easy access to information about the organization and its products, possibility of exchanges/warranties, among others.
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9. OTHER VALUE CREATION ATTRIBUTES In addition to those mentioned above, we can also mention traceability. Traceable products matter and add value. For some retail chains, traceability is not a value-generating attribute, but something basic that each product must offer its customer. It is an integral part of a process of how it was produced and where that product went along its production chain. Like so, it is important to mention that some of the attributes that we have listed above as value creators may, over time, not create value for the product, but being basic requirements for them to be on the market. Today, traceability creates value, but many buyers from distribution channels mention that, in a short space of time, it could be something basic to be part of a product.
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COM MUNI CATION CHAPTER 4
VA LU E A LSO NEEDS TO BE C O M M U N I C AT E D
Some attributes that add value to the product are easily identified, even when we consume the product itself. Others are not. For both cases, we must
Reviewing processes,
define a product communication strategy so that
products and reassessing
these values are known and perceived by custom-
the organization’s business
ers. A well-developed strategy will make it possible
model can be important
to broaden the value perception by the organization’s customer in relation to its product. Much has been said about the purpose of an organization,
for creating value for an organization.
its brand, brand positioning and what could be communicated in the booklet preceding this one. Therefore, now we need to be aware of how to create value for the company and its product. It’s about understanding your market and what’s important to it. This initial idea could be the first step to define a value creation strategy for family farming products and organizations.
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BE GIN NING CHAPTER 5
VA L U E C R E AT I O N W H E R E T O S TA R T ?
5• Question whether the creation
This is the question to be answered. Where to start?
of new attributes or value elements will generate new operating costs. If so, evaluate how much these costs would be more expensive or make the product less competitive and attractive to the market; 6• Evaluate the costs and recalculate them. Define pricing strategies for your product
1• Understand the market where your organization operates and what it has as a perception of value for the category
7• Perform an action plan to create those values that the organization detects
of products you produce and sell;
as important or priorities;
2• Evaluate the products and what
8• Implement and prioritize what is most
they effectively offer in meeting the demand of those who buy; 3• Review your organization’s processes and way of operating and to what extent
important initially; 9• Develop a communication strategy for these values;
it is able to serve the market in matters
10• Make sure that these values
related to what the customer needs
are really perceived by the market;
and what the organization offers;
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or product line;
11• Remember what experience your customer
4• Identify the values that are perceived in your
relates to your company, brand and product and
product and what values could be created;
that it must live up to what you promise and deliver.
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CON SIDER ATION CHAPTER 6
FINAL C O N S I D E R AT I O N S
Value creation can be an important strategy for family farming organizations and their products.
Evaluate how much your organization can earn in terms of marketing, having a well-conceived value creation strategy. These are basic guidelines for the organization that wants to create value in its product and differentiate itself. It is important to always be aware of what the consumer evaluates as value and to analyze what can be added to the product to generate this value.
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BIBLI OGRA PHY BIBLIOGRAPHY
KAUFMAN, Josh. Criação de valor – Qual o preço da sua ideia? Manual do CEO. 1ª edição. São Paulo: Saraiva/Somos Educação, 2016.
BAHIA PRODUTIVA PROJECT TEAM GENERAL COORDINATOR Fernando Cabral ANALYSIS AND MONITORING COORDINATOR Gilberto Andrade THEMATIC EXPERTS AQUACULTURE AND FISHING EXPERT Alexandre José de Araujo Macedo CASSAVA FARMING EXPERT André Luis Lordelo Silva GOAT AND SHEEP EXPERT Carina Moreira Cezimbra DAIRY CATTLE RAISING EXPERT José Antônio Magalhães de Araujo BEEKEEPING AND MELIPONICULTURE EXPERT Lívia Viana de Oliveira FRUIT GROWING EXPERT Marcos Raimundo Pitangueira OILSEED EXPERT Taís Nunes de Almeida SOCIO-ENVIRONMENTAL SUBPROJECT EXPERT Greice Póvoas de Carvalho AGROINDUSTRY EXPERTS Rafael Rebelo de Matos Meirelaine Rios de Almeida Mendes
SUPPORT COORDINATOR FOR TERRITORY OFFICES Dora Helena Passos MONITORING AND EVALUATION COORDINATOR Egla Ray Costa TRAINING COORDINATOR Elira de Andrade ATER COORDINATOR Wecslei Ferraz INTELLIGENCE AND MARKET COORDINATOR Aldir Parisi WATER SUPPLY COMPONENT COORDINATOR Andrevan Santana COMMUNICATION COORDINATOR Silvia Costa ADVISOR TO THE CAR’S BOARD OF DIRECTORS Ivan Fontes PROCUREMENT ADVISOR Nara Lins Muiños FINANCIAL ADVISOR Maria Juçara Monteiro MONITORING ADVISOR Antonio Berenguer WATER SUPPLY COMPONENT MONITORING ADVISOR Maria Auxiliadora Cavalcanti Produced by the Intelligence and Market Coordinator in a partnership with the CAR/SDR Press Office www.sdr.ba.gov.br / www.car.ba.gov.br/bahiaprodutiva
GOVERNOR OF THE STATE OF BAHIA Rui Costa RURAL DEVELOPMENT SECRETARY Josias Gomes MANAGING DIRECTOR OF THE REGIONAL DEVELOPMENT AND ACTION COMPANY (CAR) Wilson Dias GENERAL DIRECTOR OF THE REGIONAL DEVELOPMENT AND ACTION COMPANY (CAR) Ioná Queiroz
Headquarters of Bahia Produtiva Av. Luiz Viana Filho, 250 Conjunto Seplan, CAB ZIP CODE/CEP: 41745-001, Salvador-Bahia / Tel: (71) 3115-3941 www.sdr.ba.gov.br | www.car.ba.gov.br sdrbahia
sdrbahia | ascomcar
sdrbahia | carbahia sdrbahia
Review Renata Siqueira / Illustrations Thiago Durães / Layout P55 Edição | p55.com.br
