The importance of direct marketing for high quality farm products has increased in the last few years. This paper analyses the impact of customer satisfaction and its driving forces for farmer-to-consumer direct marketing and is based on a customer survey in 30 organic and conventional on-farm stores in Germany. The results emphasize the role of the store atmosphere and customer service as the main influencing factors on customer satisfaction

Mellin, Matthias

Spiller, Achim

Zühlsdorf, Anke

English

Organic Eprints

9. Wissenschaftstagung Ökologischer Landbau. Beitrag archiviert unter http://orgprints.org/view/projects/wissenschaftstagung-2007.html From field to plate: Farmer-to-consumer direct marketing for organic and re-gional products M. Mellin1, A. Spiller1 and A. Zühlsdorf1 Keywords: consumer satisfaction, market research, marketing, direct marketing Abstract: The importance of direct marketing for high quality farm products has increased in the last few years. This paper analyses the impact of customer satisfaction and its driving forces for farmer-to-consumer direct marketing and is based on a customer survey in 30 organic and conventional on-farm stores in Germany. The results emphasize the role of the store atmosphere and customer service as the main influencing factors on customer satisfaction. Introduction and Objectives: Farmers’ direct marketing of food is a widely neglected branch of modern agribusiness marketing. It is certainly a niche market but plays a distinctive role for establishing high quality markets in  the food  business.  Farmer-to-consumer marketing  is  of  growing importance, not only in providing many farmers with greater net returns but also in retaining food traditions (KAMBARA & SHELLEY 2002). The direct contact between farmers and consumers enable both sides to boost special qualities like traditional agricultural products, organic food, denomination of origin etc. The following paper discusses the marketing challenge faced by farmers working as producers as well as retailers and is focused on direct farm markets as outlets located at the farm used to sell their own produce. In Germany they are an increasing distribu-tion channel especially in the segment of discerning consumers (RECKE & WIRTH-GEN 2004). Costumer orientation and customer satisfaction are important assump-tions for business success in this market.  Methods: Customer satisfaction studies have been included in the standard repertoire of market-ing since approximately 15 years (PARASURAMAN et al. 1988). In the service sec-tors, especially the food retail industry, the high relevance of service quality for busi-ness success is recognized and examined by periodical studies like the American or the European Customer Satisfaction survey (FORNELL et al. 1996; JUHL et al. 2002). The literature documents, in many cases, the effect of customer satisfaction on cus-tomer loyalty (BION 1993). Different methods of measurements were used in the past. Often used, for example, is Silent Shopping, i.e. the hidden observation of sales staff by test persons. In the field of subjective procedures, the explicit measurement of customer satisfaction by surveys plays the largest role together with complaint man-agement (SCHÜTZE 1992). Currently,  the  professional  use  of  customer  satisfaction  research  is  limited  to  the global players in food retailing. The high price for a professional satisfaction survey deters most small enterprises. As far as we know, there are only a few independent food retailers who use market research to evaluate customer satisfaction. To our best knowledge, for direct farming no published satisfaction survey exists. This is problem-atic considering the relevance of personal relationships for small farm outlets with high costs. Because of cost disadvantages, small shops can only survive by achieving high service standards. The withdrawal of small retailers from the food business, for exam-                                                 1Department of Agricultural Economics und Rural Development, Georg August Universität Göttin-gen, Platz der Göttinger Sieben 5, 37073 Göttingen, Germany, a.spiller@agr.uni-goettingen.de  9. Wissenschaftstagung Ökologischer Landbau. Beitrag archiviert unter http://orgprints.org/view/projects/wissenschaftstagung-2007.html ple butcheries or specialised cheese or fish shops, demonstrates that family owned independent firms show substantial deficits.  The following contribution presents the methodology and the results of a customer satisfaction survey for on-farm stores in Germany. 60,000 agricultural enterprises in Germany  sell  their  products  without  middlemen;  among  them  are  approx.  14,000 professionally led enterprises. For these farmers direct marketing represents the main channel of distribution. This is a portion of 3.68 % of all agricultural enterprises in Germany (approx. 380.000 enterprises). The business volume in this market is about 3-3.5 billion € (RECKE & WIRTHGEN 2004). Farmer-to-consumer direct marketing is in lively competition with other store formats, e. g., supermarkets and organic stores which have developed their own assortment of regional and high quality products. Thus, an objective of the following analysis is to determine the parameters of customer satisfaction and to investigate how the various factors contribute to customer loyalty.   Results and Discussion: The  following  survey  represents  an  application  of  the  seminal  multi-item  scale (SERVQUAL) developed by PARASURAMAN et al. (1988) for standardized surveys of service quality. SERVQUAL refers conceptually to an ex-post-evaluation of the per-ceived service elements. It is differentiated from attitude research by the actual pur-chase experience of the customers, thus it builds on a comparison of customer expec-tations  (conceptions  of  an  ideal  store)  and  the  experience  made  with  a  specific retailer. There are a growing number of academic studies on customer satisfaction. In a recent publication, SZYMANSKI & HENARD (2001) conduct a meta-analysis. They reveal that fairness and disconfirmation are strongly related to customer satisfaction on average. Among the outcomes, preventing negative word of mouth communication and repeat purchasing are mainly relevant. The findings in different surveys are how-ever mixed. Customer satisfaction studies in food retailing are reported, for example, by GAIL & SCOTT (1995), BELL et al. (1997), HACKL et al. (2000) and JUHL et al. (2002). GOMEZ et al. (2004) describe a comprehensive survey, measuring the links between store attributes, customer satisfaction, and sales performance with data from 250 stores. They show three main antecedents to customer satisfaction in food retail-ing, i.e. customer service, quality of different products and value for money. Customer service is the most important determinant of overall satisfaction for US supermarkets. To our best knowledge for farmer-to-consumer direct marketing no customer satisfac-tion surveys are published. Our questionnaire consists of 13 question blocks in which 53 items are considered. The first question deals with overall customer satisfaction, followed by statements about the unique selling proposition and the respective store attributes - quality of products, service quality, location, store atmosphere etc. In most cases the scale is a 5 box Likert scale, ranging from -2 to +2. Additionally, some rating scales are used. Altogether, 1,310 customers were questioned in 30 on-farm stores in different German regions. 10 of the farms produce organic food. The average annual sales volume is about 130,500 € (range 9,800-696,000 €). The number of employees lies  between  0.5  and  11.  Successful  enterprises  have  a  sales  volume  per  square meter over 5,000 €/m² (mean=3,183 €/m²). The survey took place in the outlets with self administered questionnaires. For direct marketing, knowledge about the charac-teristics of the customer is necessary. There is a considerable literature analysing consumer  demographics  for  farmers  markets  (GOVINDASAMY  &  NAYGA  1996, KEZIS et al. 1998). Typical consumers are well educated, female, upper middle class and middle aged. The results of our sample confirm these trends, demonstrating a really outstanding target group of direct farming (Tab. 1).  9. Wissenschaftstagung Ökologischer Landbau. Beitrag archiviert unter http://orgprints.org/view/projects/wissenschaftstagung-2007.html  In comparison to the whole German population, customers of direct farming are char-acterized by higher education and income. Nearly the halves of the customers are family households. In comparison to conventional farms, producers of organic food have a more attractive target group with a higher income and better education. The main objective of the following part is to evaluate the status quo and the antece-dents of customer satisfaction for buying at an on-farm store. Generally, the degree of customer satisfaction is quite high (Tab. 2).  In the next step, factor analysis (using principal component analysis) was conducted to gain an overview of the different aspects and determinants of customer satisfaction. Five factors explain 52,896 % of the variance (KMO=0,779). One main objective of the study was to reveal the driving forces determining customer satisfaction via regression analysis. The results demonstrate the important role store atmosphere in the farm outlet plays, which is determined by the store layout, the presentation of the assort-ment and the attractiveness for children. In addition to the identification of the main determinants on customer satisfaction the study demonstrates its significance for the long-term business success: Customer satisfaction is closely connected to word of mouth communication (r=0,345***) as the main important marketing tool and shopping frequency (r=0,096**). Conclusion: The survey has indicated that the target group of direct farming presents a good op-portunity for selling high quality food. Consumers on farms are characterized by a high income  and  a  clearly  above  average  education  level.  From  other  food  consumer services it is known that these customers are willing to pay more for special high Tab. 1: Customer profile. Characteristics (n=1310)  Organic farms (n=502) Conventional farms (n=808) Average age  43 years  50 years Share of customers with a net-income of more than 3.000 €  25 %  22 % Share of customers with higher education  65 %  38 % Share of regular customers (³ 1x per week)  68 %  52 % Share of customers in the neighbourhood (< 5km)  42 %  43 % Share of male customers  22 %  33 % Share of customers with children in the household  48 %  41 %  Tab. 3: Regression model (OLS) to explain customer satisfaction. Independent variables  Beta   t Store atmosphere   .35  7.64*** Customer service  .21  4.66*** Fair prices and wide range of goods  .17  4.16*** Confidence in the farmer  .14  1.44*** Product quality   .14  1.44** Depending variable: Overall customer satisfaction Adj. R² = 0.676; F = 140.91***;  * significant for P<0.05; ** significant for P<0.01; *** significant for P<0.001.  Tab. 2: Customer satisfaction. Variable  Mean  SD  Minimum  Maximum Customer satisfaction  1,66  0,537  1.18  1.88 Scale from – 2 (very dissatisfied) to + 2 (very satisfied)  9. Wissenschaftstagung Ökologischer Landbau. Beitrag archiviert unter http://orgprints.org/view/projects/wissenschaftstagung-2007.html quality products. Therefore direct selling can be a starting point for developing a new food culture in Germany. The results provide insights into the antecedents of customer satisfaction in a small business environment. For a successful direct marketing it is crucial to  offer  an  outstanding shopping  event  for  customers.  Under  this condition customers are willing to spend more money for agricultural goods. The second most important point is a competent service, helpfulness and friendliness of stuff. Therefore, regular further trainings in customer orientation and product knowledge are an impor-tant task for the employees in an on-farm store. The survey is quite comprehensive concerning the amount of consumers involved but the number of stores was limited due to the ongoing status of the research project. Another limitation is caused by the interview  situation.  Self  administered  questionnaires  allow  only  a  small  number  of questions. Especially, the integration of attitude and food related lifestyle items would give more opportunities to cluster the respondents. Acknowledgment: The study is funded by the German Ministry of Research (BMBF) under the Social Ecological Research project (SÖF) References: Bell J., Gilbert D., Lockwood A. (1997):  “Service quality in food retailing operations:  a critical incident analysis“, The International Review of Retail, Distribution and Consumer Research 7 (4): p. 405-423. Bion  H.  (1993):  “Satisfaction  and  Loyalty  to  Suppliers  within  the  Grocery  Trade”,  Eur  J  Marketing  27 (7):21-38. Fornell C., Johnson M. D., Anderson E. W., Cha J., Bryant B. E. (1996): “The American Customer Satis-faction Index: Nature, Purpose and Findings”, J. Marketing 60 (4):7-18. Gail  T.,  Scott  L.  (1995):  “Waiting  time  delays  and  customer  satisfaction  in  supermarkets“,  Journal  of Service Marketing 9 (5):10-19. Govindasamy R., Nayga R. M. Jr. (1996): Characteristics of Farmer-To-Consumer Direct Market Custom-ers: An Overview, In: Journal of Extension 34 (4). http://www.joe.org/joe/1996august/rb1.html. Hackl P., Scharitzer D., Zuba R. (2000): “Customer Satisfaction in the Austrian food retail market“, Total Quality Management 11 (7):999-1006. Juhl J., Kristensen K., Ostergaard P. (2002): “Customer satisfaction in European food retailing”, Journal of retailing and customer services 9 (6):327-334. Kambara K. M., Shelley C. L. (2002): The California Agricultural Direct Marketing Study, California Institute for Rural Studies. http://www.cirsinc.org/CAgriculturalDirectMarketingStudy.pdf. Kezis A. S., Gwebu T., Peavey S., Cheng H. T. (1998): A study of consumers at a small farmers' market in Maine: results from a 1995 survey, Journal of Food Distribution Research 24 (1):91-99. Parasuraman  A.,  Berry  L.  L.,  Zeithaml  V.  A.  (1988):  “Servqual:  A  Multiple-Item  Scale  for  Measuring Customer Perceptions of Service Quality”, Journal of Retailing 64 (1):12–40. Recke G., Wirthgen B. (2004): “Marktvolumen und Perspektiven der Direktvermarktung“, In: Recke G., Wirthgen B., Zenner S. (eds.): „Situation und Perspektiven der Direktvermarktung in der Bundesrepublik Deutschland“, Kassel, p. 1-136. Schütze R. (1992): Kundenzufriedenheit: After-Sales-Marketing auf industriellen Märkten, Wiesbaden. Szymanski  D.  M.  and  Henard  D.  H.  (2001):  “Customer  Satisfaction:  A  Meta-Analysis  of  the  Empirical Evidence”, Journal of the Academy of Marketing Science 29 (1):16-35.  Archived at http://orgprints.org/9671/  

From field to plate: Farmer-to-consumer direct marketing for organic and regional products

Abstract

Similar works

Full text

Available Versions

Organic Eprints