March 2022 - 22

FARM MARKET & AGRITOURISM
It's possible to find elasticity in our markets
BRIAN MOYER
Penn State Extension
bfm3@psu.edu
Amazon is increasing its monthly fee
from $12.99 to $14.99. Why? Because
they can. According to Grocery Dive,
the company is seeing more growth
for service fees they take in than from
product sales.
Experts say that historically when
Amazon raises its fees, members barely
seem to notice. The company understands
its program's pricing elasticity before
making the change. In other words, they
know that it may be easier to increase
fees rather than increase product prices.
If you have searched for a product online,
you know it's simpler for the customer to
compare product pricing than comparing
service fees.
Is there elasticity in your market? Can
we identify items or services for which we
can charge a bit more?
Hugh McPherson of Maple Lawn
Farms gave a presentation at this year's
Mid-Atlantic Fruit and Vegetable
Convention, and one of the things he
talked about was where to create profit
without creating more work. The example
he gave was increasing ticket fees for your
agritainment operation and how that
can significantly increase your bottom
line. It would probably help cover those
increased input and labor costs we are
experiencing. Will some customers
complain? Maybe, but not as many as you
might think. They will pay the ticket price.
Identify what makes your business
unique. I know a baker whose source
identifies her ingredients and their
quality. She has found a citrus grower that
she purchases lemons from and makes a
lemon cheesecake pie that she sells at a
premium price. You'd be hard-pressed to
find a product like that elsewhere.
According to Produce Blue Book,
for every $100 spent on produce, the
demographic breakdown of the people
spending on produce looks like this;
Boomer generation accounts for $34,
Gen X is $33, and Millennials $25 while
Gen Z is just $1. Boomer spending is
roughly the same while Gen X and
Millennial spending on produce is
increasing which makes sense as they are
building families.
Are Gen X and Millennials shopping
at your market? If so, why? If not, why?
They account for over 60% of produce
purchases, so we want them to buy from
us. Some values that are important to
these two groups are source identified.
They want to know where it comes from
if it isn't from your farm.
" Clean " labeling, meaning ingredient
labels that don't have a ton extra things
in the product. Also, they are looking for
an experience or personal benefit. What
does this product do for me?
Customer experience and personal
benefit have a value which might be
where our business elasticity lives. VGN
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March 2022

Table of Contents for the Digital Edition of March 2022
