Situation Analysis

Current Industry Structure

This section will give detail about the industry, markets, users, competition, and environments. A view of how Oxbow Herbs & Heirlooms operates within in these areas will be discussed. Oxbow location: http://www.worldatlas.com/webimage/countrys/namerica/usstates/me.htm

Competitors in Industry

All mail order catalogs and online herb sites present competition, but there are three major competitors she is watching for ideas and site use ability. These sites were chosen based on like products (organic, medicinal, professional) and are:

Mountain Rose Herbs� ~ http://www.mountainroseherbs.com/
1001 Herbs ~ http://www.1001herbs.com/

� Fedco Seeds ~ http://www.fedcoseeds.com/aboutfedco.htm

Degree of Concentration / Fragmentation

Ann currently has three major divisions. The first is herb plants. These plants are used for medicinal use (includes cooking and medicine). The second is Heirloom Seeds. The seeds are a specialty and used for the preservation of heirloom varieties. Third, she grows apple trees that are northern hardy.

Ann has partnered with The Portage Woodshop so she can offer Birdhouses and Feeders and with The Alversons so herbal jewelry and soap can be added to her displays. Ann is being cautious with her complimentary products because she has to maintain the image of being good for a body and to the environment.

Sales

Sales are seasonal but they continue to grow each year. Ann is now at the point where she is looking for expansion. The chart below shows just how seasonal it is. Quarter two and three is very high in plant sales and quarter one and two are high in seed sales. This is due to planting cycles. If you don?t get seeds between the first and second quarters than it will be to late to plant.

Cycle Chart

Distribution System

Ann has a simple system for distribution. She has a hut outside her house with a can for people to put money in when they take items from the greenhouse. She also goes to the farmers market every Saturday for three hours with a truck load of items that she sells to anyone who stops by. When she was online in the past she would get an item by mail and then ship out the products within 24 hours.

She needs varies materials as shown below:

Keep in mind this is a small town and she believes in buying local. This increases some of her costs.

Markets

This section will discuss potential markets and trends for Oxbow Herbs and Heirlooms.

Market Size/Consumption/Trend

For the industry, sales are surging forward at a rapid pace and no decline is in site. We are becoming a very health conscious country. This statement is echoed by U.S. Department of Agriculture. ?Industry estimates put retail sales of organic products at $5.5 billion in 1998, up from $1 billion in 1990. Organic users? demographics: 40% are 36 to 55 years old with 25% likely to have a college degree. (Lamancusa, 2002).? This industry is growing has been and will continue to grow by 24% a year (Colberg, 2000).

Due to the growing populace of people seeking out herbs, Ann has enjoyed profits. There are three grocery stores currently courting her for mass production of some of her herbs and vegetables. This provides her with the opportunity to grow in a new direction when she is ready. Currently, however she is happy serving a customer one-on-one.

Profile of Users

It is always paramount to know your users.

Oxbow Herbs & Heirlooms appeals to three different target groups:

1. Those who want to be in on the new trend, fad

2. Fellow Herbalists

3. Browsers

Each of these groups provides potential business to her.

Group Psychographics

The first group of customers consist, in part, of the flashy type. They want to be fist and have the best. These are the high end customers. They aren?t looking for a deal, just a great looking product they can have in the kitchen. Ann usually sells this group custom baskets.

The second group of customers are Ann?s friends and fellow herbalists. These are the back to nature types. They want the lowest price going and won?t settle for second best. This crowd isn?t interested in the product aesthetics, just what it can do. They are kindly critical and are very careful not to take somebody else?s product.

Then we have the third group. I call them the browsers because they just happen by the farm or farmers market. They look around and buy something that seems like a good deal to them. They care how the product looks, though not as much as the first group, but require a moderate (fair) price.

Demographics

The customers come from all over the United States. The trendy (and want to be trendy) ones tend to come from the more populated areas while the back to nature lovers can come from anywhere. The middle of the road group tends to be economically worse off than the others, but want the product.

Social Class

All of these women are educated, yet form different classes. Most would consider the nature group to be of a lower class than the trend setters and followers, but they are actually quite well versed in the passion of their choice and genuinely believe� that the products are better for them and for the earth.

Purchase Behavior

Knowing it is important to know how and when your customer decides to make the purchase is the difference between selling your entire product line at the farmers market or bringing half of it home.

Decision Making Process

When the sales are being made at the farm, it is most likely that the customer comes to the farm knowing what they want or at least knowing they are going to buy. This can be said with a certain amount of accuracy after considering the following facts:

They travel from 15 to 90 minutes to get to the farm.
98% of the customers that stop buy something
There is money in the can at the end of every day

When sales are being made at the farmers market it is a little trickier. These customers come to see the products and not necessarily buy them. This is where Ann has to be a teacher. Many come with garden or health issues and require council. This means that more time is spent with each customer.

Shopping Behavior

On the farm, there is so much to see. There are gardens to walk in, teas to taste, and social opportunities. During this time customers want to play and then buy. If Ann is home she will take them on a walk around the grounds and let them try various tasty treats from the garden.

At the farmers market, it is crowded. Customers want to find something and get out. If there are not nice things to catch their eye they will keep on moving if they don?t have a reason to be there.

Competition

Ann doesn?t deal well with competition and she certainly wouldn?t come up against anyone who infringed on her brand. It seems, however, that the local market is the same. For instance, if one person is selling a great new product, than the others will not out of niceness.

Brand Competition

Ann does not have a sense of this concept. She wants to be known as selling a great product with total customer satisfaction, but the idea that she or her logo is a brand eludes her. This is mostly due to the organic herb culture of playing fair.

Generic Competition

Ann, even though everyone plays nice, has a lot of competition. Examples are:

Grocery store
Other farmers
Internet
Anyone with their own garden

There is so much competition all she can do is offer a superior product and wait for the return customers, which she has plenty of.

Macro Environments

There are many outside forces that keep Ann on her toes. This section will cover these issues.

Economic

Money is tight in the area in which she lives. The prices, however, are fair for these local people. She sells tomato plants and they are always a hit.

Regulatory

The rules for being organic are so tight that one year she couldn?t claim to be organic because one bag of miracle grow plant soil was found her greenhouse and she didn?t know if it had touched any of her plants. Her farm is inspected every so often and she has to stay within certain guidelines.

Natural

There is always a deer or moose trying to eat her garden and when the weather is bad it affects her growing season. The wind almost caused her to lose her greenhouse last year.

Technological

Everyone is online, but Ann. The current technologies demand she pay attention to them. With current trends surrounding the Internet the way they are, it is either get online or never expand the business outward. This area is where she needs the most work to meet her goals.

Societal

Currently society is on her side. Being natural is in these days and seems as though it will only grow in popularity. The problem with society is that they can turn on you in a flash. It is very important that Ann stay honest to her organic tendencies. If she ever makes a mistake, all will know.