Clustering

Advertising executive Larry Leach talks about how clustering like items or stores can actually help sales. Something market managers need to understand, but also to understand the need for tact when designing their markets…
“In communities where competition is limited we found that people would chose to drive to another community where there was more choice, more variety, and better prices because of competition.”
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3 Comments

  1. Very timely post, Darlene.
    I am finalizing a presentation of developing product diversity and a vendor recruitment plan for a conference this weekend. One of the questions always asked is what to do about exclusivity. Should a new vendor be accepted into the market if someone else is already selling that product.
    The sited article shows that competition is, in fact, beneficial.
    I am encouraging markets to work with members to ensure that there is diversity in product, variety (different varieties of tomatoes, for example) and price.
    Emphasizing the “co-opetition” theory seems important.
    Anything else you’d say is vital to include on this topic?

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    • Hey Mercedes!

      I think the issue, of course, is balance. The way that products should be added is, as you point out, by need (demand), and then it becomes the market organization’s job to add more and different demand when the same product is sold by more than one vendor. My experience was to work on vendors growing different types of the same product (smaller quantity of heirloom versus higher volume of another variety for example) or to analyze what type of shopper is attracted to each vendor and to find their particular shoppers. (Example may be that the seasoned, quiet farmer may be very popular with experienced market shoppers, but the newer, enthusiastic, talky vendor may attract nervous first time shoppers.)

      In the research of typology of markets that I continue to work on, the “food security” market is the only one that I have found so far that consciously limits competition in favor of fewer vendors attending, since those markets are often limited by the number of shoppers they can attract (when they are setting up markets in low traffic food deserts.) However, its important to note that the food security market (and all of the types that are emerging through research) are on one continued spectrum so any market can start as a food security market and then become a boutique or another type, so those limitations can be lifted later.
      In all cases, that need or demand should always be set by the manager and the Board, rather than the vendors. In other words, exclusives can often happen for short periods, but no vendor (or market manager) should expect an exclusive to remain in the types of markets that intend to grow the market base.
      Darlene

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  2. And let me also remind everyone here a fact that Mercedes already knows and is conscious of as we have talked about it in the past- we CANNOT ask vendors to limit prices or to ask them to look at other vendor’s prices when setting theirs. That is a legal violation and falls under price collusion or price fixing.
    Instead, be aware of the need to work on diversifying your shopper base, or designing your market so that the one area is not overloaded with one product. I am working on the beginnings of a short presentation on anchor vendors and their shoppers behavior for a project in Central Brooklyn that I hope to add to and share by summer for everyone else.

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