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Locavory and Entrepreneurship

Wednesday 17 March 2010

I had a scintillating session with my undergraduate class in entrepreneurship today. We were using the HBS module on Market Segmentation, Target Marketing, and Positioning as an entry into constructing a venture plan. As we are nearly all food and ag sector folks, we discussed segmentation on such consumer benefits as nutrition, organic preference, food interest, and local food preference. It was particularly useful to note the overlaps (at least in common rhetoric) among these benefits as consumers perceive them: are locally produced foods more healthful, tasty, and have a better “story” to share over dinner?

We talked of DDDs (Distance-Delimited-Diets), such as the 100 mile diet. While no one in the group admitted to sharing in this peculiar form of crackpottery, we did discuss the opportunity for entrepreneurial rents to be earned in selling the benefit “locally-produced” to locavores, as well as people for whom nearby-production signals other (perhaps less valid) benefits: taste, uniqueness, nutritive value, environmental-friendship.

Locavory is complex, like many of the non-nutritive preferences sought in food markets. Attached to the construct local is a complicated set of credence attributes that include freshness, wholesomeness, tradition, and “connection to what we eat”. There are social benefits, as well. These include supporting family farms, supporting community members (i.e. the farmers), connecting to the growers and their families beyond the transaction, and being “green”.

As with any entrepreneurial opportunity, choosing a market position to serve locavores can be constructed with additional layers of differentiation to protect against competitive erosion of the entrepreneurial rents. Think of being a firm that produces and markets locally grown organic produce using heritage varieties. Or operating a catering firm based upon these consumer promises, overlaid with convenience. Like this one.

More on locavory in subsequent posts.

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