Marketing approach to the formation of a digital commercial space for sale of organic products

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Vinnytsia Institute of Trade and Economics of the State University of Trade and Economics

MARKETING APPROACH TO THE FORMATION OF A DIGITAL COMMERCIAL SPACE FOR SALE OF ORGANIC PRODUCTS

Sharko V., Andrusenko N., Vasylyshina O.

Marketing approaches to the promotion of various goods and services have undergone significant changes over the last decade. Modern innovations in the field of information and communication technologies, the rapid development of social networks had a significant impact on the strategy of promoting organic products on the market. New conceptual approaches in marketing are based on multifunctional socio-ecological-economic mechanisms in the organization of market processes. A marketing approach focused on digital technologies is relevant for such segment of the food market as organic products.

The rise of the life level standards of the population on earth, the development of technologies have changed the trend of public awareness, brought to the first place issues of the environmental friendliness of the production and consumption of goods. Among the economically active population today, the most popular views are about the need to lead a healthy lifestyle, eat natural products, which, in turn, contributes to the development of the market for organic (ecological) food products. promoting organic marketing good

The world market of organic products is actively developing and shows higher growth rates compared to the market of agricultural products grown with the use of chemical fertilizers.

The formation of stable and reliable sources of sales of organic crop production is the determining condition of the organic production development and the efficient operation of agricultural enterprises. In countries with raw material orientation of the agricultural sector, to which Ukraine also belongs, most of the produced organic agricultural products are exported in large batches as raw materials. Almost 80% of Ukrainian producers of organic products are export-oriented [1]. The largest global exporters of organic products are the Netherlands, Switzerland, Canada, Greece and Israel [2]. Despite the economic attractiveness of exports, in the conditions of growing competition on world markets, strengthening of trade barriers, implementation of the policy of local producers' protection, disruption of logistics chains (including as a result of the COVID-19 pandemic), the role of local sales markets for organic crop production is increasing. As stated in the Report of the UN Commission on Trade and Development «Trade and the environment. Review 2013: wake up before it's too late», the primary goal in the conditions of global changes in the systems of food, agricultural production and trade is the concentration of sales on local markets. This will help to reduce CO² emissions and improve the ecological condition of the natural environment.

The experience of foreign countries clearly shows the need to form a comprehensive strategy of the development of the organic product market, starting with the definition of quality standards and ending with the development of marketing strategy for both domestic and foreign markets. This becomes especially relevant at the initial stage of the market's emergence, when it is necessary to influence both the formation of demand from consumers and the stimulation of production.

A wide range of theoretical aspects and applied problems of marketing organic products have become the object of research by many scientists. The world experience of promoting organic products was studied by I.B. Chychkalo-Kondratska and I.V. Novytska Having studied the experience of promoting organic products in Switzerland, Turkey and Germany, the authors came to the conclusion that for the growth of sales it is important to create a well-thought-out logo and activate the advertising company on the Internet and television [14]. Scientists have paid special attention to marketing tools for the organic products promotion [5, 6,7, 8]. S.V. Kovalchuk and E.M. Zaburmekha studied the socio-economic aspects of the organic products promotion. The authors believe that in order to stimulate the demand of organic products, it is necessary to intensify marketing communication, in particular through advertising and publicity in the press and on the Internet [12]. T.V. Borovyk substantiated the models of marketing strategies of domestic product manufacturers entering the market of organic products [13]. I.V. Novytska considered the essence and content of digital marketing tools, conducted a comparative analysis of traditional and digital media, analyzed the advantages and prospects of using digital tools in the process of promoting organic products to the market [14]. Xiaocui Wang analyzed e-commerce models for organic agricultural products [15].

The information base of the research was made up of official statistical data of Ukrainian and foreign organizations, legislative and regulatory acts of Ukraine, materials of thematic studies on the development of the organic production market, publications in specialized publications and mass media, as well as the results of the author's own marketing research for 2016-2021 years.

In the Ukrainian economic literature, insufficient attention is paid to the problem of the introduction of electronic commerce within the framework of small agricultural enterprises focused on the production of organic products. The major experts concentrate on the informatization of the agro-industrial complex as a whole [1] and the development of a single electronic market of agricultural products [5].

Analysis of marketing communications in the market of organic products shows that sales of organic products currently still make up not very significant share of the total sales of food products in different countries - from 0.75% in the Czech Republic to 4.2% in the USA.

The Ukrainian market of organic products is at the stage of development, only forming model of buyer behavior, sales channels and forms of interaction between its participants. At the same time, Ukraine observes a steady trend of growth in sales of organic food products (Fig. 1). Thus, in 5 years it grew more than 1.5 times - from 30 million euros in 2017 to 50 million euros in 2018.

Fig. 1 Ukrainian organic production market, million USD [3]

Although the share of the Ukrainian market of organic products is insignificant and amounts to 7% in the structure of the food market, experts assume a positive trend of its development. The rise in the standard of living of the population in developed countries, the development of science and medicine, and the active promotion of a healthy lifestyle among the population contribute to increasing interest in ecologically clean food products.

Compared to developed Western countries, Ukraine has a large resource potential in the form of a large amount of free fertile soil, a moderate climate, and the availability of a scientific base for the development of the agricultural sector.

Additional factors contributing to its development not only in developed countries are the high level of consumer interest in environmentally friendly products, the greening of production, the expansion of social standards, the attractiveness of market niches in foreign markets, and the possibility of diversifying production for manufacturers.

The fastest growing market segments for organic products are «vegetables and fruits», «milk and dairy products». At the same time, the segments «meat, poultry», «bakery products» and «drinks» are growing at a faster pace, but they lag behind the leaders in terms of volume (Fig. 2).

Fig. 2 Sales of organic products by category [3]

Currently, there are several main trends in the development of the Ukrainian organic food market. The growth of the world organic food market is more than 2 times faster than the growth of the market of non-organic «mass» products. Experts believe that the rich soil resource potential, the presence of vast areas of land (up to 40%) that have not been cultivated recently due to economic and financial difficulties, and cheaper labor will contribute to the faster development of the Ukrainian organic market than in the West.

As in the West, in Ukraine, organic products belong to the premium segment, their main consumers are representatives of the middle and higher class, that is, about 20% of Ukrainians. For example, the most active consumers in Vinnitsa are women and men aged 25-45, with higher education, with an average and higher income.

The main reasons for buying and consuming organic food are its health benefits, absence of artificial ingredients and preservatives, natural taste and safety. Among the main barriers to the purchase of this product is its high price. Also, many consumers do not feel the usefulness of organic products for health, do not know anything about them or do not trust the manufacturer. A limiting factor is the short shelf life of these products.

Factors stimulating the purchase of environmentally friendly products include: rising incomes, caring for one's own and family's health, fitness, and a decrease in the number of available and free medical services. Of great importance is the dissemination of information about the dangers of biotechnological "unhealthy" ingredients in food, as well as the harmful effects of chemicals on traditional agriculture. In addition, the consumption of branded organic products is one of the most fashionable trends in the West.

The main sales channels for organic food are: supermarkets, where most of the premium food products are sold; specialized stores selling natural products; pharmacies that sell a limited range of organic products. These are mainly diabetic and low-calorie products, baby food and cosmetics; direct sales through online stores, which allow you to avoid retail margins; marketplace, an online platform that combines the offers of organic producers.

Today, sales of organic food through online stores account for 5% of the total sales of these products. According to experts, online sales will grow by 22% by the end of 2021. A high percentage of sales of goods via the Internet is due to the fact that when selling online, the cost of production is reduced due to the absence of costs for sellers and rental of premises. Also now, online commerce has become widespread, as the consumer has gained confidence in such shopping channels.

The Ukrainian market of organic products is significantly inferior to the Western one. Thus, according to the report of the Association of Internet Trade Companies, online trade in products accounts for only 2 % of the Ukrainian e-commerce market.

It should also be noted the importance of online trading for such subjects of the organic goods market as small businesses and farms. They do not seek to independently penetrate Internet sites, but, as a rule, use the services of intermediaries. The vast majority of online stores of natural organic products are buyers of products from local farmers or farmers from nearby regions and sellers of these products under their own brands.

For a number of reasons, the movement of organic products to the final buyer through traditional distribution channels is inefficient. Retail chains require mass and regular supplies of standardized products that tolerate transportation well and have a long shelf life, which implies the use of inorganic preservatives in production, while the main advantage of farm products is their naturalness. Thus, small production volumes, a short shelf life and rather high prices, typical for farm products, do not satisfy the needs of retailers.

Farmers' markets as a channel of distribution are also not able to meet the requirements of organic producers and buyers fully. On such sites, there is no level of service necessary for the sale of premium organic products, and buyers do not receive product quality guarantees due to the low level of reliability of sanitary examinations organized in the markets.

Selling farm products to processors is also impractical due to low purchase prices and low profitability for farmers, as well as due to the high quality and wide production of products on farms.

One of the effective forms of distribution of products produced by farms is the marketplace.

Marketplace is a platform where both sellers and buyers meet. Thus, the owner of the resource has to work with two completely different types of users at once, broadcasting a unique value proposition for each. At the moment, marketplaces are in great demand in Ukraine. Interest is shown both by business owners and their target audience. The use of such resources greatly simplifies the entry of new small and medium-sized players into the e-commerce market.

Placement on the marketplace allows entrepreneurs to concentrate on the development of their own business, without focusing on attracting new clients and establishing logistics channels.

Prices on such sites can be lower than in stores - without middlemen's markups and marketing costs. Marketplaces help self-employed citizens provide their business services, increase cooperation with neighbors, and give the state the opportunity to provide more targeted support.

That is, the marketplace (site-aggregator) of organic products is a company that offers farmers services for selling their products on the Internet. Such companies are characterized by a wide range of products, the most customer-friendly delivery conditions, and a significant number of farmer-suppliers. Such online supermarkets actively use various channels of communication with consumers to promote their products. The search for the most competitive business model is actively underway among such aggregator sites.

An example of an effective marketplace for organic products is the Eat Organic project. The prices here are set by suppliers, and the platform adds its commission of 25-35%. On the page of each product there is a story about the farmer who grows and supplies it, as well as customer reviews. Farmers monitor demand: in their personal account on the site, they indicate how many units of production they can prepare this week. They help promote the product: they take photos and videos for social networks. This company sells not only products, but also the history of each farmer.

One of the innovative tools of the promotion of organic products on the Ukrainian market are marketplaces - platforms that unite suppliers and consumers on one platform. Figure 3 shows a model of the marketplace of organic products.

Fig. 3 Model of the mechanism of interaction of organic products market participants within the digital trading space of the marketplace (compiled by the author)

Thus, the market of organic products has prospects for development. One of the sales channels for products is online sales, both through specialized websites of large retailers and through marketplaces that bring together small producers by industry.

The proposed model of the marketplace of organic products is focused on the accumulation of participants in this market at the regional level. Within the framework of this Internet resource, digital interaction of the following categories of participants is provided: entrepreneurs (farmers, small enterprises for the production of organic products, individual entrepreneurs and villagers selling crops grown on their personal subsidiary plots); consumers (individuals, schools, hospitals, cafes, shops); service providers (logistics, storage and processing services; financing, insurance); state structures (control bodies, local authorities, sectoral ministries).

The functionality of the information system allows: create a separate page for each participant with the ability to edit information materials; send and receive messages from all portal participants both in text message and video format; sign agreements between system participants using an electronic signature; conduct joint video chats; arrange an auction for a particular position online; leave feedback about the seller of the goods, according to which ratings of trust are assigned to the manufacturer; conduct online surveys.

The use of this toolkit provides certain advantages for each category of participants. So, farmers and small producers of organic products get the opportunity to organize the sale of their products at minimal cost and find contractors who deliver the goods to the end consumer. The ability to edit, post videos and photos, direct chat with the end user allows you to show the benefits of your product, give the necessary explanations that are of interest to the buyer, and get feedback.

The next category of portal participants are service providers (logistics, storage and processing services; financing and insurance). Online trading involves the provision of a number of additional services such as delivery to the end customer, financial payment instruments, insurance, etc. The presence on the platform of several providers of such services at once creates a competitive environment, allows the buyer and seller to choose the most convenient delivery option for them. For suppliers, this is an opportunity to occupy their niche in a promising market, which, according to experts' forecasts, will only grow.

The regional marketplace, where authorities of various levels are represented, is also a convenient tool for the strategic development of the industry. It allows entrepreneurs to directly apply for public procurement tenders in the same schools and kindergartens, which in turn improves the quality of food in socially significant facilities. Through the portal, you can establish interaction with control and tax authorities. The functionality of direct messages and video chat essentially creates another effective channel for interaction between business and government.

Modern technologies make it possible to conduct presentations, meetings, online surveys, etc. in the digital space. The marketplace of organic products forms special information and communication channels of network interaction, allows you to find like-minded people, convey to potential counterparties more detailed information about your services and products.

Thus, the marketplace as an innovative system for promoting organic products on the Ukrainian market has a number of advantages. The main users of this channel are micro-enterprises for the production of organic products, farms, personal subsidiary plots, product consumers, social institutions, cafes and shops. The functionality of the information and communication system allows you to establish direct contact between producers and consumers, find new markets, and reduce logistics costs.

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