Case B, story of the enterprise and its product

The meat industry company was established as a family business in 1991. The enterprise’s business included butchery, cutting of meat and direct selling of products from its own outlet in the farm. The main article in the product selection was home-grown pigs that were fed arable grain. When customers found the local meat industry entrepreneur, the enterprise’s business expanded and contract farms started to supply the raw material needed in secondary production. The cooperation between other actors in the field had started, and the enterprise’s own outlet also offered products from other local farms and companies.

Later on, the focus of enterprise’s business was changed from primary production towards secondary production. The butchery was closed down and meanwhile a smokehouse was built.

In addition, the necessary equipment for the manufacturing of sausages was purchased. The solution was natural for the family business, and the family’s structure and needs supported the change (picture 2). The family’s daughter became the managing director and the son was in charge of the quality of meat. The parents had previously grown arable grain for 30 years in the farm. During these years, the farm

had bred pigs and the pigs were sold to big Finnish butcheries.

The evolvement of the meat industry enterprise from primary production to secondary production had its own problems. The thought of changing the enterprise’s business started from the idea that “Good pork needs to be offered directly to customers so that the meat does not get lost in big butcheries⁶”. At the same time, questions arose about

“could the same farm have both primary and secondary production and how an entrepreneur should act⁷”. The changing

of business required pioneering spirit. The outsourcing of the butchery was necessary for numerous reasons. For example, improving hygiene was considered important, and the butchery did not add value to the farm. Benefits from the change were that the enterprise could offer a wider selection of meat products and add special products to its selection.

The broadening of company’s selection of meat products brought up the issue of secondary producer’s inability to respond to the demand of, for example, domestic lamb and large meat farms supply domestic meat if the contract farms cannot supply it. The entrepreneur has faced new challenges in the development of business.

The enterprise pays special attention to customer service. The neighbours as well as store’s customers are important for the company. “The neighbouring ladies of the house are welcome visitors and if they don’t show up then you need to worry⁸”. During the summertime, the company’s farm shop is visited by people on the way to their summer cottages and some of the customers are wealthy. These customers consider it important that the meat is fresh and that

“they can be sure that they know what they are about to eat ⁹”. Because of the occurrence of new BSE disease cases, new customers have emerged from consumer groups who want to be sure that they are eating domestic meat. High incomes of some of the customers create extra potential to pay for high traceability and specific quality. Ecological thinking was considered unfamiliar and ecoproductization raised suspicions about the ecology of own business, such as “we are not environmentally friendly and our products are not environmental products”.

The meaning of immediate surroundings and neighbours, operating in the countryside, the

6 “Hyvää possua tulee tarjota kuluttajille suoraan ettei possu hukkuisi isoihin teurastamoihin”.

7 “Voisiko samalla tilalla olla sekä alkutuotantoa että jatkojalostusta, miten yrittäjän tulee toimia”

8 “Naapuriemännät ovat tervetulleita vierailijoita ja jos niitä ei näy, niin sitten pitää olla huolissaan”.

9 “Voi olla varma siitä, että tietää mitä suuhunsa laittaa”.

Picture 2. Second generation of the family business.

importance of domestic production and marketing planning of the products were issues that came up during the interview.

Story of the product B: Smoked ham

The products of Makuliha, including smoked ham, are sold in the enterprise’s own farm shop and in retailer shops in the Uusimaa region. The growth of the enterprise’s business has demonstrated that the right kinds of strategic decisions have been made about enterprise’s business. The pricing of products has been easier in the company’s own shop than with the retailer. The price is retailer-specific and the retailer’s own view about the price determines the sale price of the product. Retailers are aware of the prices but “what other factors affect retailer’s decision, such as the product information available¹⁰” were issues that the interviewee pondered. It may be important for the retailer that the same product is not available from the shop next door. The retailer wants to specialize with its products. Pricing is made more complicated by the costs of product demonstrators, development of advertising material, costs that occur from handling a special product, distribution costs and time management.

Smoked ham is one of the special products the enterprise offers for its customers. Thoughts considering smoked ham were investment in quality and personal service for customers. For example, smoked ham was wished to be sold unpacked from service counter. The aim of productization is to stand out from other similar products in a personal way, for example, by producing meat products that are shaped in various ways and taste different.

The interviewee had doubts about the ecology of the company, because previously it had not been considered as a separate issue. In addition to own doubts, the interviewee worried about the experiences of customers if company’s marketing was to be changed. It was unclear, for example, whether the word eco adds value for the product, how clearly it should be communicated and how issues relating to ecology are generally acknowledged. During the time, ecoproductization was not a general discussion topic and the interviewee hesitated whether it would be worthwhile to enter green markets and whether they have courage to do so. Ultimately, the retailer defines the price of a small firm’s product in the food industry and, hence to make ecoproductization even possible, the retailer should be incorporated in the process.

Ideas that came up during the interview included the issue that the customer’s opinions alone are insufficient to define the ecology of smoked ham and the enterprise needs to carefully consider what kind of information about the enterprise and the products it wants to communicate. The image about the company the customers form was considered important.

One of the enterprise’s principles in business is communicating the fact that the company operates in the countryside as a farm to the customers in a genuine way. The limits of small business resources also came apparent. While the interviewee knew the possibilities of using the internet, such as having own websites, the creation of the website was put on hold.

The insufficiency of resources is apparent in marketing communications, because too little information about the products is available for customers. The enterprise has not received

10 “mitkä muut tekijät vaikuttavat kauppiaan päätökseen kuten saatavilla olevat tuotetiedot”

subsidies from the government nor has it really expected to receive any. The enterprise would benefit more from guiding and directions from the authorities instead of rules and direct orders. How the enterprise is informed also affects how it implements the information in practice.