RESEARCH NOTES

09/28/06
Kaila and Aaron:
[Fast readers: skim the bold/yellow marked targets.]
Thanks for the lunch meeting on Monday last. The food at Giga Pizza was great. I had never had a “Calazone” except as a squid dish. The Buffalo sausage from Kalispell, along with the soft cheese and dressing, which filled the toasted empanada, was a great taste treat.
I hope the sheaf of marketing materials I gave you will help focus your marketing research on what works. We can market the slettuce through Home Grown Organics (HGO), a startup organic farming operation which is currently conducting field tests on asparagus and hazelnuts. Part of the marketing for spirulina will be through HGO's Community Supported Agriculture Cooperative (CSA).
CSA's have been around for quite a while and are popular interfaces between urban dwellers and rural farmers. Many organic farms have adopted the CSA model for direct marketing. As it turns out, foodstuffs are mostly about relationships, not product. Tidbits:

• Do you know your farmer?
• Where did this food product come from?
• Was this foodstuff produced without toxic chemicals?
• Were the chickens/beef cattle/dairy cattle, turkeys raised as pasture fed, free-ranging animals?
• Were the animals humanely treated during their lives and at the end of their lives?
• What is the nutritional value of this organic foodstuffs as compared to industrially produced foodstuff?
• How can you, the seller, assure me that the foodstuffs have been handled properly from a health and safety viewpoint?
• How will my purchase of a particular foodstuff help a local farmer and the local economy?
• I'm willing to pay extra for organic foodstuffs raised ethically and holistically, but what assurances can you, the seller, give me of such?

Some of the materials from Co-America speak to these issues.
I have attached a series of articles which bear on CSA's. Please read the Hurricane Relief Trip Recap By Jody Osmund, Cedar Valley Sustainable Farm CSA. It nearly brought tears to my eyes. The other articles are good, too. CSAs are all about relationships, not fancy ads or powerful sales pitches. As an example, flour Spirulina can be marketed directly as part of the supplies needed to bake organic products. The slettuce idea could have many varieties which imitate leafy vegetables.
I developed a “How to do it” website for CSAs after studying them for a year. You should take a look and and probably cite: Cyber Gardens http://www.xsorbit3.com/users/cybergarden/index.cgi
I recently received in hard copy: Hilchey, D. and Henehan, B, Small-Scale Grower Cooperatives in the Northeast United States – A Study of Organizational Characteristics, Managers, Member and Director attitudes, and the Potential for Improving Regional Inter-cooperative Collaboration, United States Department of Agriculture, Rural Development-Cooperative Programs, RBS Research Report 210, August, 2006. This publication cost $4.00 and is not online. After reviewing it, my critique is:

• It was not online and no plans to put it online.
• The Cooperative Marketing Channels paragraph did not cover CSAs, nor did any part of the study discuss CSAs.
• Sharing and networking through conferences was the means and only one mention of online collaboration was made.
• There was no reference to sales through ecommerce
• The literature citations failed to include any citations to websites.

It would appear that the authors were not Web-savvy. There were some good stats concerning cooperatives which redeems the publication somewhat.
I recently read about a farmer-sponsored CSA wherein the retail customer/members put in online, their specific order a week in advance, selected from a catalogue of available products. Thus the contents of the delivered foodstuffs exactly matched what the consumer order (or nearly so based on availability). The article reported a substantial drop in waste and reduction of haul-backs for those products which could be stored for future sales. Customer satisfaction also rose.
Cell Tech initially tried to sell through a Multi-Level Marketing program (MLM) which at the minimum is a variety of a pyramid scheme. You will note in the SEC 10-K filing that this marketing approach fell apart and left Cell Tech with virtually no marketing ability. Montana Synergy does not intend to sell through an MLM. If you are interested, I can explain the reasons for this policy in more detail. But please mention the Cell Tech experience with the MLM approach.
This Tuesday, I attended the 5th annual conference given by Montana Nonprofit Association, in Helena. Much of the discussion was about fund- and friend-raising and “marketing”, if you will. Nearly all of the presenters stressed how important establishing and retaining relationships were. As an example, it cost about $100 to attract the average long-term donor and about $2 to $10 per year to keep an existing donor. The main pitch was: find out what results are important for the individual, foundation or corporate donor. We should not rely upon how good a job the NPO does or how important that work is. As an example, corporate image locally is important to the corporations; then stress how the corporation's local image will be greatly enhanced by participating in a very specific cause, e.g., for Home Depot, guide the gift toward construction of a homeless persons' shelter in the immediate community.
Selling healthy foods should start with how important good health is to the buyer's state of mind (spirulina fed cows are happy cows which give happy milk), or immune system (spirulina has no toxic chemicals), or body mass (spirulina, added to a drink, is high in low-cal protein which can prevent weight gain and aid weight loss).
Organic Valley, one of the largest marketer of organic foods, has an online newsletter [ e-newsletter@alerts.organicvalley.com ] which, as an example of marketing “results”, promotes child health with this article (summary):
Dr. Greene: Brain Food for Your Kids (clickable)
What's on your child's plate today? Pediatrician Dr. Alan Greene explains why healthy breakfasts and lunches are key to helping kids succeed in school. Read the doctor's "homework" to give kids the nutritional edge they deserve. http://www.organicvalley.coop/culture/school_lunch/brain_food.html You have a good start on the marketing plan. Please keep me informed by uploading your research notes and drafts at all stages. I really look forward to collaboration via the Wikiweb for Montana Synergy: http://montanasynergy.wetpaint.com . I'll post this message and also email it to you.
Best regards,
Jim Miller
cc: Cliff Montagne, Jakki Mohr