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ISSUE # 17 page 3 JUNE 1998
MARKETING RESEARCH FOR THE SMALL SCALE CORAL FARM part 1
During the past three years the Research Foundation at G.A.R.F. has researching ways that corals can be marketed. The Research we have been doing includes both laboratory work and personal communication with professional coral farmers from around the World.
The Foundations background includes two decades of applied research into commercial Aquaculture. We have done extensive research in the growing of tropical aquaculture products in the northern part of the United States using geothermal water to supply the needed heat. Tilapia, Giant fresh water prawns, and hundreds of species of tropical fish have been raised here at the foundation. We have been growing and marketing reef aquarium animals in an expanding research project for several years. We have been able to combine the data we have compiled from the reef hobby with the practical techniques used to produce aquatic animals for profit.
For the past 18 months we have been accelerating our research so that we can share a simple and inexpensive method of starting and growing a small scale coral farm.
During the last two years we have seen the quality and size of wild collected reef animals decrease while the price has gone up. The Mushroom rocks we are purchasing this semester from wholesalers, who sell wild collected stock, are very much smaller than the same priced rocks we purchased just 18 months ago. The hobbyist can benefit from this declining supply of quality imported stock by growing these animals in aquariums. Next semesters series of articles will continue to give you pictures showing new methods of propagating reef animals of all types.
Our marketing research has been done with small scale, local invertebrate production as the main focus. This type of farming has several advantages over larger scale fish hatcheries. The methods used to clone reef invertebrates have been very easy to teach reef hobbyist. The same types of skills that are used to build and operate a successful reef show tank can be used to farm these animals for profit. The marketing methods that we will write about are only some of the many ways you can use to grow and market these reef animals.
The basic Zero Impact Reef - using AragocreteTM hand made live rock is a very good way to start this project because it will work. This system can be added to by using many other products and techniques. The "Rack Reef Farming" tanks can be changed to fit your market. G.A.R.F. does not say that any of these methods are the best or the only way to grow reef animals.
Much of our research has been conducted by growing these products for sale in the retail and wholesale market. We have learned that in this market the three most important things in selling reef animals are color, color, and more color.
When you are planning the marketing of the products from a small scale coral farm you need to consider the following things.
1). What marketing skills do I have that will help me be a successful reef farmer?
Experience in any phase of marketing will provide valuable skills that will allow you to compete with the other types of marine livestock available in your area. Are you good on the telephone? Many hobbiest would be very interested in learning about the new corals that are ready for sale. You could run a series of small classified ads listing several corals at great prices so you could build a list of customers in your town.
Are you good on the Computer? All types of computer skills will be very valuable during the early marketing phase. If you are able to make posters, hand-outs and other needed items you will save a considerable amount of money. Many petshops do not sell Marine fish, and they will often put up your poster so their customers can find captive raised reef animals. They may enjoy taking the business away from a competitor who sells wild collected stock.
2). You can trade your captive raised reef animals for new colorful broodstock for your reef farm. Trading is one of the best ways to practice the most important thing a new small business owner can ever learn. HOW LITTLE YOU SPEND IS AS IMPORTANT AS HOW MUCH YOU SELL. Many new farmers will go broke in this type of farming in the same way that people all over the country go broke each year in all types of companies. THEY WILL SPEND TOO MUCH MONEY!
There are two great ways to find bargains and they both take up more time than money.
1.) Watch the local newspapers for people advertising complete reef aquariums for sale. Many newcomers to the hobby do not understand that the aquarium hobby tends to be a winter pastime. Many people think that they have lost the passion for the hobby when the Spring and Summer days are so nice. I have been able to purchase very nice reef aquariums in the Summer from people who did not know they would be looking for a nice reef tank to enjoy next winter.
How much time do you have to give to marketing your product?
The more time you spend marketing your reef produce the higher the price you will be able to sell it for.
There comes a point when you may not want to spend the time finding people to purchase your corals at close to retail. This is the time when you may want to work with one good retail store in each town or market in your area.
Any type of marketing takes time if you are going to do a good job. We recommend that most people start this project as a part time venture. The skills and experience needed to be successful at marketing can be learned from the hands on selling of reef animals. By stocking your reef products in nice retail store you can devote more time to growing. Several pricing deals can be worked out with the retail store owner. Many people sell their corals to the stores and the stores take the entire risk that the coral will sell. Other people work with a trusted store owner and they sell their corals on a commission based pricing. Many stores will pay 1/3 of retail for corals that they purchase. These same retailers may be happy to pay 50 percent of retail when they sell corals that you leave there for sale.
Patience and faith that the reef hobby will grow as we provide more tank raised stock are important. If you are ready to build the venture over a period of several years you will not rush into doing things that overwhelm you or your systems.
How do I acquire the skills needed to market my corals so I can have a profitable reef farm?
Read as many books and magazines as you can. Keep an open mind while you do this research. Send for as many pricelists as you can find. Remember there are many ways to do this project right. There are only a few basic mistakes. Don't sell your corals for less than it costs to grow them and try to make up the difference by selling them faster and cheaper. :)
Often a mixture of these techniques can be used to build a marketing plan that is profitable.
1.)Attend your local marine aquarium club and talk to as many successful reef hobbyists as you can. Local society newsletters often charge very low prices for full page ads. You can advertise your corals and collect new names for your calling / mailing list.
2.) National and Regional reef conferences are a great place to meet other people who have much of the information you can use to build a reef farm. Booths at Reef conferences are a great way to both sell corals and to collect a list of customers.
3.)The internet is a new and powerful tool to use for marketing. Many web sites have been set up by companies who sell all types of reef products. We will explore this MUCH more in future issues.
5). How you market the reef animals that you produce will have as much to do with your long term success as how well you grow corals. We have found that Xenia and colored sps corals are very popular now.
XENIA MARKETING TIPS FOR THE LOCAL MARKET
NEW METHODS FOR PROPAGATING XENIA MAKE THIS ONE OF THE MOST PROFITABLE CORALS
PROPAGATED XENIA CAN BE DELIVERED TO LOCAL STORES THAT HAVE A HARD TIME IMPORTING THEM
Many stores have a very hard time keeping Xenia that have been shipped for long distances. Some dealers report losses of 100 percent. Xenia corals have the added feature missing from all others - MOVEMENT. Xenia grows very fast when it is doing well, and it is easy to propagate if you follow a few simple rules. Xenia is one of the corals people always read about when they are starting their reef aquarium. This coral looks good in pictures and this creates a demand.
Several things come into play in Xenia marketing that do NOT have the same impact on most other corals .
1.) People buy a nice Xenia and fail to learn the simple methods needed to keep it alive, so they repurchase the coral.
2.) The Xenia colony grows so well that it fills the available space and then crashes when it becomes stressed. People often study this corals needs and they try again.
3.)The Xenia does very well and they want to collect as many types as possible because growing Xenia can be addictive:)
This opens a good local market for your tank raised Xenia. These types of reef products can be delivered to local stores with much better success than they have when they are packed in bags overnight.
We have been preparing the xenia for transport by stressing them several times and then washing the slime off of them in clean reef water.
2. We hold the xenia out of the water for one minute.
3. We have now started floating the Xenia in the reef it was NOT raised in for five minutes. This reef is the same temp., but it stresses the xenia slightly.
4. Wash the Xenia in front of a powerhead for one minute.
5. Refloat the Xenia in the reef it WAS raised in for five minutes.
6. Pack the Xenia in the reef water it was raised in. Use more water than you would for other cuttings
We use ice pacs in the Summer when we ship Xenia and we have had about 100 percent success during the past year. The captive strains of Xenia are so hardy that we can give an unheard of live arrival guarantee. We use about 3 cups of water in each Xenia bag and we use several bags for each one. The rock the coral is attached to can cause single bags to leak. We use one and one half inch Styrofoam to keep the boxes from changing temp.
Xenia sp.Most of the Xenia that have in the unconnected genetic bank have large polyps with pinnated tentacles that move in a rhythmic motion. These polyps are connected at the base. The colors we have are cream, biege, and light brown. Two and a half years ago we received a new colony from Bali that is cream with brown edges on the polyps. This Giant Xenia is growing very fast. It is the finest looking pulse coral I have ever seen!
THIS IS THE BALI XENIA
1.)You can attach two xenia to one rock. The tag method of production makes this very easy. People love to get two corals for the price of one.
2.) Use larger rocks so the coralline algae is an added bonus. Many beginners will be looking for things to fill their reefs. If you are making your own rocks and you have the space, larger rocks will often sell first.
3.) Use two strains of Xenia on one rock. - COMBO ROCKS - the types of Xenia we are growing do not seem to damage each other when they touch. We often put two species on one long rock and these always sell very fast. People love a bargain and even a small colony of the common CREEPER Xenia adds value to the product.
4.) Print up some CARE NEEDED CARDS that can be handed out at the store. We have just purchased a new HP color copier for less than $500.00 and we will use it make color sales and care needed cards. These types of hand outs are POP- Point of Purchase and they can increase sales of your products when you can not be in the stores selling your corals.
5.) BE IN THE STORES SELLING YOUR CORALS. If the store owner will allow you spend some time on the sales floor you can use this time to teach the other sales people about captive raised corals. You can also get feedback from the customers so you will know what to grow. You need to learn to think like a farmer so you are planning and planting now what you will be selling in September when the reef habby kicks into high gear.
6.) Learn the seasonal ups and downs of the hobby in your area - in the North part of the U.S. the hobby almost dies every Summer when people start going outside. This cycle is less in South because people tend to do things outdoors all year. Summer is a good time to have sales and it is a good time to locate newcomers to the hobby - the best group is the millions of people who have fresh water aquariums - because they tend to stay excited during that first Summer.
1. Keep the Iodine level up by using Sea Chem Reef Plus at twice the regular dose.