5. Marketing Plan
5.1. Market/Competitor Analysis
when applied to soil or land it provides plants with the vital nutrients that they need to grow (acodeco, 2015). With this definition, we look at the agriculture sector as our main market for our product.
Despite the rise in other sectors such as tourism, agriculture is still accountable for 31% of the labor force in Nicaragua, with coffee, beef, banana, tobacco and sugar being the strongest industries in the agriculture sector (Central Intelligence Agency, 2015). Agriculture represents an estimate of 19% of the country’s GDP (acodeco, 2015). Nicaragua as well has shown great potential in the crop index, where the current production is compared with the 2004-2006 period. For the year 2013 the crop index in comparison to 2004-2006 was at 140% (El banco mundial, 2015). The index of animal production as well shows increases in regards to the same period. In 2013 it was 130% in comparison to 2004-2006 (El banco mundial, 2015). The index of food production shows promising numbers as well with a position of 141.2% in comparison to the 2004-2006 period (El banco mundial, 2015).
Despite the importance that agriculture has in the national gross product, it is only until recently that the Nicaraguan farmers have realized the importance of fertilizers. Nicaragua has shown a growth towards the usage of fertilizer to better crop production. Information from the World Bank, shows that in 2010, 34.7 kg were used on average per acre of cultivatable land.
That number has risen to 53.7 kg in 2012 (El banco mundial, 2015). This response comes at the hands of competition from imported goods which are cultivated with higher technology, which helps improve their costs. At times, the national product cannot compete with imported goods (acodeco, 2015). From the period of 2003-2008, on a yearly average, the chemical fertilizer market in Nicaragua alone was estimated at US$58,563,780 with a consumption of 61,482 tons of it (acodeco, 2015).
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coming years. At the moment, there isn’t much use of organic fertilizers in the market when compared to chemical fertilizers, but organic fertilizers have shown to be taking over a larger portion of the market share, further emphasized with the notion that inorganic fertilizers are hazardous in the long run.It is also worth mentioning that we would move our product across Central America in a later stage. In 2010, it was estimated that Guatemala imported over 600,000 tons of chemical fertilizer, El Salvador 289,756 tons, Honduras 169,808 tons, Nicaragua 148,466 tons, Costa Rica 373,001 tons, and Panama 136,438 tons (acodeco, 2015).
In Central America DISAGRO is the strongest player for chemical fertilizers. Along with FERTICA who has the second largest share, together they command 62% of the market share for chemical fertilizers (acodeco, 2015).
In Nicaragua, the chemical fertilizer industry resembles a monopoly. It is classified as so due to the concentrations of presence and establishments and economies of scale. DISAGRO is resells it at whatever price it chooses to. Needless to say, the market growth of competitors is subject to a specific quota, determined by DISAGRO. ALBALINISA has only imported urea from the Venezuelan government and is only a competitor in that product (acodeco, 2015).
ALBALINISA has tried to stabilize the prices, but its efforts haven’t had much impact as they are subject to donations from the Venezuelan government.
Regarding organic fertilizer, data about the market is very limited with the small data coming from farms that produce their own organic fertilizer at a local level. The two main farms that
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will focus mostly on these two as competition as our initial target is to be the leader of organic fertilizer in the country.
5.1.2. Target Market
LOMBRIBONO’s initial target market will be farmers who are currently using organic fertilizer in their farms in the state of Carazo. However, we do estimate to have sales as well from those farmers that are currently using chemical fertilizers, but are becoming more aware of the benefits of using vermicomposting on their crops as well as their soil. A secondary target market will be the households that wish to garden with our products. We will also target the poultry and fishing industry as possible purchasers of our red worms.
One of the reasons we are focusing on Carazo is that our first vermicomposting center CAÑ AS BLANCAS, is located in El Rosario, a municipality of Carazo. Carazo is a state located close to the capital Managua, approximately a forty five minute car drive, and is bordered by Masaya and Granada, some of the most important and busiest states of Nicaragua.
Carazo has a total area 1081.40km2, responsible for 0.8% of the nation’s total land. It has a population of 166,073 habitants, 102,522 of them living in urban areas and 63,551 in rural areas. Carazo is made up of 8 municipalities (San Marcos, Diriamba, Dolores, Jinotepe, El Rosario, La Paz de Carazo, and Santa Teresa). Out of all 8, San Marcos, Diriamba, Dolores, and Jinotepe are the most populated (MAGFOR, 2015). According to surveys, 48% of Carazo’s total area is designated to agriculture (MAGFOR, 2015). Most of it being used for sugar, rice, corn, beans, livestock raising, fruits and coffee. Despite Carazo only being 0.8%
of the national territory, it represents 2.91% of all the farms nationwide (7,959 farms) (MAGFOR, 2015). It is also worth mentioning that 88.53% of the farmers own small farms ranging from 0.86 to 35 acres (MAGFOR, 2015). The total land currently used for agriculture is approximately 206,491.16 acres (MAGFOR, 2015).
In regard to fertilizer, 542 of the cattle farms that undergo raising crops as well use fertilizer.
This is equivalent to 6.11% of the nation’s total. Of the total farms dedicated solely to agriculture, 3122 use fertilizers (equivalent to 3.35% of the nation’s total) and 918 use organic
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fertilizer (equivalent to 5.14% of the nation’s total) (MAGFOR, 2015). It is estimated that in Carazo 23,816 acres of land use organic fertilizer and 78,050 acres use chemical fertilizers.
If we use the national average of 34.7 kg of fertilizer used per acre per year, we estimate that in Carazo 826,415 kg of organic fertilizer and 2,708,335 kg of chemical fertilizer is used a year. We believe that by the end of the fifth year we will be able to have attained a 50% of the market share for organic fertilizer and a 10% for chemical fertilizer in the state of Carazo.
This gives us a target market of 19,713 acres in the state of Carazo alone.
5.1.3. Competitor Analysis
In an initial stage during our growth we would compete against small farms EBENEZER and LA GARNACHA. These two are the only sellers of vermicomposting in Nicaragua.
EBENEZER is located in Niquinomo, Masaya. It operates in 11.9 acres and produces vermicomposting from the same waste it produces within the farm. It reuses the vermicomposting in its own crop production and any excess vermicomposting left is sold to nearby farms. EBENEZER is focused on sustainability and offers housing overnight at affordable prices to anyone who wishes to learn more about their procedures and operations.
They have productions of roughly of 9,000 kg a month (Núñez, 2012).
LA GARNACHA is located in Esteli, approximately 140 km from Managua, the capital. It too is similar to EBENEZER in the sense that it provides sustainable agriculture with the use of vermicomposting. The vermicomposting that is produced is used within the farm and sold to nearby farmers. LA GARNACHA constitutes more of a community as it lies on 22,000 acres of land and has a cheese factory as well within its land (Vianica, n.d.). Production of vermicomposting is small barely surpassing the 100 kg a month.
5.1.4. Competitive Advantage
The biggest competitive advantage of LOMBRIABONO is our involvement of the community. Unlike LA GARNACHA and EBENEZER who involve and benefit few farmers surrounding them, we will include the markets in the urban areas as well as the population of
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Another competitive advantage we have is that we plan on starting different vermicomposting centers across many areas of Carazo and later other states. This will spread the practice of vermicomposting, which is beneficial to the soil, across various farms in Nicaragua.
Following our business model, in turn we also benefit various populations of different cities who will join the handing in food waste in exchange for food.
Our location compared with LA GARNACHA is much better. LA GARNACHA is located 9 km on a dirt road from Esteli, which in turn is 140 km away from the capital.
LOMBRIABONO is located 5 km from Jinotepe, which is the capital of Carazo and is 10 km from Diriamba, 16 km from Masatepe, 13 km from Santa Teresa and 45 km from the capital of Nicaragua, Managua. It is also 24 km from Masaya and 41 km away from Granada.
Our location compared with EBENEZER is still favorable despite EBENEZER being close to the capital as well 43 km, 10 km from Masaya and 24 km from Granada. LOMBRIABONO is centrally located in Carazo, one of the most fertile lands in Nicaragua and one of the states that shows the highest usage of organic fertilizer (MAGFOR, 2015). Carazo also has higher density population than Masaya (MAGFOR, 2015).
Another competitive advantage lies on the impact of recycling that LOMBRIABONO will present to these cities. Waste management is a big issue in Nicaragua and incorporating proper food waste management to produce organic fertilizer will alleviate some of the necessary pressure that waste has on the environment. Our impact will not only reach farms, but will have a direct effect on urban populations as well.
Yet another advantage that LOMBRIABONO has over the competition is the waste for food program, which will help promote recycling and feed families. EBENEZER and LA GARNACHA do not have anything similar to this.
A factor that LOMBRIABONO can take advantage of is the fact that both EBENEZER and LOMBRIABONO have not done proper marketing and branding. Very few people know about their great efforts and even the product that they sell has no official name other than
“Lombrihumus,” which translates to vermicomposting.
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5.1.5. Positioning Map
The positioning Map will be based on the attributes that are the strongest competitive advantages for LOMBRIABONO in regards to LA GARNACHA and EBENEZER. These attributes are the ones that will be responsible for our quick expansion.
Figure 3: Positioning Map