Selling to commercial producers successfully: it's based on what we know and what we do with it!Arthur Jones Arthur Jones is the name of:
nautilus, cephalopod mollusk belonging to the sole surviving genus (Nautilus) of a subclass that flourished 200 million years ago, known as the nautiloids. Sports/Medical Industries, has a great quote. Success comes from good judgment. Good judgment comes from experience. Experience comes from bad judgment." In the business of agrimarketing, Dr. Allan Allan can refer to:
 `, -d`), main campus at West Lafayette, Ind. associate professor of agribusiness agribusinessAgriculture operated by business; specifically, that part of a modern national economy devoted to the production, processing, and distribution of food and fibre products and byproducts. management, says, "One might take that axiom one step further in agrimarketing and say success comes from what we do with those judgments and experiences based on solid information." When it comes to successful agri selling, "Know Thy Customer" is the unnamed first commandment com·mand·ment n. 1. A command; an edict. 2. Bible One of the Ten Commandments. commandment Noun a divine command, esp. . Successful agricultural companies are working hard and fast to best understand what the commercial producer looks like, wants, needs and expects from ag input suppliers. With the focus of this issue of Agri Marketing on direct and relationship marketing, there's no better place to emphasize the importance of "Knowing Thy Customer." A recently released survey conducted by Purdue University focused on commercial agricultural producers and provides some unique understanding of this critical market segment. This finger on the pulse research provides solid information and offers valuable direction for agri-marketing professionals. THE SURVEY Every five years since 1993, Purdue's Center for Food and Agricultural Business (CAB) has conducted the Commercial Producer Survey to benchmark issues Benchmark issue Also called on-the-run or current-coupon issue or bellwether issue. In the secondary market, the benchmark issue is the most recently auctioned Treasury issues for each maturity. and attitudes of farmers with more than $100,000 in annual gross farm sales in a particular enterprise, with primary focus on those farmers with annual sales of over $500,000 in one of six key segments: corn/soybeans, wheat/ barley/canola, cotton, swine swine, name for any of the cloven-hoofed mammals of the family Suidae, native to the Old World. A swine has a rather long, mobile snout, a heavy, relatively short-legged body, a thick, bristly hide, and a small tail. , beef or dairy. Results of the survey were explored at the National Conference for Agribusiness entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Serving Commercial Producers: Meeting Needs, Adding Value" in November November: see month. 2003 at Purdue. Gray, who directed the survey, says, "The 2003 Survey results provide agribusinesses with tools to gauge their own understanding of changes impacting these producers. With more than 2,300 survey responses from producers across the country, we've we've Contraction of we have. we've have explored how their farm and ranch ranch, large farm devoted chiefly to raising and breeding cattle, horses, sheep, and goats. The cattle ranch was introduced from Latin America to Texas and the plains of the W United States and Canada. businesses are changing and what they want from their agricultural input suppliers." Dr. Jay Akridge, center director, adds, "For agrimarketers, the opportunity lies in truly understanding the producers we serve, and then what we do with that knowledge. Anticipating the needs of today's and tomorrow's producer is a crucial first step in positioning your firm to be the producer's supplier of choice." WHO IS A COMMERCIAL PRODUCER? The Commercial Producer Survey used the categories listed in the table below to define crop producers. "Today's commercial producer is significantly larger than 10 or even five years ago and economically more important to agrimarketers," Purdue's Dr. Dave Downey says. "These producers' volume creates potential economies of scale and operating efficiencies. Doing business with them may enhance suppliers' market image, and they justify unique attention and demand value tailored to meet their individual needs." GROWTH PLANS Overall, commercial producers showed mixed signals on growth. "Growth numbers vary among livestock livestock Farm animals, with the exception of poultry. In Western countries the category encompasses primarily cattle, sheep, pigs, goats, horses, donkeys, and mules; other animals (e.g., buffalo, oxen, or camels) may predominate in other areas. species and crops produced, and agrimarketers will need to keep these planned growth patterns in mind as they pursue targeting and segmentation activities," Gray says. Changes among mid-size pork pork, flesh of swine prepared as food, one of the principal commodities of the meatpacking industry. Pork has long been a staple food in most of the world, although religious taboos have limited its use, especially among Jews and Muslims. producers were most dramatic with five-year growth plans dropping from 39 percent in 1998 to 0 percent in 2003. Commercial hog producers, relative to 1993, are slowing their growth plans. (It is important to note that the survey did not cover the very large integrators in the pork industry.) Dairy producers report the most ambitious five-year growth plans among commercial livestock producers with anticipated growth of 36 percent over the next five years. This figure is down from the 49 percent five-year growth figure that commercial dairy producers reported in 1998. Commercial corn and soybean soybean, soya bean, or soy pea, leguminous plant (Glycine max, G. soja, or Soja max) of the family Leguminosae (pulse family), native to tropical and warm temperate regions of Asia, where it has been producers expect significant growth over the next five years and on average expect to increase the size of their operations by roughly 30 percent by 2008. This contrasts to the 21 percent growth expected among commercial cotton farmers and the 7 percent growth expected by wheat/canola/ barley barley, annual cereal plant (Hordeum vulgare and sometimes other species) of the family Gramineae (grass family), cultivated by humans probably as early as any cereal. producers. Gray points out that growth numbers are key to agrimarketers' understanding of this segment. "First, customer portfolios must be reviewed--is your portfolio a mix of customers who plan to grow and those who don't? Or, is it weighted too heavily toward those who do not plan to grow? For those producers who have both the desire and the capacity to grow, how can your firm best serve this group? Which of the many needs of a rapidly growing farm business can you fill? These needs may stretch far beyond typical product-service boundaries as issues such as labor, satisfying environmental regulations, locating production contracts, etc., come into play." DEALERS ARE CRITICALLY IMPORTANT Commercial producers said dealers were the most important off-farm influencers of input decisions for both capital item and expendable purchases. In addition, commercial producers rated dealers the highest quality source of personal information they use in making input decisions. Dr. Maria Marshall, assistant professor of rural entrepreneurship en·tre·pre·neur n. A person who organizes, operates, and assumes the risk for a business venture. [French, from Old French, from entreprendre, to undertake; see enterprise. points out, "The dealer as an off-farm influencer of purchase decisions was more important to crop producers relative to livestock producers. The dealer was also less important to the largest producers and less important to those hiring independent, paid consultants." While dealers remain the most important off-farm influencer in the input purchase decision for both capital and expendable items, the news is not all positive. Some of the more disconcerting dis·con·cert tr.v. dis·con·cert·ed, dis·con·cert·ing, dis·con·certs 1. To upset the self-possession of; ruffle. See Synonyms at embarrass. 2. findings for dealers include: * Large producers are the most discriminating dis·crim·i·nat·ing adj. 1. a. Able to recognize or draw fine distinctions; perceptive. b. Showing careful judgment or fine taste: buyers and notice the greatest differences in the quality of services and information across local suppliers. * The larger the producer, the more likely they are to believe that they know more about input products than local suppliers. * Since 1998, more producers feel they have more knowledge about their input products compared to their local suppliers. Akridge continued, "For agrimarketers, it is important to remember that dealers continue to play a critical role in the marketing channel, even for large producers. At the same time, the role of the dealer is under pressure. Dealers must continue to innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. around services, information, and business processes to maintain their position." THE NEXT LEVEL "Sheer economics make the importance of the commercial producer and the mega-farmer segments crystal dear," says Downey. "Nearly every supplier understands they must capture and maintain a significant share of these segments to remain economically viable." Downey emphasizes, "It's significant for agrimarketers to realize price is always important to large farmers, but it is not about price ... it is always about value. Price must accurately reflect the cost of creating the bundle of products, services and information that large producers perceive as valuable in their farm business. Large producers will not pay for things unless they perceive there is sufficient value to justify the price ... because they don't have to!" REACH THEM, SERVICE THEM, RETAIN THEM Findings of the 2003 Commercial Producer survey prove that we have a diverse and complex market. Downey says, "This map of the commercial producer must be dissected dis·sect·ed adj. 1. Botany Divided into many deep, narrow segments: dissected leaves. 2. Geology Cut by irregular valleys and hills. Adj. 1. , analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. and prioritized by agrimarketers." Additionally, specific strategies must be developed for the market segments. Combined with data from 1993, 1998 and 2003, research on commercial producers has suggested a more sophisticated approach is needed to adequately reach, service and retain these large commercial producers. Downey says, "Field marketing is an approach that combines a deeper understanding of customers and focuses on tailoring solutions to the unique needs of each targeted customer. Field marketers must have solid technical expertise, good business savvy, and excellent selling and communication skills. They must be able to use a wide variety of company resources to identify specific problems and create unique value and communicate (sell) that value to the targeted customers." Direct marketing and relationship marketing in agribusiness have continued to evolve. Downey says, "As commercial producers have continued to grow, we are recognizing that some producers must be singled out.., targeted specifically and designated as a 'key account'. Key Account Management (KAM) effectively employs all the information we know about key producers to deliver exceptional value consistently. It provides a means for partnering with these clients to meet their business needs and a company's goals simultaneously." It is not all about products and price however. Downey adds, "Trust and honesty Honesty See also Righteousness, Virtuousness. Alethia ancient Greek personification of truth. [Gk. Myth.: Zimmerman, 18] Better Business Bureau nationwide system of organizations investigating dishonest business practices. [Am. are now even more important to these producers." When asked to indicate the three most important traits in the best agricultural salesperson they knew, 65 percent of the respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. indicated that trust and honesty were important traits; up from 49 percent of respondents in 1998. The next two most important salesperson qualities were technical competence technical competence, n the ability of the practitioner, during the treatment phase of dental care and with respect to those procedures combining psychomotor and cognitive skills, consistently to provide services at a professionally acceptable level. and follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan service. SUCCESSFUL AGRIMARKETING Agrimarketers must stay on top of the changes and challenges facing producers in the industry they serve. Gray summarizes, "Whether it's field marketing, key account management, targeting or segmentation, this 2003 Commercial Producer Survey not only reinforces what we know but also opens doors to some new issues and challenges that are emerging for these large commercial producers. Helping this group run a more profitable farm business is, in the end, what adding value is all about when you are designing and delivering the best marketing approach to reach the segment you serve."
WHO IS A COMMERCIAL PRODUCER?
Farm Type Mid-Size
Corn/soybean (acres) 300-1,499
Wheat/barley/canola (acres) 700-3,499
Cotton (acres): 200-1,099
Dairy (cows milked/day) 40-199
Finished Hogs (head marketed/year) 800-3,999
Feeder Pigs (head marketed/year) 3,300-16,499
Finished Cattle (head marketed/year) 150-799
Feeder/Stocker Cattle (head marketed/year) 250-1,249
Farm Type Commercial
Corn/soybean (acres) 1,500+
Wheat/barley/canola (acres) 3,500+
Cotton (acres): 1,100+
Dairy (cows milked/day) 200+
Finished Hogs (head marketed/year) 4,000+
Feeder Pigs (head marketed/year) 16,500+
Finished Cattle (head marketed/year) 800+
Feeder/Stocker Cattle (head marketed/year) 1,250+
Farm Type Large
Corn/soybean (acres) 4,600+
Wheat/barley/canola (acres) 9 000+
Cotton (acres): 3,000+
Dairy (cows milked/day) 1,000+
Finished Hogs (head marketed/year) 25,000+
Feeder Pigs (head marketed/year) 100,000+
Finished Cattle (head marketed/year) 3,000+
Feeder/Stocker Cattle (head marketed/year) 20,000+
Livestock enterprises were defined in number of head produced.
USEFULNESS OF
INFORMATION SOURCES
(by size)
Large Commercial-T Midsize
Local dealers 3.45 3.58 3.49
Veterinarians ** 3.39 3.64 3.74
Manuf. sales rep 3.31 3.20 3.00
Other farmers 3.20 3.31 3.35
Manuf. tech rep 3.09 2.94 2.59
Indep. consult 2.75 2.46 1.91
Lenders 2.49 2.53 2.26
Average usefulness:
t = never useful, 5 = always useful
Source: Purdue Center for Food and Agricultural
Business
Note: Table made from bar graph.
IN THE NEXT FIVE YEARS, I WANT A MORE
DIRECT RELATIONSHIP WITH MANUFACTURERS
OF EXPENDABLE ITEMS (by size)
Average:
Large: 3.75;
Commercial-T: 3.52;
Midsize: 3.31
Large Commercial-T Midsize
1. Strongly
Disagree/ 11% 11% 14%
2. Disagree 11% 11% 14%
3 27% 40% 47%
4. Agree/
5. Strongly
Agree 62% 49% 39%
Source: Purdue Center for Food and Agricultural
Business
Note: Table made from bar graph.
More information is available on the 2003 Commercial Producer Survey including a Survey Theme Report, or a customized run of the data focusing on your business segment at www.agecon.purdue.edu/cab, or by contacting Scott Downey at downeys@purdue.edu or 765/494-4325. Kathleen Erickson is president of Erickson Communications, an ag marketing communications Marketing communications (or marcom) are messages and related media used to communicate with a market. Those who practice advertising, branding, direct marketing, graphic design, marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a located in Clarks Hill Clarks Hill can refer to:
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