New Generation Marketing. Bringing Relevance to Today s Seed Buyer

Transcription

1 PURDUE UNIVERSITY CENTER FOR FOOD AND AGRICULTURAL BUSINESS New Generation Marketing Bringing Relevance to Today s Seed Buyer Betty S. Ottinger Associate Director Center for Food and Agricultural Business Purdue University Speech before the American Seed Trade Association's Soybean Seed Research Conference Chicago, Illinois December 2001 Thank you for the opportunity to speak to you during ASTA's 31 st Soybean Seed Research Conference. When Manjit asked me to talk about marketing, I thought I needed a good title, something to catch people s attention. So today, my topic is New Generation Marketing - Bringing Relevance to Today s Seed Buyer. Unfortunately, about three days later on one of the late night talk shows, they were talking about the term new generation and how that term was used in public relations efforts. The thought was that new generation means we re not going to see anything new until another generation. I hope that s not the case today! I d like to talk about just a few ideas that might help you think about bringing relevance to your seed customers. It is common knowledge that our connection and relationship with today s seed buyers is extremely critical. We have fewer, larger, more sophisticated producers. And the producers that are in our market place are very competitive with each other. They re under a lot of pressure to make their businesses viable for the long term. As seed firms, I know that you re trying to meet those buyers demands. You re trying to bring relevance through your products, through your services, and through information. There are some age-old questions. It seems that the questions never change, but maybe our approach on how to answer them does change. What s important to your seed buyers? Once you ve figured out what s important, how can you satisfy their needs? And once you ve shown a customer that you can bring value, how do you maintain the relationship? The competitors are always right there, just inches behind you, so how do you keep what you offer to your customers relevant and sustainable for the long term? Center for Food and Agricultural Business Purdue University Krannert Building 403 W. State Street, W. Lafayette, IN phone: (765) fax: (765)

2 In our brief 20 minutes, I d like to talk about three topics: Building competitive advantage through linking value chains; Communicating competitive advantage through word of mouth marketing; and Delivering competitive advantage through field marketing activities. Building Competitive Advantage Through Linking Value Chains There s nothing new about value chains. They show processes and activities that a firm uses to bring value to the market place. But what if we use those value chains as a different way of looking at what we could bring to the customer? What if we look at what you do as a seed firm, what areas of expertise that you have and where you can plug into your customer s value chain? The bottom line is that you re looking for ways that you can help your customer reduce cost or generate more revenue, thus bringing more value to that producer s operation. Identifying Differentiation Opportunities through Linking the Value Chains of of the Firm and its its Seed Customers Logistics Marketing Service & Technical Support Sales Distribution Research SEED FIRM FARMER/PRODUCER Let s just look at a value chain for a seed firm and a producer. For years, seed companies have been creating linkages between these two value chains. What a seed company does in the production and research areas has been vital to the production activity on the producer s operation. And that s an area where you ve made progress in leaps and bounds over the years. Where are the other linkages? Let s just look at finance, for instance. Many seed companies are offering financing programs to their customers. In a recent copy of AgriNews, one seed company had an entire back-page dedicated to describing the different options that they had for financing for their seed buyers. Just a couple of weeks ago, I had the opportunity to have an in-depth conversation with a territory representative for an agricultural equipment company. He indicated that in his area, the farmers have grown so large that they have hired a lot of new employees. Now these operations are trying to deal with all of the other business challenges that they have, including the new personnel management issues. The territory rep is now looking at the expertise in his firm in the 2

3 human resource management area in order to take personnel management training to some of his key accounts. Identifying Differentiation Opportunities through Linking the Value Chains of of the Firm and its its Seed Customers Logistics Marketing Service & Technical Support Sales Distribution Research SEED FIRM FARMER/PRODUCER Obviously we can make numerous linkages between the seed firm s value chain and the customer s value chain. However, this morning I want to issue a challenge. At the points where your firm is linking your value chain with the customer s, can you make that linkage better? Can you make that linkage stronger? What can you do better in the areas where you already bring value to the customer? I bring this up for a reason. Last week I had the opportunity to spend three days with a group of 40 young, innovative, successful farmers in the four state area of Indiana, Kentucky, Tennessee, and Ohio. These producers are on the Purdue campus over the next year in a program sponsored by Farm Credit Services of Mid-America. They will participate in hands-on workshops studying farm financial management tools and business planning strategies. Farm Credit Services wants to assist these key customers continue to be successful ten and 15 years from now, as well as deepen their relationship with key accounts. Last week as I was preparing for this talk, what better audience could I have talked to in order to ask what they expected from their seed supplier? One question I posed was, What would you tell your seed supplier that would be beneficial in bringing additional value to your operation? I also made sure to ask, What keeps you loyal to your current seed supplier? I did have the opportunity for some one-on-one conversations with this group but also handed out a one-page survey. The bottom line is that I was able to gather quite a bit of information. Their responses fell into three categories: price, services and information. Of course, this is not a scientific survey, but what surprised me is how many of the answers were related to information needs. I d like to share a couple of comments from some of the producers I talked with last week. 3

4 Bringing Relevance... What commercial producers are saying Information Seed corn companies stress a variety s good points. We need to know the weaknesses as well as the strengths. Give us all of the facts about the products strengths and weaknesses. For example, a variety that has good drought tolerance. We didn t understand the impact cool weather would have on the variety. If we just had the information, we would have placed it on a different part of our property. In the end we lost quite a bit. Companies are coming out with so many new hybrids so fast that you don t give us enough information. Placement of hybrids is so important as a part of hedging my risk, please give me enough information to make the best decision I can. The above comments represent several examples of customer information needs. Again, these responses are from young, innovative and successful producers operating up to 13,000 acres. Let s take a look at the some of the positive responses in terms of what keeps these commercial producers loyal to their current seed supplier. Bringing Relevance... What seed companies offer to maintain my loyalty Family owned company Responsible employees CCA certified A lot of yield data Delivery in the field Lower loan rates Full time agronomist Informational meetings Agronomy training Matching of products to needs Brings latest bio tech information Bulk delivery Objective; accurate plot information Availability of good products Non-biased test plots with other companies One key point from this informal survey is that most of the information needs of these commercial producers are pretty unconventional. The information that they need in order to add value to their operation is a part of the linkage that you are already making. Thus, the reason for issuing the challenge: (1) How can you fine tune or increase the value of what you already offer to your customer? (2) What other linkages can you make that the producer isn t asking for? What linkages can you create to address needs that the seed buyer has not yet expressed? Just one example that begins to move us into the area of answering unspoken requests is the personnel 4

5 management expertise that the equipment representative plans to take to his sophisticated, large producer accounts. Identifying Differentiation Opportunities through Linking the Value Chains of of the Firm and its its Seed Customers LIVESTOCK PRODUCER HRM Research Distribution Sales Service & Tech. Support Inventory holding Marketing Logistics Marketing Logistics SEED FIRM FARMER/PRODUCER Bigger picture surrounding your customer PROCESSOR Inventory holding Design Engr. Manufacturing Inventory holding PRODUCER Sales & Distrib. Service & Tsch. Support Let s take a look at the bigger picture surrounding your customer. This diagram is helpful in terms of thinking about the customer s customer. In the longer-term, it will become critical to look beyond the seed buyer s needs. Several of the producers I had discussions with last week talked about growing value added/specialty crops. The request surfaced about how seed companies could assist producers in finding markets for the value-added grains they grow. A more extensive conversation in this area was with an innovative producer who has been quite aggressive at contract growing for processors. A number of seed firms are successfully creating linkages with processors and other entities on behalf of the commercial producer. Longer term, how can seed firms link into the value chains, further down the food system? Below is a perspective of one producer. 5

6 Bringing Relevance... What commercial producers are saying I want my seed supplier to be aggressive in making linkages with processors on my behalf. Last year, when I placed my seed order, part of my contract growing was designated for a tortilla processing plant not too far from here. The hybrid that I chose was on the preferred variety list. However, it was taken off of the list and I only found out because I attended a meeting conducted by the processor. Now this is just one guy s opinion, but you asked. I would have liked for my seed company to have been the one that called me to say that the hybrid was dropped from the preferred variety list. I think there are real opportunities for the seed company to partner with larger producers whose number keeps getting smaller and smaller. Communicating Competitive Advantage Through Word-of-Mouth Marketing Let s turn our attention to communicating relevance. Word-of-mouth marketing is not a new idea. It s actually an old idea and an old technique, but there s been a lot of new interest in word-of-mouth marketing. It s really a way of creating buzz and directing the buzz about the value a company is bringing to the market place and the customer. There are companies that are currently assisting agricultural input suppliers create buzz in the marketplace. Buzz doesn t just happen. As companies are beginning to use this method again, many times it is formally included into a marketing plan. There are several ways that word-of-mouth marketing is formalized. Communicating Relevance Word of Mouth Marketing Buzz doesn t just happen Supply opinion leaders with the product Ration supply Exploit icons Tap the power of lists and rankings Nurture grass roots movement Supply Opinion Leaders With Product. There is more information documented on how this works in the non-agricultural marketplace; however, there is documentation in the agricultural marketplace about the role of opinion leaders in technology adoption decisions. Seed 6

7 companies have seen success in supplying opinion leaders, or early adopters, with new products for quite some time. Ration Supply. Some marketers believe when you re creating the buzz, that you have to ration your supply to create more demand. This is just an element of word-of-mouth marketing and doesn t necessarily have to be included in the mix. Exploit Icons. Seed firms do this effectively through the use of logos, slogans, and public relations and advertising efforts. When I think of exploiting icons, the toy business or the music business comes to mind. Featuring a product in a hit movie, where every kid in the country wants to buy your product what a way to capitalize on icons! There are innovative applications of this technique in our marketplace. Tap Into The Power of Lists and Rankings. Seed companies do this very well through test plots, yield data, side-by-side comparisons, university data, etc., that you provide to customers. This is critical for our university. We have a highly ranked agribusiness program, but we also have a collaborative EMBA program with our Krannert Graduate Business School. When Business Week and U.S. News put our business school, our partner, in the top 20 across the country, you better believe we ve got that information displayed in key places. Nurture Grass Roots Movement. I believe that there is nothing more powerful than nurturing a grass roots movement once the buzz has been started. Word-of-mouth marketing can be powerful in the hands of influencers. Some recent research indicates that the buzz starters will be your sales person or your promotion efforts; however, in the agricultural marketplace, once the buzz is started, it is other farmers who will keep the buzz going. Off-Farm Influencers in the Purchase of Expendable Items For Crop Enterprises Local dealer Other farmers Manufacturer sales/tech rep Independent, paid consultants Extension service Corn/soybeans Wheat/barley Cotton Others off-farm Average % of decision 7

8 The idea of farmers being important influencers is also supported in the commercial producer study conducted at Purdue University. We wanted to learn, off of the farm, who were the most important influencers of purchases of expendable items for crops. For example, for corn and soybean operations the local dealer (would include farmer dealers) was rated the most influential. Other farmers were a relatively close second. And, other farmers are even more important influencers for those producers under 35. Delivering Competitive Advantage Through Field Marketing Activities To wrap up the third area this morning, I d like to talk a little bit about delivering relevance to your seed customers through Field Marketing. Field Marketing is a topic we have worked with at Purdue, through our Center, for about the last five years. Field Marketing focuses on your sales team the people who are in the field one-on-one with your customers. Field Marketing is based on developing a comprehensive plan for building long-term, profitable relationships with targeted customers. This concept fits very nicely with building better and new linkages with customers. Field marketing combines longer-term marketing principles with sound sales techniques and asks the sales team to approach the associated activities in a structured way. As the sales team takes a longer-term look at the marketplace, they examine customers as well as competitors. A tool for prioritizing customers and prospects allows a sales person to better understand the geographical territory and customers/prospects who deserve the most time and attention. Understanding which customers are a priority, and at the same time servicing the remaining customer base, is key to building long-term, profitable relationships. Delivering Relevance Field Marketing The Basics: Customer/Prospect Information Assessing the Competitive Situation Key Business Opportunities Goals for Long Term Relationship Field Marketing Strategy Key Account Strategy Key Action Steps 8

9 It is important to note that field marketing activities revolve around key accounts; we are not suggesting this process for all account management. Through our activities at the Center, we ve worked with management teams, sales coaches and entire sales organizations in a multistep field marketing process. Let s begin with the basics customer/prospect information. Seed companies do a good job of collecting information about prospects and customers. Firms gather information about the physical characteristics of the operation, the decision makers, the influencers, and what outside resources or consultants are being utilized. Is the portfolio of information your sales reps gather on key accounts enough? Do your sales people know the business goals of their key accounts? Think about that question. If a sales rep or field marketer is to really bring value to a key account, shouldn t the one, three, or five-year business goals be known for that large, sophisticated operation? Next we ask the sales team to assess the competitive situation. What are the competitor s strengths and weaknesses? Once we have solid customer and competitor information, we can begin to determine what key business opportunities may exist with a particular account. Keeping with our long-term theme, one, two and three year goals are assigned for each key account. These goals provide direction for key action steps by establishing volume, margin, and relationship targets Key action steps include the process of setting a specific timeline that lists dates, resources, and outcomes. The key action steps will provide a monitored set of activities that are being undertaken to reach the one, two, and three-year goals set for this account. As we ve worked with firms, and many of them have been seed firms, we get quite a few questions about whether field marketing activities really work. It can work if sales personnel have access to company resources. It can work if sales people are given some authority in the field. It can work if sales people receive the appropriate coaching and accountability for the goals they ve set. And it only works if management says, Yes this is important and we re going to do it. So we have talked about three ideas. Some of them, as I ve said, answered age-old questions or were tried and true techniques with a new spin. But hopefully these thoughts about linking value chains, creating and directing buzz in the marketplace, and using field marketing activities through your sales information will help you bring more relevance to your seed buyers. Thank you. 9