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Agrimarketing : January February 2008
24 AgriMarketing January/February 2008 Building a strong brand and sub- sequent brand loyalty is no easy task for agri-marketers for two main reasons. First, the customer base for the agricultural input sup- plier is continuously evolving because of structural change occur- ring within the agricultural sector. Second, rapid technological ad- vancements create frequent intro- duction of new products. The task of building loyalty can be made a little easier for agribusi- ness marketers who understand the purchasers of their products. Re- search at Purdue University has been conducted to help agri- marketers in this effort. Using the responses from 2,100 producers who completed a survey, Purdue researchers created a profile of a branded producer. PROFILE OF A BRAND LOYAL PRODUCER Well over half of survey respondents (58%), expressed loyalty to the branded capital inputs, such as the equipment and machinery that they buy. About 39% of producers reported that they considered themselves loyal to the brands of expendable inputs, such as fertilizers, feed, and seed. A common theme among producers who identify themselves as loyal is that they believe branded input prod- ucts are differentiated from one another and that brands perform bet- ter when compared to generic prod- ucts. They were particularly interested in the non-price characteristics of branded products such as perfor- mance, service, and maintenance. Loyal respondents placed a higher value on information from media sources, including print, magazine, radio, and farm shows, than producers who did not exhibit loyalty. CAPITAL VS. EXPENDABLE INPUT BRAND LOYALTY Other characteristics were identified that distinguish capital loyal produc- ers. Corn and soybean producers tended to more often report loyalty to branded capital input items. This is expected, since the production of these grains is very capital intensive. Pro- ducers who attended high school but did not obtain a diploma exhibited the greatest loyalty for capital inputs. A different set of factors was found to determine expendable brand loyalty. Reporting a lower-than-aver- age level of annual sales and being older than 54 years of age are factors that more often tend to indicate brand loyalty for expendable inputs. Pro- ducing cotton and placing orders for agricultural inputs and products online are both indicators of non-loy- alty for expendable inputs. Online ordering is an indicator that these producers value convenience and have the ability to easily shop around and compare prices on the Internet. IMPLICATIONS FOR AGRI-MARKETERS What does this mean for agribusi- nesses that supply farm inputs? The survey shows that brand differentia- tion, media exposure, and brand per- formance directly affect brand loyalty. These issues can be directly addressed by agribusinesses seeking to build brand loyalty while operating in an evolving market environment. As a practical application, market- ing managers can use the characteris- tics highlighted above to identify loyal customers and subsequently can develop two strategies: one for loyal customers and one for those who do not fit loyal profiles. For example, a strategy to build brand awareness and to disseminate information about brand attributes would be useful when directed toward producers who do not fit the loyal profile. A strategy to maintain loyalty --- repeat purchase discounts, for exam- ple --- would be more useful when geared towards those customers that are loyal. In addition, marketing strategies for loyalty should continue to focus not on price but on the value that commercial producers can obtain through product quality and service. Providing relevant information through mainstream media channels is one means of communicating these facts and other related information. Marketing strategies should also vary between capital inputs and expendable inputs. Expendable inputs, for example, require less of an investment and are typically for short- term use. Younger farmers, who are least likely to be loyal to expendable inputs, may try a number of brands before settling on one that they find acceptable later in their career. Agribusinesses should focus on brand awareness and on highlighting brand benefits with this group. On the other hand, capital inputs usually require large, long-term financial commit- ments, and farmers operating capital intensive operations are expected to exhibit greater loyalty associated with factors such as service and performance. AM Anetra Harbor (email@example.com) is an economist with the U.S. Department of Agriculture, in Washington, D.C. Maud Roucan-Kane (mroucan@purdue. edu) is a research associate for the Center for Food and Agricultural Business and a Ph.D. student at Purdue University. BRAND LOYALTY AMONG AG PRODUCERS by Dr. Anetra Harbor and Maud Roucan-Kane Sales and Marketing Insights from Purdue University SEMINARS Upcoming Agribusiness Strategic Decision Making Under Uncertainty March 18-20, 2008 Sales Management and Leadership June 17-18, 2008 Precision Selling: Building Relationships with Large Farmers July 31-August 1, 2008 Strategic Agrimarketing October 27-31, 2008 Center for Food and Agricultural Business
2008 Marketing Services Guide
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