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Agrimarketing : September 2012
54 Agri Marketing September 2012 Islowly pulled up next to our mailbox, and my husband reached in to grab the day's delivery. He started sorting through the pile and stopped suddenly. "What in the world?" Jason asked inquisitively, holding up a copy of Latina, the "largest magazine edited by and for Latin women," according to its web site. "Huh. Looks like someone didn't segment their prospective subscribers very well," I joked. Living with an agri-marketer for seven years, he's come to expect these types of responses from me. Somehow, my late-20s Caucasian husband who has no significant ties to the Hispanic community made it onto Latina's mailing list. "I wonder how much it cost to mail that. What a waste," I thought, as he dropped it into our recycling bin in the garage. The team at Latina should take another look at their marketing segmentation strategy and ensure that they are reaching the people they intend. Segments should include customers or prospects who will respond similarly to a given offer because they have common needs, goals or beliefs about what will make them successful, according to Dr. Scott Downey, Professor and Associate Director at Purdue's Center for Food and Agricultural Business. "Agribusinesses have accepted there are groups of customers who are different, but we haven't gotten very sophisticated about figuring out what that means," Downey explains. "The next step is to ask how exactly the groups are different and what the company is going to do differently in response." As the difference between the largest and smallest customer has gotten wider, a single "go-to" market approach is not as effective or sustainable as separate approaches for each segment would be, according to Downey. For example, establishing and maintaining a sales force is an expensive marketing tactic. There are some customers for whom agribusinesses can justify the cost of a sales person. However, there are others who do not provide the same return on investment and may be better served through other channels, such as an online store or telephone center. "We should manage the investment we make in providing contact with customers so that we can get a return on it," Downey says. "That probably means having different resources and different talents in our organization directed toward one segment versus another." Downey suggests taking an approach that helps marketers understand what the segments want, what processes they use, what goals they have and how their beliefs are different. Marketers can also explore how the segments are organized differently and how they use information differently. With this knowledge, agribusinesses can match their resources and talents with the appropriate segments. "Segmentation is not a low-level activity," Downey advises. "It determines how a company is strategically going to go to market, so it needs to be done at the highest levels of the organization. It is an organizational decision, not solely a marketing decision." Instead of relying on an internal team to identify the company's segments, agribusinesses should consider hiring a market research firm to manage the segmentation process. A research firm is more knowledgeable regarding what questions to ask and better equipped to elicit the segment's points of differentiation based on the responses. The firm will also help the agribusiness' executive management team identify which segments to focus on, what their value proposition is today and where they want it to be going. In addition, they will explore what the company's capabilities are for serving multiple segments. The Latina magazine incident gave my husband and me a good laugh, but more importantly, it illustrated the complexity and importance of establishing a successful marketing segmentation strategy. Remember, it's much more than determining the points of differentiation between groups. Taking it one step further and somehow acting differently to better serve a segment's uniqueness can mean the difference between a sale and the recycle bin. AM GOOD MARKETING IS NOT GARBAGE by Megan Sheridan Insights from Purdue University SEMINARS Upcoming Agribusiness Center for Food and Agricultural Business Strategic AgriMarketing October 15-19 , 2012 ARA Management Academy February 5-7 , 2013 Learn more at www.agecon.purdue.edu/cab Megan Sheridan is the Marketing Director at Purdue's Center for Food and Agricultural Business. She can be reached at msheridan@ purdue.edu. To be useful, segments should be: • Substantial (Large enough to warrant attention). • Accessible (Can find and communicate with them). • Profitable (Represent a large volume of business).
AgCareers USA 2012