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Agrimarketing : October 2012
108 Agri Marketing October 2012 Education | Overview | continued from page 106 from a social relationship to a business relationship. Certainly farmers seldom buy from people or companies they don't like, so a warm friendly approach continues to be an important element of any selling strategy. But we have clearly shifted that relationship to one that is based on understanding the customers' business model and how to help them solve technical and business problems. That fact alone has brought about major shifts in our marketing and selling strategies. Dave: Another very important element of this shift is the ability of the customer to discern the value of an offer. To suppliers this means they have to understand their business, create unique economic value, and then be able to demonstrate/quantify and communicate the benefits of the offer to the customer. No longer is it enough to say, "trust me ... this is good for you." That changes our thinking about what products/ services we bring, how they are priced, and how we communicate the value. Tom: Yes, and their expectations are constantly ratcheted upward. Every time they experience greater satisfaction, that level of satisfaction soon becomes a new minimum standard, and they want/expect more. Customers are fickle that way! PROMOTION Dave:: Another dramatic change is in promotional strategies. Today we recognize that "promotion" refers to everything we do to communicate our offer to our customers. There are so many different channels of communication today. While there continues to be a lot of value in traditional forms of communications, there are new options to consider in the overall "promotional mix," many of which are internet based. Learning to use these in the right way is a major challenge for marketers because communication preferences vary so much among customers. Tom: I am really impressed with the power of a good Customer Relations Management (CRM) system. Computers allow us to do so much more with CRM. Twenty years ago most of us didn't even have a clue about what a CRM system was. We are learning now and some companies are making progress by leaps and bounds. Tracking every customer contact and using that information to deepen relationships with customers by proving better service at just the right times is very powerful. Manufactures as well as dealers can really understand a lot more about their customers with a good CRM system and enhance the total value proposition they can deliver. Dave: The whole selling process has dramatically changed too. When we first started teaching AgriSelling courses on the Purdue campus 35 years ago, it was all about pitching our products, touting the benefits, overcoming objections and aggressively closing. But today our AgriSelling class focuses much more on discovering a customer 's beliefs, goals and needs, then creating unique solutions from a wide variety of company resources, and demonstrating the value of that package. They have a great deal more technical ability and spend a great deal of time educating customers on new technologies in their field. The professional salesperson today focuses on customers in their company's most strategic market segments and works with a team others to create and deliver real value. Salespeople are now recognized as an intricate part of the marketing strategy, rather than a separate function. DISTRIBUTION Tom: Dave, I'm sure you agree that an area of evolving change is distribution. Fifty years ago, with very few exceptions, products were distributed using a four step system --- manufacturer, distributor, dealer and farmer. This is still true for a lot of products, but has changed drastically for some, and is in the process of changing for several others. Dave: Of course this has changed largely because of changes in the number of buyers. With millions of farmers came the need for long distribution channels to create the required reach. As the number of buyers declines so does the need for long distribution channels. Look, for example, at the poultry industry where now just a handful of large organizations control production; direct selling just makes sense. Tom: And there have been other changes too. Earlier we talked about the internet. This makes it possible for manufacturers to reach end users directly. Add to that the widespread use of credit cards for payment and the system is in place to foster more direct buying. Dave: The "Large Commercial Producer Studies" in the U.S. and Canada both point to more direct distribution in the future. Tom, I think your last study showed that very large producers anticipate they will purchase up to 40% of their inputs directly from manufacturers in the not too distant future. That's a lot of product! Tom: The whole thing is changing for distributors too. With fewer, larger retailers and the growth of retail buying groups, many manufacturers are rethinking how they get product to dealers. I don't think we'll see distributors go away, but the distinction between THE BULLSEYE OF MARKETING (more on page 110)
November December 2012