Selling Commercial Producers

1
Selling Commercial Producers

• November 20, 2003
• Dave Downey
• Purdue University
• Center for Food and Agricultural Business

2
What Does The Mean To Our Field Marketing and
Selling Strategies?

• Answer.
• We have a very diverse and complex market
• that must be . . . .
• Dissected
• Analyzed
• Prioritized
• and specific strategies developed
• for target segments

3
Market Segmentation

• Identifying meaningful and practical segments
• and designing effective and unique strategies
• is proving to be the key to success
• Part-time and Life Style farmers
• Traditional producers
• Commercial producers
• Mega / Industrial farms
• All have unique needs, problems, and values
• and offer significant profit potential
• if served properly

4
Market Segmentation

• Suppliers understand the traditional segment
• and are quite comfortable with this business
• and it is abundantly clear that
• this segment continues to be
• the bread and butter for many
• Many suppliers are recognizing the potential
• of the part-time/life style segment
• . . . and it is growing for many

5
Market Segmentation

• But the Commercial producer
• and the Mega farmer
• are the key focus and challenge
• Sheer economics makes the importance
• of these segments of crystal clear
• Nearly every supplier understands
• they must capture and maintain
• a significant share of these segments
• to remain economically viable

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The Commercial Producer

• In many ways, the commercial producer
• is very much like other segments
• so the same marketing strategies
• work equally well
• ..especially when implemented
• by good salespeople
• Yet there are important differences
• that demand different strategies
• applied in different degrees

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The Commercial Producer

• Significantly Larger..
• Economically more important
• Volume creates potential economies of scale
• and operating efficiencies
• Enhances suppliers market image
• (and strokes the suppliers ego?)
• ..justifying unique attention
• and tailoring value to individual needs

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The Commercial Producer

• More Sophisticated Managers
• View farming as a business
• rather than a way of life
• See management and labor issues
• as major challenges in next five years
• Spend more time purchasing inputs
• Use more sophisticated mgt. techniques
• Develops cash flow risk management plans
• Attend management seminars
• Have written business and marketing plans
• Utilize computers and the internet heavily

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The Commercial Producer

• Focused More On Technology
• Adopt new technologies more quickly
• Spends more time evaluating
• new technology
• More Complex Production
• More Value-Enhanced crops livestock
• More contract production

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The Commercial Producer

• More Complex Decision Process
• More people involved in purchase decisions
• Family and non-family employees
• Independent consultants
• More Price Conscious (or is it value issue?)
• Price is number one issue
• Performance, Service, and Convenience
• is also important

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Selling Commercial Producers

• Fundamental Questions..
• What kind of sales strategy is most effective
• for selling and servicing commercial farmers?
• What role does the salesperson play?
• What role should the salesperson play?
• What kind of salesperson is most effective?
• How should the sales function
• be organized and managed?

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The Role of the Salesperson

• Farmers say they are spending more time
• evaluating technology than five years ago
• The local dealer (salespeople)
• plays a powerful role
• as an information source

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The Role of the Salesperson

• Local dealers (salespeople?) rate quite high
• as a source of information
• and now rate higher than other farmers
• Manufacturer sales/tech reps
• also play an important role
• especially for expendables

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For the expendable items I buy, I find I am
relying more on manufacturer reps than local
dealer reps for information than I did 5 years
ago by Size
Significantly different at plt.05
15
For the capital items I buy, I find I am relying
more on manufacturer sales/tech reps than on
local dealer sales/tech reps for information than
I did 5 years ago
Significantly different at plt.05
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The Role of the Salesperson

• The ability to provide information
• is an important component
• of the farmers purchase decision
• Farmers see significant differences
• among suppliers

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The ability of the supplier to provide
information is important to me when selecting a
supplier
Significantly different at plt.05
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The Role of the Salesperson

• Salespeople continue to play a critical role
• in the purchase decision process
• Farmers say they rely more on salespeople
• for information than five years ago

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I am relying more on salespeople for information
and advice than I did 5 years ago
Not significantly different at plt.05
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What Do Farmers Value in Salespeople?

• The Top 3 Characteristics are
• Honesty
• Technical Competency
• Follow-up Service
• The same ranking as 1998
• but more pronounced in 2003

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Top 3 Characteristics of the Best Ag Salesperson
by Size (Part I)
Significantly different at plt.05
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Top 3 Characteristics of the Best Ag Salesperson
by Size (Part II)

• Note
• Fairness and Friend ranks higher for
  mid-sized farmers
• Innovative ideas and
• Access to supplier resources
• ranks higher for large farmers

Significantly different at plt.05
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Each Commercial Producer is Unique

• Within the Commercial Producer segment
• there are many significant characteristics
• that many farmers have in common
• Yet it is equally as clear that
• there is huge variation within the segment
• Each Commercial Producers is unique its detail

• Values
• Needs and problems
• Decision processes
• Plans

• Financial situation
• Management capacity
• Resources
• Organizational structure

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Large and Mega Producers

• Large commercial and mega producers
• offer major business opportunities
• for input suppliers at all levels
• But they also present some of the largest
• marketing challenges of the decade
• Our industry is not geared
• to dealing with very large customers
• and we are struggling to adjust

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Large Commercial and Mega Producers Are Different

• Large and Mega Producers are sometimes.
• As large as their local supplier (or larger)
• As technically competent (or more so)
• As knowledgeable about the market
• (or more so)
• As good at negotiating (or better)
• As sophisticated in organizational structure

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Many Local Dealers Have TroubleSelling Large
Commercial Producers

• Many large producers place little emphasis
• on what the traditional supplier
• wants to sell them
• Or they find that the local source is not
• capable of providing what they want
• at price that is competitive

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Large and Mega Producers

• Extremely dangerous to make generalizations
• They can be .
• Economic
• Business
• Relationship buyers
• but most often they are
• Economic or Business Buyers

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Large and Mega Buying Styles

• There are two basic types of Mega farmers
• Both demand and will get a really good deal!

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Large and Mega Buying Styles

• Ruthless Megas are
• .Economic Buyers who focus on price
• and then try to squeeze service
• out of the supplier
• Often pit one supplier against another
• Withhold information from suppliers
• Split purchases among suppliers
• Jerk suppliers around
• Are not concerned with
• the profitability of their suppliers.

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Large and Mega Buying Styles

• Reasonable Megas
• .Business Buyers who focus on ROI
• and place value on services
• that are important to their operations
• Concentrate purchases with a primary supplier
• but still check prices.just to make sure.

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The Price Issue

• 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 value
• -- that large producers perceive as valuable
• Large producers will not pay for things
• unless they perceive there is sufficient value
• to justify the price
• because they dont have to.

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Organizational Structure Large and Megas
Producers

• Specialists in different business functions
• Complex organization
• multi-layered decision structure
• Often separate the purchasing function
• from the user function ..intentionally
• to reduce the emotional issues in buying.

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Working With Large and Mega Producers

• Must understand that there are
• two levels of needs
• Personal needs of key players
• which requires good traditional selling skills
• and solid technical competency
• Needs of the business entity itself.

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Commercial Large ProducersComplex Account Needs

• Commercial Producers have five different sets of
  business needs.
• Product and Technical Needs
• Operational Needs
• Financial Needs
• Marketing Needs
• Personnel Needs

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Selling The Large Commercial Producer

• Previous research on Commercial Producers
• has suggested a more sophisticated approach
• to selling and servicing larger farmers
• That approach has come to be called.
• Field Marketing

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Field Marketing Defined

• Field Marketing is an approach that combines
• a deeper understanding of customers
• and tailoring solutions to the unique needs
• of each targeted customer
• More formally, Field Marketing is the process
• by which sales reps
• develop long-term profitable relationships
• with targeted customers
• that match priorities
• established by the marketing strategy

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Key Elements Of Field Marketing

• Identifying marketing opportunities
• Segmenting, targeting, and focusing
• Long term, Profitable relationships
• Tailoring value bundles
• A specific attitudes and abilities
• is required by the salesperson
• A specific organizational structure
• and philosophy is required
• by management

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Field Marketing
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Field Marketing

• Field Marketers must.
• Have solid technical expertise
• Good business savvy
• 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 targeted customers

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Field Marketing

• Field Marketing cannot flourish without
• Management and organization that
• understands and embraces the concept
• An organizational structure that
• encourages and rewards long term results
• An information system that facilitates
• efficient management of field activities
• Management and field personnel
• who are competent and well trained
• to do the job

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Key Account Management

• As Field Marketing continues to evolve
• some of the most successful companies
• have taken the concept further.
• As Commercial Producers have continued to grow
• we are recognizing that some producers
• must be singled outtargeted specifically
• and designated as a Key Account
• This approach is sometimes called
• Key Account Management (KAM)

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Motivating Field Marketers and KAMs

• Field Marketers and KAMs are motivated
• by many different factors
• Involvement in professional activities
• Assistance in development
• of company strategies
• Assignment to important accounts
• Training new staff
• Etc.

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Selecting Field Marketers KAMs

• What makes
• a good Field Marketer?
• Technical competence
• Self confidence
• Good communicator
• Self motivator
• Works well on teams
• Can create value
• High passion
• and commitment

• Building a FM/KAM
• organization
• is a long process
• Not everyone can be
• a Field Marketer
• Traditional salespeople
• fit some parts of the market
• Field Marketing tools
• can help traditional salespeople

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Conclusion
Field Marketing/ KAM Requires . . .

• A well defined marketing strategy
• that works in harmony with sales management
• A corporate organizational structure
• that is conducive to teamwork and joint activity
• Salespeople who have the ability
• to build long term profitable relationships
• and create value with targeted customers
• A reward system
• that encourages team work
• and long term relationships
• and total systems solutions

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Four Levels of Selling
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From Theory To Reality..

• Field Marketing and Key Account Management
• are far more than a theory
• Many input suppliers are working hard
• to implement many of these concepts

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From Theory To Reality

• One such example is .
• Ravensdown Fertiliser
• Christchurch, New Zealand
• Mr. Rodney Green. CEO

http//www.ravensdown.co.nz/
New Zealand