Making the Most of your Marketing Efforts: Reconsider Your Customers Needs
A developed marketing plan can help you stand out from the crowd.
Today’s business environment is more competitive than ever. As a successful manager in the feed and grain industry, you are actively responding to the many demands of this ever challenging business environment, which likely includes a multifaceted marketing program. It is easy to become focused on all of the immediate decisions that need to be made (such as approving the latest update to your website; finalizing the price quote that is due within the hour, etc.). In this column we invite you to take a few minutes and think more broadly about your marketing plan. This will allow you to “get out of the trees” and “take a view of the forest” to see whether your marketing plan is right on course and where you can adapt to better meet your customers’ needs.
In the grain and feed business you often compete for customers “in both directions” on the value chain. The core marketing concepts that we discuss below are relevant whether you are working to attain your desired market share of farmers who sell their grain to you or of processors or export markets to whom you sell further up along the value chain.
Who are your primary target markets both up and down the value chain from you? We invite you to pick up a pen and complete the table on pg. 58 — we think you will be pleasantly surprised at how the process of writing your ideas down both generates new ideas and helps you solidify the ideas you already were thinking about. On the table, jot down your thoughts about who these customers are, what their needs are, how you are currently serving them and ways which you could more effectively serve them. Now what about your secondary target markets — those customers who are still very important to you but just not the first ones that come to mind? The final column in the table provides a place for you to generate the ideas for your secondary target markets.
Your marketing mix:
With the needs of your customers in your primary and secondary market segments in mind, let’s now consider the “4 P’s” of your marketing mix: Product, Place, Price and Promotion (E. Jerome McCarthy, a marketing professor at Michigan State University first proposed this four P classification in 1960, which has been used by marketers throughout the world since that time).
In the competitive grain and feed business, where products are often standardized (at least from the grain side), one might first think that there are limited ways to distinguish yourself from your competitors with respect to product. However, consider that within the marketing mix the “product” involves products and services. You are already distinguishing your business from your competitors with respect to the service you offer (e.g. , marketing outlook information you provide in newsletters and on your website; unique ways that you report payments and invoicing to meet specific customer needs to name just a couple). Jot down how your product/service bundle differs from your competitors’. Then with those differences in mind, take a look at the needs that you identified for your primary and secondary target customers. For which components of your product/service bundle do you have a good match with your customers’ needs? For the other components, consider how you can adapt to meet your target customers’ needs.
Differentiated products and/or services might include things like mini-bulk feed containers, targeted offer pricing for specialty grains, on-farm pickup of grain, managed risk contracts for grain marketing or other unique ideas that work in your marketplace. With the world at your fingertips via the Internet — you might scout out innovative products/services that feed stores or grain elevators in other parts of the country might be offering … they say imitation is the highest form of flattery!
A recent study conducted by Whitacre and Spaulding, on grain marketing tools provided by elevators, which you might find useful, can be found at: http://ageconsearch.umn.edu/handle/9721
Place is all about having your product/service in the right place at the right time and in the right format for your target customers. In the grain and feed business, logistics and transportation have long been a very important part of “place” and continue to remain critical today. You and all of your competitors spend a lot of time and effort to make this part of your business operate as smoothly and efficiently as possible. It only makes sense to continue to work on further improving efficiency in this area, as it makes up a significant component of cost for the value chain.
In addition to transportation and logistics, have you given thought to the way that you interact with your customers? Evaluating how your product/service bundle is available to your customers (in terms of location, time and format) could shed light on some opportunities to become more competitive on the “place” front. Here is a start of things you might consider:
Your website: What information and functions do you have on your website? How is this meeting the needs of your target customers? What changes would bring value to your target customers?
How are you using social media? How are your target customers using social media? What changes could you make to bring greater value to your target customers
What mix of services do you currently offer (e.g., delivery/pick-up; special feed formulations; etc.) and how are they addressing the needs of your target customers? Are there some services you could drop and services you could add to bring more value to your target customers?
Are you providing any customized invoicing and payment for your target customer — (e.g., for farmers with rentals, customized paperwork can make it easier for bookkeeping)?
How do your hours of operation fit your target customers’ needs?
How many locations are you operating from? There can be a real trade-off between the cost of maintaining a business location with the value of convenience for customer loyalty. When considering this issue think about the needs of your target customers. What ways can your staff communicate and interact with your target customers to meet their needs without a physical location (e.g., have your target customers get accustomed to calling one of your sales staff when placing an order that is then filled by you making the delivery)?
Are there smartphone apps you could develop without too much expense, which your customers might find helpful? Think about how to provide extra value to your customers — perhaps something like an app that tracks waiting time for unloading trucks at harvest — would this be useful?
You will no doubt have noticed that some of these aspects of “place” are closely related to “product.” This is to be expected since we are evaluating components of the marketing mix.
Figuring out the appropriate pricing for your business is challenging. If you don’t get the price right, you are either losing business or “leaving money ‘on the table’ or in the hands of your customer” — both of which hurt your bottom line.
Three general ways to think of pricing include: competition-based pricing; value-based pricing; and cost-plus pricing.
Competition-based pricing: In many cases you find that you are in a competitive environment and you must price to meet or beat your competitors (especially in the grain and feed business). In these areas of your business, it is very important that you be as efficient as possible. Since you have little or no latitude on pricing, controlling your costs is critical to your bottom line.
Value-based pricing: This is the situation where you figure out the value that your customer receives from your product/service and price accordingly. Certainly not all aspects of your business will be good candidates for value-based pricing; but think of those areas where you are really solving a problem for your customers in a unique way — and the value that you are delivering to your customers. These are also those cases where the customer cares more about factors other than price.
Cost-plus pricing: This is when you price your product/service by adding a standard markup to your costs of production. Whether you employ cost-plus pricing or not, it is always a good idea to really know your true costs of production. Whatever pricing method you are employing, it is essential that you price to cover your costs of production. Failure to do so will make it difficult for you to stay in business for long.
Pricing involves more than just the posted or negotiated raw price. Other aspects of pricing include:
• discounts and allowances you may offer
• financing terms
• payment periods
• special pricing for bundling of products/services
• volume discounts
• early payment discounts
From time to time it is useful to evaluate your pricing options to see if the special deals you offer are really meeting your target customers’ needs.
This is about informing your customers (current and potential) about your business, your products and your services. The promotion P covers a lot of different areas including: direct sales, formal advertising, corporate promotion and public relations, websites, social media and word-of-mouth communication. This is the advertising and selling part of marketing.
Marketing experts agree that effective promotion involves a clear and consistent message about what your product/services are; what your business stands for and what you deliver. Delivering a clear and consistent message can be challenging when there are so many aspects of promotion. Ensuring the message that your sales staff delivers is consistent with the advertisements on radio and in newspapers is challenging — yet this is the easy part since it all involves a message that originates from within your business. Important aspects of promotion also involve what your publics (your customers and others out there who are connected to your business in one way or another) are saying about you via social media or word-or-mouth communication. Thus an effective promotion strategy involves managing what others think and say about your business as well as what you are saying about your business.
Marketing Mix: As the title suggests, the four P’s should work together for an effective marketing strategy for your business. Marketing decisions that you make as a manager will almost always influence more than one of the P’s. The key to an effective marketing strategy that enables your business to achieve the greatest profitability is making all marketing decisions from the perspective of delivering the greatest value to your target customers. Delivering value to your target customers leads to greater customer loyalty which leads to greater long-term profitability.