Success in niche feed and grain markets with the long tail theory

In today's dynamic and highly competitive feed and grain business environment, identifying and targeting niche markets can be crucial for success. Serving niches can help the agribusiness separate itself from more mainstream competitors by building value bundles tightly aligned with the specific needs of targeted groups — especially if the targeted groups are underserved or not served by the firm’s competitors. Serving these targeted groups in a focused way can build deep loyalty and make it difficult for competitors to access the niche. As long as the firm can effectively manage the cost of serving the niche market, such a strategy can drive profitability for the niche-focused firm.

Some would argue that given the increasingly individualized needs of farmer-customers and innovations in marketing and supply chain management that support the delivery of customized solutions, building a portfolio of profitable niches is essential to success — and maybe the only path.

What are some of the keys to identifying and profitably serving niche markets? One framework that is especially useful when thinking through a niche strategy is the concept of the "long tail." The long tail strategy offers a framework for understanding how businesses can thrive by catering to specialized segments rather than relying solely on mainstream products and services.

The long tail concept

The theory, introduced by Chris Anderson in his book “The Long Tail: Why the Future of Business is Selling Less of More,” suggests that our culture and economy are increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and moving toward a huge number of niches in the tail (Figure 1). Several factors drive this shift, including the “democratization” of production and distribution (widespread access to alternative modes of production and distribution) and the increasing connectivity between supply and demand.Figure 1: The long tailChris Anderson

Democratized production tools

One of the primary drivers of the long tail is the democratization of production tools/modes. The term “democratization” here refers to technological innovations that have made it easier for individuals and small businesses to produce a wide range of products. For example, digital cameras, desktop music and video editing software, and blogging tools have empowered people broadly to create professional-quality content without significant investment or the assistance of professionals.

In the agribusiness sector, democratized production tools have enabled small farmers and producers to innovate and create unique products. For instance, farmers can now produce organic or specialty crops using advanced agricultural technologies that were previously inaccessible. This democratization has resulted in a wider variety of products available in the market, catering to specific consumer preferences and needs. It also creates a wider range of needs to be served among these specialty producers. 

As another example, larger farm operations can incorporate a variety of data analytic tools, storage facilities, sophisticated feeding/milking equipment, GPS-guided application equipment, sensors, genetics — the list goes on and on — into their operations, many of which were once the purview of their input suppliers. This incorporation of such capabilities into the farm business that were once purchased/acquired through input suppliers creates farm-to-farm uniqueness that must be addressed by their input suppliers, in many cases, through a niche strategy.   

Democratized distribution tools

The second critical factor in the long tail strategy is the democratization of distribution tools. Platforms like Amazon, eBay, iTunes and Netflix have revolutionized how products reach consumers. These platforms act as aggregators, providing access to niche products that would otherwise struggle to find shelf space in traditional retail environments. Agricultural producers can leverage these distribution platforms to reach niche markets effectively. For example, a small dairy farm producing artisanal cheeses can sell its products through online marketplaces, reaching customers far beyond its local region. This expanded reach allows niche products to find their audience and thrive even without significant marketing budgets.

Commercial farms may put these tools to work in acquiring some inputs/services, shopping well outside their local geography. This may create a new source of competition for your feed and grain firm. On the other hand, feed and grain firms have access to an increasingly wide range of “distribution” tools to create highly tailored options for renting/buying/storing/delivering their products. This provides feed and grain firms much capacity to tailor value bundles to align with the specific needs of individual farms (a segment of one) or tightly defined niches.

Connected supply and demand and filters

The third pillar of the long tail strategy is the enhanced connection between supply and demand. Tools such as Google, blogs, recommendation systems and best-seller lists act as filters, helping consumers discover niche products that match their interests. These filters reduce search costs and uncertainty, making it easier for consumers to find and purchase specialized products. The need for effective filtering mechanisms becomes more critical as the variety of available products increases. Historically, limited shelf space acted as a natural filter, but in the digital age, new filters are required to help consumers navigate the plethora of choices. Consumers face cognitive constraints, making analyzing all available options in detail challenging. Effective filters help reduce this complexity by highlighting products that meet specific criteria or match consumer preferences.

For agricultural producers, connected supply and demand mean that consumers looking for specific products, such as heirloom vegetables or grass-fed beef, can easily find suppliers. By optimizing their online presence and utilizing digital marketing strategies, these farms can connect with consumers actively seeking their products, thus driving sales and growth in niche markets. Here, filters can include online reviews, influencer recommendations and curated product lists, all which consumers may use to find the specialized products they desire.

The use of data analytics, digital marketing, sophisticated personal selling strategies and on-farm trials, among other tools, can help feed and grain companies connect in a highly tailored way with individual farms and niches. Filters here can include prominent consultants, influencer producers, widely used university trials, respected farm publications, etc. The key point is that the options for communicating the availability and features of the value bundle — and validating that value through filters to farmer customers — has exploded.   

Key steps to implementation

To effectively implement the long tail strategy, feed and grain firms should focus on the following steps:

1. Identify market niches: Conduct thorough market research to identify niche segments that are underserved or have unmet needs. This could involve analyzing market trends, shifts in buyer preferences and customer feedback. A deep dive with your sales force on what changes they are seeing with the customers in their territories, where competitors are strong and where they are not, and emerging gaps between what farmers want/need and what they are getting can identify individual producers or niches of producers that can be the focus of a long tail strategy.
2. Leverage production tools: Take a deep look at how the functions performed on the farm are changing and what it means for what they need from you. Put your own set of advanced production tools and technologies to work and meet the farmer/niche where they are, complementing their adopted production structure. As your producers adopt sustainable farming practices, experiment with new crop varieties, or develop value-added products, or other niche opportunities may be created.
3. Optimize distribution channels: Align your distribution approach with the specific niche needs you want to serve. Creative tailoring of transport, storage, timing and custom services, among other distribution functions, can enable your feed and grain firm to build tight linkages between your value chain and that of your producers. Here, it is key to ensure that distribution channels are efficient and meet the specific requirements of the niche.
4. Enhance visibility: Feed and grain firms can access many options to connect with their farmer customers creatively. Digital marketing strategies, search engine optimization (SEO) and social media marketing, among many more, give the feed and grain firm the tools to laser focus communications on specific niches. Personal selling has a role here, and equipping field sales personnel with the tools to deliver highly individualized messages is an important key to success.
5. Utilize filters: Implement filtering mechanisms that help producers see the value in your bundle. This could include customer reviews, expert recommendations and personalized product suggestions based on a needs assessment of your producers. Using influencers to showcase value is not a new approach in feed and grain markets. But, combined with the digital tools described above and innovative approaches such as word-of-mouth marketing, opportunities here are only limited by the feed and grain marketer’s imagination. 

The idea of niche marketing is familiar to most feed and grain firms. That said, the long tail strategy concept highlights the way technology has changed how farmers run their operations and how it has changed the approaches, tools and strategies feed and grain firms have to serve these evolving farm businesses. Taking a step back and looking at how your customers are changing, what specific niches are emerging, and how you can deliver a value bundle tightly aligned with those specialized needs can set the stage for long-term profitability.