Our current marketplace can only be described as volatile. Inflation is at a 40-year high, worker shortages remain a critical issue, rising interest rates are increasing the cost of doing business and threats of a recession loom large.
In this challenging business environment, we encourage you to follow a “back-to-basics” management approach.
Ranking target customers to decide resource priorities
Our current marketplace can only be described as volatile. Inflation is at a 40-year high, worker shortages remain a critical issue, rising interest rates are increasing the cost of doing business and threats of a recession loom large.
In this challenging business environment, we encourage you to follow a “back-to-basics” management approach.
Ranking target customers to decide resource priorities
Your customers are the core of any marketing plan. It is critical that your marketing plan involves all of your target customers: the farmers you buy grain from, the livestock producers you sell feed to, the processors you work with and the export markets you sell into, among others.
Think of two broad groups of customers: primary target customers and secondary target customers.
- Primary target customers are your “best” customers. This may be because of the volume of business they do with you, the margins you can recover from their business, or how easy it is to communicate with them and serve them. These are the customers where you earn the highest profits – and should be the customers where you devote the greatest resources.
- Secondary target customers are your “next best” customers. These may be smaller farmers who do less business with you but are important in your community and critical to provide solid service. This group may also include newer customers that have high growth potential. Since you are currently earning less profit from your secondary target customers, you will logically devote fewer resources to this group – but it’s an important group with which to stay connected.
Following the 4 Ps of the marketing mix
The 4 Ps to developing a marketing plan: Product, Price, Place and Promotion are interconnected. For example, you can examine your product and identify strategies and tactics that you employ and this will interact with and influence price, place and promotion.
1. Product/service
Think of the product/service bundle you offer. Other components of this category include packaging and packing size, features, design, user experience, brand name, quality and information.
As a manager, how much and in what manner are you providing market outlook information to your customers? What services, like on-farm pick-up/delivery, are you incorporating into your business, and how are you pricing these services to your primary target customers versus your secondary target customers?
In what ways are you making it easy for your customers to do business with you (e.g., electronic invoicing that merges with their electronic accounting systems)? What services are you providing via your webpage – or other electronic customer interfaces so that your customers can access you 24/7?
2. Price
Price seems obvious, but when you look deeper, you realize that pricing can be complicated.
Price includes everything from list price to payment period to volume discounts and allowances to financing terms to special prices for bundling products/services and early payment discounts.
Remember that of the 4 Ps, price is the only one that is associated with revenue coming into your business, as opposed to money leaving your business as expenses.
Getting price correct is critical. You will most likely have different pricing strategies for your primary target customers versus your secondary target customers. In fact, you may have even further segmentation of your customers when it comes to pricing. Providing volume discounts for your larger customers may be a critical strategy here.
3. Place
Place is everything about having your product/service in the right place and in the right form and at the right time for your target customers.
As you think about place, consider everything from hours of operation, how you invoice your customers, services such as on-farm delivery/pick-up, and what information and services you provide via your website for 24/7 accessibility.
Doing a good job with place requires effective strategies associated with logistics, transportation and distribution – which have very technical components. It is critical, however, that you first think of how your customers will interact with your business and then put the technical aspects in place to meet your customers’ needs.
4. Promotion
Promotion covers a lot. It involves advertising, publicity, sales promotions, corporate promotion and public relations, websites, social media, word-of-mouth, and direct marketing and sales.
Having a clear and consistent message about what your product/services are, what your business stands for and what you deliver in all areas of your promotion is critical.
Ensuring that your salespeople are communicating the same message as your messaging online (websites, social media) is challenging but something that you can directly manage.
Word-of-mouth communication amongst your customers and the general public is also part of your business’s promotion – when that messaging is positive it is great for your business and vice versa. Thus, regularly monitoring and responding to word-of-mouth communication is critical to your business’s success.
Always be marketing your feed or grain business
Retired Harvard Professor Ben Shapiro states in a Harvard Business Review article, “Rejuvenating the Marketing Mix,” that in order to get your “marketing mix” to perform at a high level, you must leverage the four Ps so that each is “used to the best advantage in support of the total mix.”
While the article was written in 1985, the strategies he outlines are still very useful today. Look at your marketing program so that it builds logically on consistency, integration and leverage.
Shapiro goes on to say that “a marketing program must be “symbiotic” with your company – meaning that it must be aligned with your company culture and your capabilities.”
Some in the marketing profession say you “should always be marketing.” Subscribe to this approach – as a positive image and a focus on your key customers will definitely pay dividends.
How to sort target customers
A great marketing plan begins with identifying your primary and your secondary target customers.
While your primary target customers are your most profitable customers, your secondary target customers are critical as they may be important members of your business community or present high-growth potential.
Do the following exercise to properly target your customers:
- Write down the key needs for each of your primary target customers and then each of your secondary target customers.
- Write down the actions that your company is taking to serve each of these customers.
- Write down things you can be doing differently to better serve each of these customers.
- Circle those items that you can most immediately put in place and develop a plan to make it happen.
Questions to determine a marketing mix
Retired Harvard Professor Dr. Ben Shapiro suggests using your marketing mix to answer the following questions:
- Are the elements consistent with one another?
- Beyond being consistent, do they add up to form a harmonious integrated whole?
- Is each element being given its best leverage?
- Are your target market segments precisely and explicitly defined?
- Does your total marketing program, as well as each element, meet the needs of your precisely defined target market segment?
- Does your marketing mix build on your organization’s cultural and tangible strengths, and does it imply a program to correct weaknesses, if any?
- Does your marketing mix create a distinctive personality in your competitive marketplace and protect your company from the most obvious competitive threats?