Perceived Knowledge

How well do you, the retailer, know your customer? Before answering this question, consider the findings of a recent study of retailer perceptions regarding growers conducted by Purdue University.

“You can really get into trouble in a hurry if you make the wrong assumptions about your customers,” said Dr. Dave Downey, executive director, Center for Food and Agriculture Business at Purdue. Downey was speaking at the National Conference for Agribusiness, held in November on the university campus in West Lafayette, IN. Much of this conference featured the findings of Purdue’s 2008 Large Commercial Producer Survey.

In his presentation, Downey focused on closing the gap in knowledge within the retail channel on what retailers believe grower-customers want/think and what grower-customers actually want/think. To conduct this study, Purdue researchers selected one element of the distribution system and asked many of the same questions about buying behavior that the university originally asked of growers. These answers were then compared to one another to see if assumptions by retailers jibed with the way growers actually thought. For the study, growers were divided into three groups — extra large, commercial, and mid-sized.

“For many of you, this could be something of a reality check,” he said. “We sought to find out a few things — how well we understand what motivates growers, how accurate are our assumptions about their buying behavior, if our strategies make sense, and what adjustments might be appropriate.”

Overall Understanding

According to the study results, retailers have a good understanding of grower buying behavior and attitudes, said Downey. “But there are several important differences in the relative importance of many key factors that could significantly impact marketing strategies,” he added.

Buying behavior is one example. When asked if there was a significant difference in the quality of information from one local supplier to another, 74.4% of retailers agreed that this was the case. However, when growers were asked this same question, less than 45% believed the quality of information between suppliers was different. More telling, when asked if growers think they know more about many input products than their local suppliers, only 14.5% thought this was true. But among growers, more than 30% of respondents agreed with this statement.

“Retailers strongly believe there are larger differences in the quality of information among suppliers and their own product knowledge compared to what growers believe,” said Downey.

The same disconnect in assumptions occurred regarding loyalty to crop protection products. When retailers were asked if growers would consider themselves loyal to the brands they buy, 12.8% agreed that this was true. But when growers were asked this, almost 40% considered themselves brand loyal. Likewise, when asked if growers would consider themselves loyal to their primary local supplier of crop protection products, 45% of retailers believed this was true. But for growers, this same question had an agreed percentage ranging from 53.8% to 58.6%.

“Growers consider themselves far more loyal to brands than retailers believe them to be,” said Downey. “There appears to be more loyalty to the retailer, but that loyalty is perceived stronger by the grower.”

The Price Is Right?

Among specific crop inputs, the Purdue study found very little difference between how retailers and growers view their seed and fertilizer purchasing behaviors. Crop protection products, however, are another matter. When retailers were asked if growers think most brands of crop protection products are more or less the same, 48.3% agreed with this assessment. But when growers were asked this question, only 31% to 34% agreed that this was the case. More telling, when retailers were asked if growers usually purchase their crop protection products based upon the lowest price, 34.1% agreed that this was true. Among growers, however, 31.4% of extra-large growers agreed with this statement, but less than 24% of commercial and mid-sized growers thought this was the case.

“Retailers are more likely to believe that growers think all brands are about the same than do growers,” said Downey. “Retailers are more likely to believe that growers buy on price than growers say they do.”

This belief also probably explains the study’s finding regarding generics. When retailers were asked if growers will increase their use of generic products during the next five years, 54.1% agreed. For growers, however, the percentage that agreed with this statement ranged from 38.3% for large growers to 43.8% for commercial ones. Furthermore, when asked if generics offered a good trade-off between price and performance from branded products, 34.1% of retailers agreed this was the case. Among growers, however, the percentage that agreed with this question was approximately 43% across all three groups.

“Retailers expect generic crop protection products to grow considerably faster than growers expect them to grow,” said Downey. “Retailers feel more strongly than growers that branded crop protection products are not better.”

In conclusion, retailers should reevaluate their assumptions about grower-customers, particularly in certain key areas, Downey said. “Faulty assumptions create major problems for retailers because they leave money on the table, spend money on the wrong services, and prioritize the wrong projects,” he said. “Our research may not be directly applicable to any given product or market area, but it does give us an indication that our assumptions about our customers need to examined and adjusted from time to time.”

Leave a Reply

Management Stories

ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Partnership
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Southern States Cooperative
Trending Articles
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
Latest News
ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Fertilizer closeup in hand
Industry NewsVerdesian: Striking A Balance Between Yield & ROI
May 26, 2016
Finely tuned nutrient management plans are helping farmers throughout the U.S. improve nutrient use efficiency, increase return on investment (ROI) Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Pa…
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Corn close up
Crop InputsArysta LifeScience Establishes Global Headquarters In R…
May 25, 2016
Arysta LifeScience has announced plans to relocate its global headquarters from West Palm Beach, FL, to Cary, NC, over the Read More
fertilizer blending and storage, Top 100
BlendersCHS Dakota Expansion Features AGCO’s GSI InterSys…
May 25, 2016
The continued growth of precision agriculture has increased farmer use of customized fertilizer blends best-suited for their soil conditions. Several Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Topcon’s X30 display with CropSpec sensors
EquipmentGPS Autosteer Systems: Product Updates From Precision A…
May 24, 2016
Throughout 2015 GPS Steering solutions continued to evolve from what was once an after-market add on, to today’s cab where Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojThe Precision Ag Revolution Continues
May 24, 2016
It’s funny how much “the first time” tends to mean to someone as they get older. I sometimes can’t recall Read More
Eric Wintemute, AMVAC
Precision AgAMVAC Ups The Ante With New Precision Ag Technology
May 24, 2016
A potentially industry-changing at-plant soil treatment system from American Vanguard Corp., or AMVAC, is coming soon to large growers in Read More
Dry and Liquid Plant
CropLife 100CropLife 100 Map
May 24, 2016
The new CropLife 100 map shows the locations of each of the headquarters of the 2015 CropLife 100 retailers. The interactive Read More
Southern States Cooperative
Corn Field
Industry NewsTiger-Sul Names Veteran Account Manager To Lead Central…
May 23, 2016
With the continuing growth of the sulphur bentonite and precision crop nutrient industry, global agriculture firm H.J. Baker has announced that Read More
Bayer sign
Industry NewsReuters: Bayer Defies Critics With $62 Billion Monsanto…
May 23, 2016
German drugs and crop chemicals group Bayer has offered to buy U.S. seeds company Monsanto for $62 billion in cash, Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Industry NewsCompass Minerals Hires Industry Veteran To Lead Plant N…
May 19, 2016
Compass Minerals has hired plant nutrition industry veteran Vatren Jurin to steer the company’s portfolio expansion into specialty liquid micronutrient Read More
ASMARK Retailers LIVE! Tour 2016 Group shot The Andersons
CropLife 100The Andersons Rejects Unsolicited Proposal From HC2
May 19, 2016
The Andersons, Inc. has announced that its Board of Directors has rejected two non-binding, highly conditional, unsolicited proposals from HC2 Read More
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More