June 25, 2012

Second article in a three-part series on marketing basics

by Joy Parr Drach, Entira

The small town where I grew up counts an Olympic silver medalist in archery as one of its 2,400 or so residents. To succeed in his sport, he has to focus on the target … literally. He advises bow hunters to “… focus on making a well-placed shot just as you have done so many times in practice.”

I wonder how many agribusinesses could bring home the gold if they listened to his advice to improve their targeting of customers?

This second in a series of three articles will look at targeting your market, a topic inextricably linked to Mike's last article on segmentation and a must before we can address our final topic in the series, product positioning.

Make the tough decisions

Targeting is about making tough choices. When the Olympic archer was a kid, his mom brought home a set of golf clubs. His dad had her return them. He realized his son couldn't be the best archer and another Arnold Palmer at the same time, so he made the choice. (Probably a good one, considering Tiger Woods was born the same year as his son.)

Many ag companies today are running away from choice. They want to be all things to all people. I suppose it's understandable: we're marketing to a small universe - about 2 million growers if you count every 10-acre Tom - so you don't want to leave out anyone who may be a prospect. But can a company really maximize the value it extracts from the 35,000 largest farmers who buy the inputs for half of the US ag production if its stated target is the entire 2 million? Conversely, there are some companies that need to forget about the 35,000 and focus on 10-acre Toms. The question is … how does a company make the decision about which customers to target?

At Entira, here is the process we use to evaluate the attractiveness and fit of each customer segment:

What do customers need/want? And, what does this represent financially?
The foundation of smart targeting is well done segmentation. If you've done that job right, you'll have a wealth of insights into your customer and prospects. The key is to look beyond simple demographics such as size of operations and number of crops and really get to the heart of your customers' businesses. For example … Who influences their decision-making? Whom do they trust? What do they see as obstacles to their success?

For one client, our segmentation analysis showed a large, financially attractive group of prospects that craved direct contact with the company, technical expertise and new products. The shocker was that the current channel wasn't serving this group. Armed with qualitative and quantitative information about the needs of these valuable prospects, it became clear that the client must redesign its go-to-market strategy to address this group.

How well can/will your competitors address customers' needs?
It is essential to step back and look at the marketplace with an unbiased eye. How are your competitors positioning themselves in the market, especially with the most valuable customer segments? This step is often tough for our clients: there's not enough time to spend in the field or with customers, and when you're there, competitors seem to be the last thing anyone wants to talk about.

With a little creativity and focused effort, you can gather the information you need. First, leave the logo shirt at home on visits to a handful of key customers. Talk with them about their business goals and how you and your competitors meet their needs (or don't meet them). Next, talk with contacts outside your company for a fresh perspective on the entire marketplace. Finally, tap into your own company's resources. Use your next group meeting to brainstorm your competitors' current business plans, future opportunities and challenges. Try scenario building and role playing exercises to invigorate the thought process.

What is your differential advantage?
This step requires an honest assessment of how your abilities compare to your competitors, especially with regard to what customers want or need. Many times, it also requires an organization that is open to reinventing itself to deliver customer solutions.

An animal health client provided a good example. Its customers really wanted more flexibility - options such as inventory carrying and management and lower minimum orders. The competition relegated this to the channel and wasn't likely to change. Smaller competitors really didn't have the resources to address these needs, and the largest competitor was focused on other areas and very inflexible because of its scale. Our client had a perfect opportunity to harness its unique abilities to meet a previously undiscovered but important customer need.

Armed with solid segmentation data and the answers to these questions, your choice is much clearer. Firms can typically effectively serve more than one segment, either with the same channel and products or by using different channels and products for different segments. But you need to make the choice instead of trying to be all things to all people … focus on making that "well-placed shot" to hit your business target.

Entira has worked with a number of companies to improve customer targeting processes and execution. For more information, email info@entira.net.

This article appeared in the June 2008 issue of Strategic Agribusiness Review.