channel challenges: redefining roles and structure? dr. maria marshall dr. jay akridge source: 2003...

Channel Challenges:Redefining Roles and Structure?

Dr. Maria MarshallDr. Jay Akridge

Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

Channel Challenges: Redefining Roles and Structure?

• Our focus:– Will be on the ‘dealer’ level of the channel– What does the Commercial Producer

Project tell us about:•Current position of dealers•Role of services and information•Future opportunities/challenges



Current Position of Dealers


Dealer Influence on Purchase Decisions

• How important are dealers as influencers of input decisions?

• How do commercial producers view dealers as sources of information?

• How have these attitudes translated into:– Loyalty to dealers– Value of dealers


Influence Outside the Farm on Purchases of Expendable Items (by size)

30%

17%

15%

19%

7%

4%

4%

34%

17%

17%

14%

7%

5%

2%

37%

13%

20%

8%

9%

4%

3%

0% 20% 40% 60% 80% 100%

Local Dealer *

Manuf. Representative *

Other Farmers *

Independent Consultant *

Extension *

Lender

Other

Average % of decision

Large

Commercial-T

Midsize

* Significantly different at p<.05


Influence Outside the Farm on Purchases of Expendable Items (by use of consultants)

31%

17%

16%

20%

7%

5%

2%

40%

18%

18%

2%

7%

4%

3%

0% 20% 40% 60% 80% 100%

Local Dealer *

Manuf.Representative

Other Farmers

IndependentConsultant *

Extension

Lender

Other


Use consultant

Don't useconsultant


** Based on consultants specified in 2003 questionnaire


Influence Outside the Farm on Purchases of Capital Items (by loyalty to capital brands)

40%

17%

18%

6%

4%

9%

2%

30%

19%

20%

9%

4%

9%

3%

0% 20% 40% 60% 80% 100%

Local Dealer *

Manuf.Representative

Other Farmers


Extension

Lender

Other *


Brand Loyal

Not Brand Loyal



Influence Outside the Farm on Purchases of Expendable Items (by year)

33%

16%

20%

14%

10%

6%

35%

18%

17%

16%

7%

7%

0% 20% 40% 60% 80% 100%

Local Dealer

Manuf. Representative *

Other Farmers *

Independent Consultant

Extension *

Other


1998

2003



Influence of Dealers on Input Decisions

• In general, commercial producers rate dealers the most important off-farm influencer of input decisions– Larger the producer, the less important– More important to crop producers, relative to

livestock producers– Less important to those hiring consultants– More important to brand loyal producers– Relative position little changed since 1998


3.45

3.39

3.20

3.09

2.75

2.49

3.58

3.31

2.94

2.46

2.53

3.48

3.74

3.00

3.35

2.59

1.91

2.28

3.313.20

3.64

1 2 3 4 5

Local Dealer

Veterinarians * *

Manuf. Sales Rep

Other Farmers

Manuf. Tech Rep

Indep. Consult.

Lenders

Average usefulness (1=never useful, 5=always useful)

LargeCommercial-TMidsize

Usefulness of Information Sources(by size)

All significantly different at p<.05

** Livestock only


3.60

3.76

3.31

3.01

2.86

2.57

3.43

3.25

2.83

1.51

2.41

3.273.07

3.37

1 2 3 4 5

Local Dealer *

Veterinarians * * / *

Manuf. Sales Rep *

Other Farmers

Manuf. Tech Rep *

Indep. Consult. *

Lenders *


UseConsultant

Don't UseConsultant

Usefulness of Information Sources(by use of consultants)


** Livestock only


3.55

3.57

3.08

3.56

3.22

3.29

2.96

3.60

3.50

3.01

1 2 3 4 5

Local Dealer

Manuf. SalesRep *

Other Farmers*

Manuf. TechRep *


1993

1998

2003

Usefulness of Information Sources(by year)



Usefulness of Dealer Information

• In general, commercial producers rate dealers/dealer personnel their highest quality off-farm (personal) source of information

• Producers who use consultants rate all sources of information higher

• Rating of dealers very stable over time


19%15%

53%

28%

59%

26%

64%

23%

13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1:StronglyDisagree/ 2:Disagree

3 4:Agree/ 5:StronglyAgree

% o

f re

spon

den

ts LargeCommercial-TMidsize

Average: Large: 3.46; Commercial-T: 3.54; Midsize: 3.63

I consider myself loyal to my primary local suppliers of expendable items (by size)

Significantly different at p<.05


4%

13%

83%

23%

34%

43%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts Brand LoyalNot Loyal

Average:Brand Loyal: 4.03; Not Loyal: 3.21

I consider myself loyal to my primary local suppliers of expendable items

(by expendable brand loyal)



20%24%

56%

64%

23%

13%

69%

19%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts


Average:Large: 3.40; Commercial-T: 3.60; Midsize: 3.68

I am willing to pay slightly more to buy my inputs from locally owned suppliers (by size)



5%

16%

79%

26%

33%

41%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts Loyal (Expendables)Not Loyal

Average:Loyal (Expendables): 3.89; Not Loyal: 3.13

I am willing to pay slightly more to buy my inputs from locally owned suppliers (by local expendable supplier loyalty)



Dealer Loyalty and Value

• There is a group of commercial producers who– Consider themselves loyal to their local supplier

• The larger the producer, the lower the self-reported loyalty

• Dealer loyalty related to brand loyalty– Are willing to pay more for locally owned suppliers

• Larger the producer, less likely to agree• Younger producers less likely to agree than older

producers• Strong link to loyalty to local supplier



Providing Services and Information


Providing Services and Information

• How much difference do commercial producers see in the quality of services dealers provide?

• How is the use of custom services by commercial producers changing?

• How much difference do commercial producers see in the quality of information dealers provide?


8%

89%

5%

81%

3%

14%

81%

13%

6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den



There are often significant differences in the quality of services from one local

supplier to another (by size)



32%

24%22%

36%

24% 24%

38%

22%

16%18% 22% 22%

0%

20%

40%

60%

80%

100%

None 1-25% 26-75% 76-100%

% of activity custom hired

% o

f re

sp

on

den

ts


Custom Hired Fertilizer Application (by size)*

Not significantly different at p<.05

* Crops only


39%

22% 22%17%

48%

23%

17%12%

0%

20%

40%

60%

80%

100%

None 1-25% 26-75% 76-100%


% o

f re

sp

on

den

ts

19982003

Custom Hired Pesticide Application by Commercial Crop Producers (by year)



18% 16% 14%

54%

16%

86%

52%

9%

21%

3%6% 5%

0%

20%

40%

60%

80%

100%

None 1-25% 26-75% 76-100%


% o

f re

sp

on

den

ts


Custom Hired Livestock Waste Handling (by size)*


* Livestock only


Providing Services

• Commercial producers see important differences in the quality of services provided across local suppliers– Larger producers most discriminating

• Custom services important to all sizes of producers

– Custom fertilizer application trends stable, some reduction in custom pesticide application


5%

30%

9%

31%

11%

34%

55%

65%60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den



There often are significant differences in the quality of information from one local

supplier to another (by size)



25%

40%35%

29%

19%

41% 40%

28%

43%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts



I often know more about many input products than my local suppliers (by size)

Significantly different at p<.05Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value”

Center for Food and Agricultural Business

32%

43%

25%

36%40%

24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts 19982003

Average:1998: 2.93; 2003: 3.16

I often know more about many input products than my local suppliers (by year)



Providing Information

• Commercial producers see differences among local suppliers in quality of information– Larger producers most discriminating– Larger producers tend to believe they

know more than local suppliers– Trend towards stronger feeling on this

issue



Future Opportunities and Challenges


Future Opportunities and Challenges

• How much time is invested in input purchase decisions?

• How do commercial producers view single source supply strategies?

• How does Internet use affect attitudes toward dealers?

• Do commercial producers want a more direct relationship with manufacturers?


15%

80%

6%

25%

64%

5%

18%

76%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den


Average:Large: 4.06;Commercial-T: 3.94; Midsize: 3.66

I am spending more time evaluating new technology for use in my farming operation

than I did five years ago (by size)



4.14

3.89

3.96

3.67

1 2 3 4 5

I spend moretime evaluatingtechnologies*

Purchasingtakes more

time*

Average rating (1=strongly disagree, 5=strongly agree)

19982003

Opinions About Time Investment and the Buying Process (by year)



34% 32%34%35%

31%34%

39%34%

27%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts



I prefer to buy most of the expendable items I need from one supplier (by size)



3.45

3.08

2.32

3.60

2.45

3.60

3.24

3.06

2.67

2.75

2.99

3.30

1 2 3 4 5

Local dealer

Manuf. SalesRep

Manuf. TechRep

Indep.Consult.


Non User

Moderate User

Heavy User

Usefulness of Information Sources (by Internet use)

All significantly different at p<.05


14%

20%

66%

10%

23%

67%

17%

26%

57%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

sp

on

den

ts Non UserModerate UserHeavy User

Average:Non User: 3.62; Moderate User: 3.65Heavy User: 3.46

I am willing to pay slightly more to buy my inputs from locally owned suppliers

(by Internet use)



11%

27%

62%

11%

40%

14%

49%

39%

47%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts


Average: Large: 3.75;Commercial-T: 3.52; Midsize: 3.31

In the next five years, I want a more direct relationship with manufacturers of

expendable items (by size)



8%

31%

61%

11%

40%

49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



% o

f re

spon

den

ts Top Growth Others

Average:Top Growth: 3.77; Others: 3.52

In the next five years, I want a more direct relationship with manufacturers of

expendable items (by planned growth)



Opportunities and Challenges• Time invested in input decisions represents

an on-going opportunity• Larger producers less likely to pursue

single-source supply strategies, BUT– Rewards to generating loyalty apparent

• Internet users value information, BUT– Find dealers less important

• Larger producers want a more direct relationship with manufacturers, as do high growth operations



• Dealer Summary:– Many positive signals, commercial

producers see dealers as value- adding, BUT

– Many signals point to on-going pressure:•Size, growth, Internet use, technology



Additional Charts


Influence Outside the Farm on Purchases of Expendable Items (by age)

35%

18%

17%

14%

6%

6%

1%

36%

17%

19%

13%

3%

6%

2%

31%

18%

16%

16%

4%

7%

3%

34%

17%

12%

15%

6%

9%

2%

0% 20% 40% 60% 80% 100%

Local Dealer

Manuf. Rep

Other Farmers*

IndependentConsultant

Lender *

Extension

Other


Under 3535-4445-6465+



Influence Outside the Farm on Purchases of Expendable Items

(by loyalty to expendable brands)36%

17%

15%

13%

7%

5%

2%

31%

18%

17%

16%

7%

4%

2%

0% 20% 40% 60% 80% 100%

Local Dealer *

Manuf. Rep

Other Farmers


Extension

Lender

Other


Brand Loyal

Not BrandLloyal



Influence Outside the Farm on Purchases of Capital Items (by size)

31%

17%

18%

8%

10%

5%

5%

37%

19%

18%

9%

7%

4%

2%

37%

22%

14%

9%

3%

5%

3%

0% 20% 40% 60% 80% 100%

Local Dealer *

Other Farmers*

Manuf. Rep *

Lender


Extension

Other *


Large

Commercial-T

Midsize



Influence Outside the Farm on Purchases of Capital Items (by year)

37%

24%

18%

8%

5%

8%

38%

19%

19%

8%

4%

13%

0% 20% 40% 60% 80% 100%

Local Dealer

Other Farmers*

Manuf. Rep


Extension

Other *


1998

2003



3.67

3.34

2.93

2.62

2.54

3.65

3.02

2.56

2.39

3.55

3.31

3.22

2.95

2.46

2.51

3.36

3.04

3.18

2.99

2.69

2.65

3.203.28

3.36

1 2 3 4 5

Local Dealer *

Other Farmers*

Manuf. SalesRep

Manuf. TechRep

Lenders

Indep.Consult.


Under 3535-4445-6465+

Usefulness of Information Sources(by age)



5%

14%14%

28%

39%

18%

35%

27%

5%

15%

0%

10%

20%

30%

40%

50%

60%

70%

1: Stronglydisagree

2 3: Neither

agree nordisagree

4 5: Strongly

agree

% o

f re

spon

den

ts CommercialMidsize

Average:Commercial: 3.42; Midsize: 3.46

I consider myself loyal to my primary local suppliers of capital items (by size)

Not significantly different at p<.05


33%

17% 18%

8%

25%

35%

18%13%

10%

24%

0%

20%

40%

60%

80%

100%

None 1-25% 26-50% 51-75% 76-100%


% o

f re

sp

on

den

ts

19982003

Custom Hired Fertilizer Application by Commercial Crop Producers by Year



7%

39%34%

17%

4%7%

54%

4%

10%

28%

48%

11%

5%

20%

13%

0%

10%

20%

30%

40%

50%

60%

70%

1: Stronglydisagree

2 3: Neither

agree nordisagree

4 5: Strongly

agree

% o

f re

spon

den


Average:Large: 3.54;Commercial-T: 3.28; Midsize: 3.04

In the next 5 years, I want a more direct relationship with manufacturers of

capital items (by size)



channel challenges: redefining roles and structure? dr. maria marshall dr. jay akridge source: 2003...

Documents

commercial producers

value center

agricultural business

national conference

meeting needs

channel challenges

commercial producer

jay akridge source