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Agriculture Marketing

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by

Andrew Harrison

on 20 September 2013

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Transcript of Agriculture Marketing

Sample size n=87
Agriculture Marketing:

Sample Size: 89
Industry: Agriculture/Manufacturing
Position: Ranging from Management to C-level Executives
Products: Wide range of farming machinery and equipment
Geography: US Companies, majority based in Midwest

Identifying the Market
Transportation Methods
Third Parties
Third Party Logistics
Logistics within the Ag Industry

Phone Survey (5-15 minutes)
Collected data over 5 week period
7/15/2013 - 8/19/2013
Open- and close-ended questions
Gathered qualitative data when possible
Participants were allowed to disclose or
withhold info at any time

Methodology:
Demographic:
Small to mid-sized companies are predominant in this sample.
Primarily serve retailers or distributors that sell to retailers presumably for a more direct line of sale.
B2B allows for wholesale/bulk shipments, but some shipping is still customer-routed.
Control methods (i.e. TMS, Audit, Control Tower) rarely used, and a significant lack of awareness around these functions.
Domestic transportation is primarily LTL, allowing companies to ship various parts and supplies.
International shipping is often international surface.
Major players in the international ag market are Canada, Asia, Europe & Australia.
Significant amount of international inbound (29%) and outbound (27%) freight.
It is common (especially in the Midwest and Eastern states) for companies to attempt to receive and ship nearer to them.
Primary outsourced function is transportation.
Almost half as many companies outsource logistics as opposed to transportation.
Most companies do not have the resources to provide their own shipping methods.
Most contacts thought the price was beneficial but could be problematic (savings vs. cost).
Highest proportion of competitive bid and 3PL usage in mid-size companies (50-100).
No apparent formal level of management.
Satisfaction relatively high despite lack of review or management.
Qualitative Findings
By utilizing a reliable network of carriers and brokers that has already been put in place, contacts felt they were able to keep costs low and maintain an ideal rapport with their transportation services. Sometimes these networks & relationships are contractually obligated, otherwise people resist change due to perceived switching costs. With smaller companies these relationships can be simple friendships and may have been in place for generations.
Established Networks
Many contacts believe that adding a third party decreased the level of communication with their carriers. With a 3PL these people feel they lose control over their shipments and increase potential liability issues. Alternatively, previous bad experiences with other third parties (brokers, carriers) have developed mistrust when contacts' logistics functions are taken out of their hands.
Communication/Transparency
3PLs are sometimes avoided because shippers are concerned that their irregular loads (i.e. oversize, hazardous, etc.) will be problematic for a third party and increase risk of damage or loss. One contact said that he would use a third party if his shipments were uniformly sized objects but since his various parts were different sizes/shapes and he felt this would be difficult for any other carrier besides the ones who were familiar with his business.
Special Conditions
Smaller companies will often make an effort to use closer shippers to support local business as well as mitigate high cost and risk of long-distance travel. Many smaller companies also did not seem familiar with 3PLs or the various benefits they possess (i.e. TMS, Logistics Control Towers, auditing services, etc.).
Close Proximity
Threats
Substitution/Rivalry

Pre-established relationships/Contractual Obligations

Decision makers disconnected from company (parent company)
Summary
Many companies seem keen on properly managing and overseeing their logistics/transportation but are not inclined to outsource this work.
Perhaps due to cost, or simply misunderstanding 3PLs' utility and comprehensive functionality.
Many simply do not want to take the extra effort to find and hire a third party (3PL) despite the inclination to better manage their system(s).
Solution: Educational marketing
Through relatively low-cost marketing campaigns to better inform potential customers in this industry will help them to make an educated decision once they understand what a 3PL is and does.
Specialization in LTL, special condition freight, direct communication (one point of contact), online accessibility, etc.
Explain the ease in which it is to access and stay in touch with a 3PL (via Internet, etc.). Remove the job of hunting one down for them.
Lack of awareness around the functions of 3PL
A majority of inbound shipments come from Asia (44%), but international export/outbound freight is fragmented, with the lion’s share resting in Canada (30%) and equal amounts (16%) in Europe and Australia. This international focus, and the strain it causes the respondents, represents an opportunity for 3PLs.
Different laws, regulations and licenses come with shipping internationally and create extra frustration and confusion for smaller companies.
Canada, although still international, is in close proximity to the U.S. (especially the companies in this industry) and presumably maintains relatively lower costs for shipping.
Solution: Ease international frustration
Focus marketing on the ability of a 3PL to take away the responsibility and stress of international shipping and handle it more efficiently and simply. Establish 3PLs' ability to do so with past testimonials from these other countries, especially Canada (or other target countries).
International shipping to/from Canada,
Australia, Europe & Asia

Certain demographics (50-100 employee size) seem more accepting of employing a third party and by targeting these companies with the tactics mentioned previously as well as creating a dialogue with potential customers aside from price.
Many contacts spoke to efficiency and communication when choosing their third parties. “Results” was listed as the second most attractive aspect of third parties. By assessing companies’ current transportation methods and approaching them as a “problem solver” and modernization tool, more sales may be pursued.
By comparing existing third party usage to 3PL there is a chance to transpose resources already put toward outsourced work to logistics.
For example, “You already hire carriers through a broker; we can do the same for a similar price but give you functions X, Y, Z as well.”
Growing usage of 3PLs in small to mid-sized companies could be used advantageously as an angle when procuring new customers. A significant amount of contacts did perceive an emergence of 3PLs in the sector as well as benefits for smaller companies.
Sales Strategy
Communication (single point of contact)

Ability to transport wide variety of products

International Accessibility

Experience/Expertise in Logistics
Lack of Brand Awareness/3PL Awareness

Incurs extra cost to company (switching costs, etc.)

Misunderstanding of 3PL application(s)

Price Sensitivity
Strengths
Weaknesses
Opportunities
Although belief exists that 3PLs are becoming more common (77% total agree) a shrinkage in use has occurred with these contacts (36% down to 18%).
A significant ignorance toward 3PLs is apparent (40% SA, 27% A), yet almost an even split in consideration of using one (44% A/SA; 34% D/SD).
While rates are the highest priority when choosing a 3PL, distribution and transportation services are close seconds (43% and 38% High Priority, respectively).
Past 3PL users seem to have a slightly more negative opinion (i.e. don't add value, need better mgmt.) yet more staunchly believe that they are becoming more widely used.
Internet and direct communication is commonly used tool for smaller companies to find freight quotes.
Objectives:
Discover current trends in logistics methods
Understand where and what is being shipped and by whom
Learn which decision makers are the best points of contact
Develop marketing strategies to take advantage of results

Higher proportional use of 3PLs in mid-size companies (50-100) & use less internal resources

Belief that 3PLs are value-add, more widely used and effective freight mgmt.

Company's desire to mitigate expenses

International shipping frustration
Through techniques such as online and direct transportation management combined with the lack of formal logistics management, it appears many contacts desire simplicity with their transportation efforts. By employing a relatively “hands-off” approach to their logistics programs, these contacts presumably maintain lower costs but at the risk of allowing their transportation to be mismanaged and inefficient.
Simplicity
* Central South has been omitted as the results were negligible (<5)
* Central South has been omitted as the results were negligible (<5)
Sample size n=89*
Sample size n=88
Sample size n=43
Sample size n=89*
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Sample size n=85
Sample size n=16
Sample size n=48
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Sample size n=84
* Respondents had the option of selecting multiple locations
* Respondents had the option of selecting multiple locations


Sample size n=80
** Respondents had the option of selecting multiple locations
** Respondents had the option of selecting multiple locations
"Other" Includes:
Reliability
Ease of Use
Control
Communication
Efficiency
Quality Service
Time Sensitivity
Scheduling
Proximity
Simplicity
Combination of Options
Sample size n=51
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Sample size n=52
Sample size n=17
Full transcript