COMPETITOR ANALYSIS
A thorough understanding of the competition is an important part of formulating any
marketing strategy. Although it is usually unwise to simply react to competition, it is
equally unwise to ignore competitors. Even the most dominant firms are often vulnerable
to competitive encroachment from niche players, international competitors, or more
traditional competitors with new technology or products. In fact, some marketing experts
theorize that the larger and more successful a firm is, the more likely it is to fail. The
argument is that large, successful firms often become complacent with their success,
perpetuating the way of doing business that helped them become successful, and losing
the edge that helped get them there. As markets and consumers change, old approaches
become increasingly outdated, and smaller, more aggressive firms may begin to take over
the market. Clearly, even successful firms must continually monitor competition.
One simple but effective method for analyzing competition is completing a formal
strength and weakness analysis for each competitor. This tool simply involves listing the
key strengths and weaknesses of a competitor in the same way firm strengths and
weaknesses were analyzed earlier. With the list of strengths and weaknesses in hand, the
marketer then focuses on the opportunities or threats each competitor presents. The
final step in using this information is to develop a marketing strategy that capitalizes on
the competitor’s weaknesses and takes advantage of any opportunity that competitor
vulnerabilities present.
Information on competitors can come from a variety of sources. A search of the
Internet will turn up a considerable amount of information on any major food or
agricultural input firm. Annual reports, SEC fi lings, company press releases, and
speeches by company executives can all offer useful information. Information supplied
by salespersons or dealers can help keep tabs on what other firms are up to. Customers,
industry experts, and other players in the marketing channel can all help provide a more
complete picture of competitor activity.
The need for such information may seem so obvious to fi eld marketing people that
this exercise seems unnecessary. But formalizing it in this manner, discussing it
thoroughly, and developing a competitive strategy often improves communication, even
in small firms, and results in a more proactive approach to marketing decisions. When all
significant competitors are analyzed periodically, there is a far greater likelihood that a
logical marketing plan will be developed and executed.
Tools for analyzing customer needs
The case for understanding customer needs has been made in Chapters 6 and 7.
How do agribusiness marketers learn what customers want from their firm? There are a
variety of tools available to the marketer to help them better understand the needs of
their customers and prospects. Some of the more important tools will be reviewed here.
Customer surveys
One of the best ways to learn what customers think about a product or service is to
ask the customers directly. Agribusinesses can gain much valuable information, which
can help in formulating market plans, by communicating directly with customers through
surveys, interviews, and informal conversations. Although there may be reluctance
among some customers who do not want to be bothered or who distrust any information-
collecting activity, experience shows that food and agribusiness customers are willing to
share their opinions with firms they do business with, especially when the data collection
effort has been properly designed. When such information is used effectively, it is
invaluable in making marketing decisions.
Market research relies heavily on surveys of various types to track customer
attitudes. Extensive personal interviews lasting an hour or more may provide a great deal
of information about customer purchasing decisions, attitudes, and how the product is
used. Such in-depth interviews must be developed and performed by trained
interviewers; they are therefore quite expensive, often averaging $100 or more per
completed interview. In many cases today — especially if the interviewee is a large farmer
or a professional such as a veterinarian — the person being interviewed also wants
compensation for their time while being interviewed. This can easily add much more to
the cost of the session.
Telephone interviews have gained in popularity because of their lower cost and the
speed at which a telephone interview study can be completed. However, it is impossible
to collect as much information by telephone as compared to a personal interview
because telephone interviews seldom last more than 15 minutes. It is difficult to explore
many issues very deeply in such a short period of time. Depending upon the length of the
survey instrument, phone interviews by professional market researchers may cost from
$15 to $70 (or more) per completed interview.
Written surveys remain a widely used method of studying customer opinions and
attitudes. Written questionnaires can be short or long, but longer ones usually get a much
lower response rate. A quick written survey delivered through the mail is considered
successful when 15 to 25 percent of the questionnaires are completed and returned. It
may be a very short survey response offered at a trade show, where customers and/or
prospects are asked to respond to a few short questions. More formal mail surveys
involving phone follow-up and multiple reminders will generate a substantially higher
response rate — 50 to 60 percent being very common. Many firms use online survey tools
to distribute questionnaires. This medium can help execute a very quick, very focused
survey of customers. While there are advantages to written surveys, it is difficult to collect
much detail or in-depth reasoning behind responses from a written survey. Yet because
they are relatively inexpensive, written surveys are considered a good way of collecting
some kinds of market information. For all types of surveys, careful pretesting, or
evaluating the questions so that what is being asked is clear to the respondent, is
important. Poorly worded questions can cause the results of a survey to be virtually
meaningless. The meaning of a question may be clear to the author of the survey, but
totally confusing to the respondent — or worse, it may be misunderstood, with the result
that it elicits incorrect information.
