An assessment of agronomic input suppliers' perception of farmer attitudes and the influence on financial performance

Joseph Donald Suttles, Purdue University

Abstract

The importance of understanding customers' characteristics is something that farm input retailers have recognized for some time. Various methods have been used by academia and private industry alike to gain an in-depth understanding of what drives today's farmer. However, further investigation is needed to determine how well farm suppliers have utilized and adapted to new information about their customers. A keen understanding of where gaps exist between farmers' attitudes and preferences relative to input retailers' awareness and insight about those characteristics will benefit retailers by improving their ability to direct resources toward issues which exhibit potential for relationship improvement. Higher efficacy in operations can aid retailers to further advance their business goals all while enhancing the value to farmers from the input purchasing interaction.^ Input supplier and farmer responses to paralleled surveys are compared to identify gaps in retailers' understanding of the motivations of their farm customers. Gaps are evaluated based on their potential to improve the dealer-farmer relationship across four categories; buying behavior, product preferences, dealer interaction, and salespeople. Retailers’ responses are evaluated for their correlation with the profitability of the retail firm, as measured by gross margin. ^ The analysis concludes that retailers generally have a good understanding of the attitudes, preferences, and motivations of their farm customers. However, there were significant differences identified between retailer and farmer responses for several issues. Those issues included the importance of service and convenience in the product purchase decision, the differentiation and loyalty toward crop protection chemicals, the differentiation between competing input suppliers, and the value and role of salespeople for farmers' interaction with retailers. The gaps across these and other issues indicate that retailers might improve their value proposition through better offerings and, especially, better communication to their customers. The profitability of retailers was not well predicted by their responses to the survey questions, with a few notable exceptions. For instance, retailers were predicted to command higher profitability when they believe farmers to be less reliant on salespeople today than in the past or when they responded with higher expectations of the importance of salespeople calling on customers frequently. Retailers can use this analysis as an aid for evaluating their own perceptions of farmers and to improve their ability to direct their limited resources toward efforts which have a high potential to bring value to their customers and themselves. ^

Degree

M.S.

Advisors

Allan Gray, Purdue University.

Subject Area

Economics, Agricultural

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