Agribusiness firms have to continuously develop and manage a marketing program. They have to look at customer behaviors, which are very demanding and keep changing. Competitors also normally continually introducing new products, services, and program. Unpredictable weather patterns further complicate market planning, and volatile agricultural commodity prices often cause the demand for farm supplies and services to fluctuate. Because of such complexities, agribusiness marketing strategies require a great deal of planning. Successful managers spend much time analyzing their market, assessing their own strengths and weakness, and mapping their strategic marketing plan.
Agrimarketers can use many market planning tools to assist them in the market planning process. Some of these tools are the marketing audit, sales forecasting, competitor analysis and analyzing customer needs.
1. The marketing audit
Purpose of the marketing audit:
• Agribusinesses can use marketing audit to examine the firm’s marketing objectives and its plan for accomplishing these objectives in light of its resources, the market conditions, and its distinctive strengths and weakness. This analysis very important for the firm to make sure the firm’s will get information for future planning and goal adjustment.
• Nearly every agribusiness and certainly all publicly owned companies have financial audits performed regularly by outside auditors to ensure that there are no discrepancies or oversights that could cause serious problems for the business and/or investors in the business. Similarly, a marketing audit is an objective examination of a company’s entire marketing program.
• The marketing audit examines the firm’s marketing objectives and its plan for accomplishing these objectives in light of its resources, the market conditions, and its distinctive strengths and weaknesses.
• There are 5 steps in doing marketing audit – i) Analyze Market success of each product, ii) Review Market conditions, iii) Identify Distinctive competencies, iv) Evaluate Marketing plan and objectives, and v) Study Human resources and organizational structure.
i) Analyze Market success of each product – this step involves estimating total market potential, determining the firm’s share of the market, and attempting to identify what factors are responsible for the firm’s market position with each product or service. The firms have to access what progress they have made toward achieving their marketing goals for each of its products.
The questions should be asked:
a) Did the firm miss the mark when assessing the needs of the target market?
b) Did competitors introduce new products or programs that caused problems for the firm’s marketing plan?
c) Did the firm fail to execute the plan effectively? or
d) Was the marketing goal too ambitious? For example, a fertilizer company has an objective of a 10 percent increase in fertilizer sales at a time when the rubber and palm oil sector under pressure from low price might be better served by creating a new objective of holding fertilizer sales constant, while devoting more resources to expanding sales to oversea market. It is important to note that while much focus is given to areas where performance was poor; there is another, equally important, perspective. An effective marketing audit also attempts to capture the insights provided by areas where performance was exceptional. If sales of new cooking oil are growing twice as fast as expected, the food firm should dig deeply into the situation to better understand why this is occurring, if it will continue, and how they can apply this success to other products.
ii) Review Market conditions – this step involves evaluation of external market factors and exploration of expected trends. The focuses here are about trends in technology, regulation and policies, general economic conditions, and the competitive environment. Marketers must challenge their previous assumptions, and generate new scenarios for the future they believe they will be moving into.
iii) Identify Distinctive competencies – this step involves evaluation of areas where the firm is particularly strong in relation to the competition. Distinctive competencies may include financial, human resource, marketing, and production advantages. For example, the financial support of hypermarket like TESCO and Carrefour must be strong compare to traditional Supermarket.
iv) Evaluate Marketing plan and objectives - this step involves evaluation of agribusiness’s overall marketing strategy, given a review of past performance in the firm’s target markets, a reexamination of the firm’s market environment, and a reassessment of the firm’s distinctive competencies. This step of the marketing audit should also consider how the marketing plan is to be implemented. A good plan will be ineffective if it is poorly implemented. Continuing to use the same channels of distribution because ‘that the way we always do it’ may be a poor choice. Do incentive travel packages offer the best type of sales promotion for dealers, or would it be best to return dollars in the form of rebate – or perhaps just sell at lower prices in the first place? Analysis of such implementation issues forces the marketer to think deeply about whether or not the current marketing strategy is still the correct one.
Given a through examination of where the firm has been and new forecasts for the future, the goal of this step is to make sure the firm’s market strategy still fits. This is sometimes called gap analysis. The gap is the difference between desired performance at some point in the future and what performance will be if the firm does not change marketing strategies. Obviously the bigger the gap, the greater the need for the firm to look again its marketing strategy.
v) Study Human resources and organizational structure – Given the critical role people and organizational structure play in the marketing process, this area deserves special attention. Are salespeople adequately trained to advice growers on technical matters? Should technical specialists in the field report to the area sales manager, or should they report to the home office? Does the organizational structure promote adequate cross-communications between salespeople, marketing staff, and the research and development department? Can available human resources and the current organizational structure support what the firm wants to accomplish in the future?
The marketing audit should perform as objectively as possible. Because it is sometimes difficult for managers to evaluate their program objectively (because they created it), managers should consider hiring an outsider to periodically review the program. A qualified consultant can evaluate a marketing program and raise important questions about the allocation of time, effort, and financial resources.
(Reference: Erickson, S., Ckridge, J. T., Barnard, F. & Downey, D. (2001). Agribusiness Management. (3rd. ed.). New York: McGraw-Hill.)