PRICE COMPETITIVE OR SERVICE EFFECTIVE?
"Don't ask for lower price, ask for a better service", said a board in a tailor shop; As a matter of fact, this sentence could fit in the words of any business sector around the world.
Price competition seems to have no ending; it has been the unique market strategy for many companies.
Agricultural sector is being affected by this situation greatly. Year by year, it is more difficult to sell Ag products in their traditional markets at a reasonable price. Products from different parts of the world appear in the market at cheaper prices but, are the customers buying the same product at a lower price? Or they do have differences and, which are those differences?
Fortunately there are many examples of companies decided for a different positioning rather than price competition, here only few of them:
- Cherry tomato in Granada -Spain-; while 80% of the Spanish tomato is sold as round tomatoes, cherry tomato producers have based their strategy in gustatory quality and proximity of the target markets, and what has the same importance, customer information – they say: tomato can accomplish all the formalities, but those can be indifferent for the customer on the supermarket shelf if he/she is not well informed about what he/she is buying-. Recommended lecture at
www.revistamercados.com/ingles/articulo.asp?articulo_id=384
- Mercabarna packaging of potato. Something so simple such as potatoes sold in bulk, suddenly changed by differentiating them for each use depending on the culinary aspects of the potato. Added, washing and serving them in smaller packages made the difference in such competitive market.
- Cereza del Jerte (Jerte Valley Cherry). How 5.000 farm averaged 1,2 ha can lead a market niche through association, a Protected Designation of Origin (DPO) and a determined agricultural practices, boosted by a investment in an advertisement campaign in order to inform customers. Check it at http://www.cerezadeljerte.org/.
These examples do have in common the company understanding of the customer needs, and the investments in order to fit those needs.
If we check any modern Paper talking about business, we will read about R+D, market presence, consultancy, client satisfaction, corporate initiative, creation of teams, and many other things that cost money; that money shall be generated from the sales, and that is reflected in the difference in the product price.
It doesn’t matter whether we are a fertilizer producer, a grower or a trader; if we follow the price competition we will end up in a position where it is not possible to generate value, which means that it will not be possible to compete. In order to be competitive, we need alliances with other members of the chain, taking active part in the market, understanding and satisfying the customer expectations.
Agronomists do play a crucial role in the whole chain. Their proximity to the field and work can be considered the first step to get the right product at the right time; and we agree that we need a good first step before getting the second.
At this point, the participation of leading companies in the process is also important, I am talking about worldwide companies, leaders in theirs sectors (seeds, plastics, specialties, etc) that can help the farm manager/advisor in their daily decisions and at the same time develop new products requested at the supermarket shelve. Those consultancies can not be done with the basis of being price competitive, but with the base of being service effective; for that reason: "Don't ask for lower price, ask for a better service". |
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