While market research is valuable -- and usually vital -- in all sectors, it is especially important in agriculture. This is because the traditional agricultural business model involved farmers marketing products to known buyers. In fact, in many cases, fundamental farming and growing decisions (i.e. what to grow, how much to grow, when to harvest, how to store and ship, etc.) were made on a contractual basis. It was a classic risk-reward trade-off, with most farmers opting to accept a relatively smaller profit margin in return for a confirmed purchase.
However, these days farming is far more sophisticated, complex and multifaceted than in years past. There are numerous value-added products and services, along with increasing global competition, changing customer dynamics, and new buyer personas. Forget about the stereotype of farmers meeting in the middle of town to “do some trading.” Today’s agricultural marketplace professionals are more likely to have an MBA than a pickup truck.
Ultimately, this means businesses that want to sell in the massive $400+ billion dollar agricultural sector, as well as those currently in the sector who want to generate maximum profit while reducing their risk exposure, cannot rely solely on historical data to make decisions. They need to look forward and anticipate what is coming down the pipeline next month, next year and next decade, and that is where agricultural market research enters the picture. Here are the three biggest advantages:
1. Opportunity Analysis
The history of business is overflowing with great ideas that should have been enthusiastically adopted, but failed to get off the ground because of limited market demand. And of course, there are other ideas for which demand existed, but production and distribution costs resulted in a price position that the market deemed too high.
Agricultural market research takes a pragmatic, down-to-earth look at the viability of introducing a new product or service in the market, and verifies whether it will be profitable and sustainable (and if not, what may need to change to make it both of these things).
2. Selling an Idea
While having a viable idea is obviously critical, it is not the full story – because that idea has to be sold to customers in an effective way. For example, if a new solution is a software system that helps farming operations track, monitor, analyze and compare their roster of logistics vendors, then the presentation or pitch to sell it will typically involve a demo, and perhaps a free trial that proves value. The price position must also be strategically chosen to ensure that ROI is achievable within a realistic timeframe (i.e. if a customer must purchase software licenses for 3 years before profit is realized, what happens if they leave after 2 years or even 1?). Agricultural market research helps uncover all of these details, and ensure that innovative products and service will profitably sell in a competitive marketplace.
3. Analyzing the Competition
Agricultural research is also necessary to shed light on what the competition is doing, and especially, what investments they are making in everything from product development to marketing and advertising. A high-level scan or SWOT exercise cannot reveal many of the critical details and nuances that make a profound difference between smart and informed decision-making, and heading down the wrong road.
At Communications For Research, we are one of the nation’s most experienced full service agricultural market research firms. We have in-depth knowledge of the agricultural sector, along with the proven capacity to recruit and engage appropriate market research participants – including specialists and influencers deep within buying organizations. To learn more, check out our Ag Access services today and schedule your a call with our co-CEO Colson Steber.