Agriculture Reference
In-Depth Information
complete feed, choosing instead to push concentrate feeds and keep their feedmill in use,
reducing hauling costs in the process.
The brothers are looking into the construction of overhead feed holding bins to reduce
truck waiting time. They would also like to get more bulk bins on the farms of their custom-
ers to reduce unloading time. “We must take steps to increase effi ciency over the longer
run,” said Lance. The brothers are considering remodeling the offi ce/showroom and acquir-
ing a new computer system to handle accounting tasks and keep customer records more
effi ciently.
Marketing
. Quality and service are key components of RS&E's business philosophy. They
focus their sales effort on Rapid Grow's premium products and feel they get a good gross
margin on what they sell (13 percent in 2011). The brothers are very conservative about
growth—about 5 percent a year is all they want. “We cannot let our current level of customer
support slip,” said Lance. “And, we are willing to let some opportunities go by to make sure
that we can keep our current customers happy,” he added.
Customer service is delivered in several ways, according to Lance. Quality feed products
are the cornerstone and the brothers have been very pleased with the Rapid Grow line over
time. Nutritional support is another component of customer service. This is done by drawing
on Lance's excellent knowledge of swine nutrition and by making heavy use of a talented
local veterinarian who doesn't sell feed or animal health products. In addition, they draw on
Rapid Grow's nutritional experts whenever necessary. They have a good, but not great,
company website. And, they have been thinking about how more extensive use of the Internet
might help them build even better relationships with their farmer customers.
Richmond has worked hard to maintain margins, attempting to increase gross margins on
feed over time. For the most part they have been successful at increasing per-ton margins on
feed. RS&E is not the cheapest feed company in the market, nor do they intend to be. “We
will make money on what we sell,” said Lance. They offer a 2 percent discount for cash. In
addition, they have a volume discount program that Lance admits is a bit “informal.”
Richmond rarely advertises and holds farmer meetings only occasionally. “Unless there is a
new product to push, I'm just not a great believer in meetings,” said Lance.
Summary
. Lance and Paul have built a good business over time. However, their market is
changing rapidly and the competition is getting tougher. The brothers wonder just what posi-
tion they should take in the market. What will they need to do to support this position? What
steps are necessary for a thorough evaluation of their challenges/opportunities? How will
they communicate the value their products and services provide to their customers? Clearly,
Lance and Paul have many tough decisions to make.
Questions
1.
What are the key opportunities and threats facing Richmond Supply and Elevator in the
marketplace?
2.
What are the key strengths and weaknesses of RS&E?
3.
Based on the limited information in the case, describe the fi rm's target market. In your
opinion, does the fi rm have a good grasp of who their target market is and what this
market wants from the fi rm?
4.
What position should the fi rm take with their target market? What key themes should
they emphasize in their positioning statement?
5.
Is RS&E a product-driven fi rm, a sales-driven fi rm, or a market-driven fi rm? Explain
your answer.
