The marketing mix - Agribusiness Management - page 146

Costs
Benefits
Value
Figure 7.2 The value equation
In the defi nition of value, note the importance of the word “perceived.” Some benefi ts
and costs will be tangible and easily measurable—the horsepower of a tractor or the per unit
cost of fruit juice, for example. But intangible benefi ts and costs can be just as important
(or more important) in the purchase decision—the prestige or the peace of mind that comes
with owning the “best” farm equipment, or the convenience that comes with a special type
of juice package.
There is no easy way to measure benefi ts like prestige or convenience, but customers
will form highly unique opinions—perceptions—about the value of such benefi ts. Because
many benefi ts are intangible, the agribusiness marketer must not only know how the
customer defi nes value, they must make sure the value their bundle provides is clearly
communicated to the customer. In the end, no matter what the agribusiness marketer thinks
about their products and services, it is the customer's perception of benefi ts and costs that
will determine whether or not a purchase is made.
Many fi rms dedicate signifi cant dollar investments to more clearly measuring and catego-
rizing the value customers place on intangible benefi ts. Such market research efforts may
include focus groups, wherein groups of targeted customers are brought together to explain
their feelings associated with using a product or service. Other market research tools include
surveys, and online response tools to name a couple. A salesperson working with a customer
one-on-one can also provide unique insights into the value of these intangible product or
service benefi ts. Intangible benefi ts are important enough for companies to invest in market
research to more clearly understand the customers' perceptions. More information on these
tactics is included in Chapter 8 .
To relate the customer's defi nition of value to the agribusiness fi rm's product strategy, it
is helpful to visualize the fi rm's product offering as consisting of four distinct, but highly
interrelated, parts. This way of looking at the value bundle has been called the total product
concept by some authors (Manning and Reece 1990). The total product concept is a means
to relate the customers' defi nition of value to the agribusiness fi rm's product strategy by
visualizing the four parts of the fi rm's product offering: the generic product, the expected
product, the value added product, and the potential product ( Figure 7.3) . Understanding
these different levels can help an agribusiness marketer better understand how value is
added, and ultimately, can guide development of the product strategy.
The foundation for a fi rm's product offering is the generic product . This is the standard
product with no special services or features attached. For DEKALB Genetics, this is a unit
of hybrid seed corn, while for Ocean Spray, it might be cranberry juice. There is little or no
differentiation at the generic product level—at this level customers see all agribusiness fi rms