Agriculture Reference
In-Depth Information
way that isn't expected and providing services or a level of service that isn't being provided
by competitors. Here, the fi rm goes beyond the tangible, physical properties of the product
and the minimum services that are typically provided with the product. Higher levels of
customer service, unique information, and the intangible benefi ts that go along with features
such as reputation, trust, integrity, and safety may all be part of the value added product.
Following our retail fertilizer example, retail customers may expect the standard custom
application service as part of the expected product. However, the custom application service
provided by the most highly trained drivers in the market and a guarantee that the driver will
be in the fi eld within 60 minutes of the promised time is likely to exceed customer expecta-
tions. A comprehensive agronomic plan developed by a trained agronomist and updated
annually with a personal visit from the agronomist may send signals that this fi rm is adding
more value than competitors. Or weekly text messages to key accounts giving updates of
changes in growing conditions and pest and disease problems may clearly communicate that
this fi rm goes above and beyond for their customers. It is this level of attention to customer
needs that drives the value added product and starts to more clearly delineate fi rms in the
market.
One last dimension of the product exists, the
potential product
. Here, the focus is on the
future—what is the next benefi t that customers will seek from the fi rm? How will the prod-
uct bundle be managed to add even more value for customers? Once the value added product
is successful, the fi rm must actively look for other possibilities in the marketplace because
competitors will seek to emulate any success the fi rm may enjoy.
The potential product for the retail fertilizer fi rm might include investing in a new infor-
mation management system to allow the fi rm to track comprehensive yield, fertility, and
weed and pest data by fi eld for customers. Or, it might mean acquiring a multiple-nutrient
variable rate applicator guided by a global positioning system (GPS) which will allow the
fi rm to apply precise levels of fertilizer on an as-needed basis as the rig moves across a fi eld.
It could be an interactive website that allows producers online access to a databank of key
agronomic information. The potential product may mean bundling up these types of services
with even more professional advice to deliver a precision agronomic package far superior to
any other offering in the market. The focus here is innovation and making sure the fi rm stays
ahead of competitor attempts to deliver the value added product and the expected product.
Note that the ability to meet and exceed customer expectations is heavily infl uenced
by what competitors offer. Unfortunately, if any of the value added attributes provided by a
fi rm are also provided by competitors, in the customer's mind these benefi ts may become
expected, taken for granted, and will not be as effective in differentiating the product offer-
ing. In this case, which is probably the typical one, actual delivery of the benefi t becomes the
deciding factor: if the fi rm does the same thing as a competitor, but can do it better in a way
customers truly perceive to be unique, and benefi cial to their operation, then there is still an
opportunity for differentiation.
Value is a matter of customer perception—it is based on what the customer believes to be
true. As managers, it is sometimes easy to lose sight of what customers value. Marketing
games of one-upmanship can lead to a “bell-and-whistle war” with little regard for whether
the customer actually wants the new feature provided. Just because a major competitor
has added another service does not mean that it is time to add the same service. Failing
to carefully consider the new feature from the customer's perspective may add cost to the
product for something that is not valued by the customer. Letting customer needs—current
and anticipated—guide construction of the value bundle is a fundamentally important
marketing concept.
