By Jana Williams, Auburn University
They said direct would never work in this industry. Proven wrong, why do many manufacturers continue to believe the traditional way it is the ONLY way?
Since foundation, agricultural chemical products have followed the same channels to reach us, the consumer. Let's take the BASF ag chemical segment for example. BASF manufactures multiple products, and has an imposing array of representatives who work with a few specific distributors. These distributors then house product from other manufacturers, and sell to the retailer or end user. The question remains, which pesticides do these distributors push? Might it be the one's that give themselves the most kick-back or incentive?
Hypothetically, say I go to purchase a vehicle. I know I want a Ford truck, I buy it from a dealership that only carries Ford vehicles, and I am satisfied. Now what if I were to stay open-minded about the vehicle I want, and go to a dealership carrying multiple makes? What reason would they have to sell me one truck over the other? If the salesman is aware the kick-back of an expensive hunting trip will come with me purchasing a Dodge, would that egotistically re-direct his sales motivation? Would they play a role in interfering with my free-will?
But, what if a manufacturer were to alter their framework and in return strive for the customers' best interest? If distributors are cut out of the formulation and the final consumer works directly with the manufacturer, will that solve a lot of the controversy over unfair motivation? Would you, the consumer, get the true story, at the best price?
With global communication and e-commerce continuing to be simplified for society, we are seeing more manufacturers sell direct. Mentioned by the WFDSA, consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration, explanation of products, home delivery and generous satisfaction guarantees.
As a marketing undergraduate student, I have researched the background of a few specific companies in the agricultural chemical industry, who have branched away from this traditional market approach. I began with AgroFresh, Inc. After speculation of contracting their ethylene management products through distribution, they decided to bypass this step and sell directly to the end user. Since their start in 1999, this method has been an overwhelming global success. AgroFresh's end users are satisfied; they get the product without an extra mark-up and receive facts directly from the manufacturer.
I also evaluated Alligare, LLC, who had their first sale in 2004. With a failed attempt at distribution, they converted to a direct go-to-market strategy. In just five short years they have been able to accumulate a 23.3 percent market share of the Industrial Vegetation Management industry. Alligare is the only national herbicide company who abstains from entering into a formal agreement with traditional distribution, bringing forth a buyer cost advantage by terminating the need to compensate distribution for product marketing. This strategy gives the end user the ability to build a partnership by ordering directly through Alligare. Going into 2009, they are one of the few manufacturers in the industry continuing steep sales incline.
Will the current economic crises impel manufacturers to re-construct and no longer follow common distribution? For many companies like AgroFresh, Alligare, etc., direct marketing has caused them to successfully explode into the marketplace. Customers appreciate this integrity and enjoy knowing they are getting the best prices, no matter the size of the purchase. With the guaranteed dignity this method has proven to withstand, by better fulfilling individual's needs, direct access to products will over-time be a demand of all consumers. In return, a direct marketing approach could be a prominent key to organization survival.
By Jana Williams, Auburn University