Going Beyond Porter’s Generic Strategies

Recently, I was fiddling about with my car radio and I caught the long-running Radio 4 soap opera, The Archers.  This tale of ‘everyday country folk’ has been running since World War Two.  It was set up as a vehicle to give the farming community advice on farming practices.  The agricultural content has diminished over the years but the show still retains an agricultural consultant and often storylines debate current issues with the UK country scene, such as ecology (the Grundy’s have accidentally loosed their pigs onto a site of special scientific interest) and disease outbreaks (a recent breach in biosecurity has spread disease across several herds of cattle).

In the episode I caught, Pip Archer, who works for an agritech company was speaking to her father David about the use of satellites to monitor the application of fertiliser.  This conversation reminded me of the work of Professor Malcom Macdonald at ICI’s Fertiliser division in the 1980s.

At the time of Professor Macdonald’s work with ICI, no fertiliser manufacturer in the world was profitable.  Fertiliser was seen as a generic product sold on the promises of price and increased yield.  The marketing approach was the same to all farmers.

Professor Macdonald examined the farming community and found that there were seven types of farmer and that using these types to segment the market, greater sales could be achieved.

The farmers in the Archers exemplify three of the seven types identified by Professor MacDonald.  Brian Archer is the tech farmer interested in the most modern farming techniques and the application of new technology.  For instance, he has recently purchased a drone so he can monitor his fields from above.  Pip’s talk of applying fertilizer scientifically using satellite technology directly matches his high-tech approach.

However, if Pip was talking to Tony Archer, Brian’s brother, it is unlikely that the technological approach would work.  Tony’s approach to farming is that of the eco-farmer interested in preserving nature and using organic methods.  If Pip was selling a fertilising system to Tony, the best approach would be to talk up the green benefits of the product and its low impact on the natural world.

Brian Aldridge, a friend and confident of the Archers is a different kettle of fish.  Aldridge is a traditional, ‘if it ain’t broke, don’t fix it’ farmer.  He is after the best deal possible and focuses on the best yield for the least money.  If selling fertiliser to Brian Aldridge, Pip would be best to highlight the value her products offer.  If she speaks about ecology or technology, she is unlikely to make the sale.

Michael Porter described three generic marketing strategies, cost focus, differentiation and niche.  He also states that following several of these strategies at the same time can result in a firm sitting in no man’s land and wasting marketing spend.

A big company like ICI can afford to spend on a differentiated strategy.  They can afford to spend on different marketing mixes to attract different farming segments for their fertilizer products.  Small producers cannot.  Small traders are often left with a niche strategy as they cannot meet the volumes required for a cost focus strategy or the extensive budgets needed for a differentiated strategy.

Rather than trying to attract David, Brian and Tony, their approach may only be to sell to one of the segments, the eco-farmer, the tech farmer or the yield-focused farmer.

However, even with niche marketing, there may be an overall issue to be addressed.  All three of the Archer’s farmers want the same thing.  They want to maximise their income and reduce the running costs of their farm.  They simply disagree as to how this should be done.

So if following a differentiation strategy, the solution to the problem may start in the same way.  I have never met a farmer who will willing waste money.  It is the emphasis of how they use money that will alter.  David will want a technological solution so he does not waste fertiliser.  Brian will want a traditional answer.  Tony will want an eco-friendly way of getting the best-bang for his buck.

So each segment identified can be broken down into micro segments.  The prime motivation of the segment may be the same but the message must be tweaked for each micro-segment.

Car firms do this by creating ideal customer profiles.  These can be very detailed listing the ideal customers family make-up, their job, the stage of their career, where they live, their hobbies, etc.  A range of these ideal customer profiles are created for each market segment and the marketing mix tested so that different attributes can be highlighted to different micro-segments.