The change in agricultural product markets, due to various reasons like globalisation, privatisation and liberalisation of economy is leading to new demands on the input markets. This means that input markets are increasingly driven by the demands of the final food and non-food markets which are trying to satisfy the needs in a better and better way.
This necessarily means that the input sectors will have to gear-up to meet these challenges, if they would like to remain in business. The growing competition also makes it necessary to plan a marketing-mix properly and carefully with future in mind.
The following discussion focuses on the:
The product, in our case the fertiliser, is basic to the marketing efforts because it serves as a problem-solving instrument for the user. But, increasingly, the cost of production is leading to price increases, which the market, in most of the cases, finds it to be very high. It is here, that renewable sources of energy can lead to decline in cost and help the product expand its market because it will be cost effective.
Further, on the product side, in order to increase the performance levels, a more effective use of product with irrigation methods like drip, sprinkler and application methods like fertigation can help. There is also a need for new products like bio-fertilisers or organic fertilisers, which can solve many of the food market problems at the first stage itself and help farming become more sustainable.
Crop specific blends can also be planned so that harmful effects and the consequent image loss to the product can be avoided. Use of micronutrients like sulphur is necessary in more fragile and sulphur deficient areas as an attempt to supplement the demand for fertilisers. Besides this quality assurance is a must to create trust among the buyers and build brand loyalty.
Fertilisers being a bulky and a delivery product, which meant for far-flung rural areas requires very efficient system. Franchising of mixing and/or blending units is one such way of doing it efficiently.
Further, in order to reap the economies of scale, the bundling of inputs should be resorted to. What this means is to deliver a bundle of products to the retailer so that he could meet all input requirement of the farmer in one place.
This is like single window approach to the delivery of services. Also, local distributors should be used for the services. This has been successfully used by the GAIC who have appointed Unemployed Agricultural Technicians (UTs) as dealers.
Emphasis on effective extension is a must, to survive and grow in rural product markets as extension is the major driving force for such products. Establishing linkages with financial agencies and other input sellers can help greatly; as the bank credit plays an important role by making the purchase possible. Similarly, other input sellers can be of help in recommending the present input or brand as farmers tend to buy from a single shop for all their needs. Therefore, constant promotion should always be resorted to.
Media also plays an important role in the promotion of agricultural inputs. Therefore, the type of media to be used, needs to be considered very carefully so that the objectives of coverage of target population and frequency of exposure are achieved successfully. In a product like fertiliser, it helps to resort to wall paintings, rural visits and audio-visual shows.
There is also a need to do more personalised promotion of the product as sometimes fertilisers end up being only a commodity and brand specificity is lost. Besides, in rural settings there is much more value placed on personal communication.
Finally, as mentioned in the beginning, there is a need to do client and location-specific promotion because of the increasing specialisation in farming sector. This can be attempted by designing location, crop specific or even farmer-class specific promotional campaigns.
There is also a need to bring in more of unique selling propositions in this product line, so that farmers are able to prefer one brand over another; as well as the brand can hope to get a selling edge in the market. Further, in order to increase the trial and adoption rate, there is very crucial role of demonstrations at the field level. This activity facilitates the product getting into farmer’s notice and future purchase and use.
In this product category, where there are frequent demands for product improvement and new product development, concept selling and testing assume significance. Concept testing needs to involve farmer-users and other clientele group so that relevant and specific concepts can be generated and developed. Concept selling is important to have an edge in development of the product and its marketing; as the product design and marketing are time consuming and costly activities.
Further, the market needs to be segmented for effective targeting and positioning. Instead of trying to sell fertilisers for all purposes and everywhere, it is important to identify niche markets. The examples could be crop and region specific product and promotion targeting, new product market targeting like bio-fertilisers and organic fertilisers. This is necessary not only to optimally allocate limited marketing resources of the companies in Indian market but also to gain some significant presence in specific markets.
The positioning of products in terms of purpose, pack size, weight, and composition needs to be clearly specified. Further, this has to be supplemented with appropriate brand positioning mainly in the areas of promotion and extension. A good replacement policy in fertilisers can create high amount of good-will and brand loyalty among the farmers.
In the presence of large number of competitors, though it is important to maintain good supplies in terms of quantity and quality, it is even more important to focus on demand side management of the operations. This requires creating a market pull for the product so that the supplying functions are compelled to work efficiently and reinforce demand-pull and brand image.
Finally, continuous market research should be undertaken to assess the buyer needs and problems at various levels, so that continuous improvements and innovations can be undertaken for a sustainable market performance.
The emerging fertiliser marketing scenario could be best described by the emerging economic scenario of greater liberalisation and perhaps total curtailment of subsidies. It is envisaged that this will allow market forces to fully operate in deciding the market size, price, supply, availability factors etc.
Thus from current partial decontrol to total decontrol of fertilisers, the emerging market scenario will bring in a system of frequent changes in fertiliser prices, distribution pattern, marketing territory, etc. For this each manufacturer/importer has to keep a very dynamic distribution network and product mix. It will still remain everybody’s responsibility to equitably reach fertiliser to the remotest corners of the country to meet farmer’s requirements whether big or small.
The other major change will be about the availability of funds for fertiliser extension. Each manufacturer/importer or marketer has to develop a strategy to find funds for fertiliser extension. It may not be possible to charge it to the marketing cost as the fertiliser prices may be already too high.
This means the cost of fertiliser extension has to come from the profitability. Therefore, the extension education programmes have to have the commercial angle, i.e., for generating higher turnover and profitability. But the commercial viability of the fertiliser extension must not overlook the social responsibility either.
With the economic liberalisation it is hoped that the market for agricultural produce will remain highly remunerative to the farmers. The benefit/cost ratio of fertiliser use would, therefore, also remain favourable to the farmers. The objective of the fertiliser extension programmes has to be more towards increasing their use efficiency for even higher profitability.
As the higher fertiliser use efficiency is achieved, it shall also take care of the environmental protection and the soil health. The farmer education has to include complete knowledge transfer on scientific package of practices of different crops and adequate for their adoption.
As the farmers will be more interested in crop diversification and commercial crops, the fertiliser extension has to be more informative and dynamic. Giving information on just field crops will not serve the purpose. Its call for a critical analysis are wise so that the advantage of spreading higher and more efficient fertiliser use could be taken through this route.
As we go into the twenty first century, the concept of integrated agriculture will be adopted more and more by the farmers. The fertiliser industry’s extension service has to be, therefore, ready to educate farmers on this new concept of integrating input intensive new agro-technology with traditional systems. This will promote sustainable agriculture without sacrificing the objective of self reliance and for that matter generating exportable surpluses.
Farmers are increasingly becoming technology conscious. They are generally well informed and hold discussions at higher technological plane than ever before. They will do so increasingly in future. Hence the extension service of the industry has to be fully technically equipped to cater to the needs of widening be of ‘well informed’ farmers.
The needs of future are much different. To make the extension programme more cost effective, each manufacturer/importer or marketer has to innovate application methods of extension tools. He has to decide his priorities area-wise/territory-wise to make his marketing strategy cost-effective and yet look after the needs of the farmers. There is no gain saying that farmers prefer those brands of fertilisers whose principles are service oriented.
Also, it is worthwhile exploring the application of the concept of cooperative or joint sales promotion of retailers which can save significant amount of resources of the competing brands and help in expanding and correcting markets in terms of product purchases and usage.
This strategy has been successfully used in various other product categories in developed country markets. The market for agricultural inputs like fertilisers seems particularly relevant for this kind of innovative market promotion tool.
So far as extension is concerned, no other input company invests so heavily in extension as fertiliser companies. It is very difficult to differentiate between market promotion and extension cost in input sector especially in fertilisers and seeds. But the activities of fertiliser companies are more visible than that of seed companies.
The companies give the responsibility of extension to their regional sales offices who in turn finalise the programme in consultation with state level offices. IFFCO tops the list of fertiliser companies in terms of expenditure on extension and the geographical coverage of market.
Its activities can be grouped into:
(b) Field programmes,
(c) Seed multiplications, and
(d) Village adoption.
IFFCO also has Farmer Service Centres like many other fertiliser companies. Despite these measures of extension and fertiliser promotion, at the farmer level it is still dealers and other farmers who figure as important and preferred source of information by the farmers.