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Colby, Kansas | Tim, I wasn't trying to make a point on you, just demonstrate that everybody has to deal with economies of scale. Free Seed, don't get me started. There is no such thing in the grand scheme, and from a sales perspective it is a giant PITA. This last year our programs were the typical plant x many more acres and we'll throw in 6 bags, x acres gets you some more, etc.. But the seed is free and the tech fees are not, bags must be billed out then credited back,, its just a pain in the *ss. I wish if they were going to have some type of promotion just say increase your order by x amount and we'll give you another 5% discount. Sorry for that rant but some of these programs dreamed up by seed/chemical companies are just stupid and at times are costing me more in time and office labor than they are worth.
In summary to your first question, free seed really doesn't increase my marketing expense because almost all free seed comes from on high (DSM, company program, etc). I guess when I'm talking about my marketing expenses I'm talking about # of guys I feed at a field day, gallons of diesel for sales and delivery, shrinkwrap around pallet with a customer order, postage on newsletters, value of time spent with customers. Just expenses specific to my cost of doing business.
Your comment about being a small part doesn't upset me in the least, I very much agree, I'm sure I could have found much more lucrative ways to pay for college. It's a small margin, not as tight as chemical or new machinery, but still small for the amount of customer service involved. About selling to the big guys at cost and making money on the little guys, that kind of ties into my point. I need the volume from the big customers in order to continue to make a profit at all. And I need more profit on the little guys to cover the increased cost of doing business. Does more profit come from smaller customers, I guess it depends upon how your cost are structured and how much you have to cut deals with the big guys.
As far as giving seed to non-customers,,, maybe I'm wrong here but I won't do it. I haven't done my job as a salesman if I can't get them to BUY some seed. That's not to say that I don't sweeten the pot a bit for a new, expanding, or long-time customer. I've had people try and work me over on that, "well we need some free seed to try". I've learned the hard way several times that there are some potential customers you just walk away from. I know Pioneer has tried various marketing strategies including mass giveaways of seed, however even extreme marketing tactics haven't had an impact on their market share trend for the last 7-8 years.
Best Regards,
Lucas | |
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