Customer Value Drivers of South African Dairy Farmers

Abstract

The formal animal feed market in South Africa is estimated at R15 billion rands per annum (Hemme and Ndambi 2009). There therefore exists a sizeable market that animal feed producers are targeting. This research seeks to provide information to animal feed producers so that they may better structure marketing efforts and new service or product offerings. The research problem is to determine the relative importance of the key customer value drivers of dairy farmers in South Africa when purchasing animal feed. A qualitative study of a convenience sample of five farmers was used to construct a quantitative questionnaire to assess the farmer’s perceptions of the various proposed customer value driver’s constituents. These questionnaires were completed telephonically by a sample of 254 famers. Quantitative analysis techniques like a response frequency analysis and factor analysis were used to provide information to respond to the research problem. The most important customer value driver used by South African dairy farmers when purchasing animal feed is a balance between the core functional element of animal feed, namely nutritional value and the economic cost of acquiring it. Once the purchase offering has satisfied the above value assessment then farmers rate the second most important factor to be the time and effort required to acquire and use the product. The third most important factor was found to be the service provided by the feed supplier. Farmers seek technical advice on the use of the animal feed and general feed mix formulations as well as access to technical information and laboratory test facilities. This view of the service element is aimed at allowing the farmer to achieve his primary goal of acquiring the required nutritional elements at least cost. Feed costs are the major cost in producing beef or milk for farmers (Hemme ii and Ndambi 2009) and thus applying the correct feed is of prime importance in determining cattle farming profits. Farmers are searching for the best value product by balancing nutritional value and price. The services of nutritionalists and supplier advice are employed to develop optimal total mix rations. Feed suppliers must therefore develop and position products that cater to this core requirement.