Dairy Land Case Final

8/8/2019 Dairy Land Case Final

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Strategic Marketing - Case # 1Eslsca– MBA - Nov. 2010

Presented by:Mohamed Khalifa



Dairyland seed in brief

qSince 1907, Dairyland Seed has been a leading developer and provider of corn, soybeansand alfalfa seed throughout the United States.

qDairyland produces seeds for various crops, including soy beans. Among their soy beanseeds are varieties that they have developed that are tolerant to herbicides.

qThis means that a farmer can spray for weeds without harming the soy bean plants.

qDairyland has developed seeds that are tolerant of DuPont’s STS herbicide and some thatare tolerant of Monsanto’s Roundup herbicide.

qMajor seed companies that are direct competitors of Dairyland have been purchased byDuPont and Monsanto.

qConsequently, Dairyland is dealing with two companies that compete with each other, andas owners of seed companies, now also compete directly with Dairyland.

Dairyland employeesalmost 100 Employeesplus seasonal help,40 % of them work inresearch



Dairyland seed history dates back to 1907

§ 1907: Simon & Andrew Strachota founded the company,naming it Strachota seeds

§1920: Andrew Strachota retired leaving his brother Simon tohead the company

§1940: Simon Strachota died, His son Orville returned homefrom college and run the company

§1955: As the White Dutch Clover market dropped off, Orivelleshifted to Alfalfa seed “ a product with rapidly growing demanddriven by dairy farmers for their cows

§1961: Strachota seeds started to produce seed corn on largescale

§1963: Orivelle changed the company name to be Dairylandseed, to reflect their commitment to the market

§1960s: Soybean seeds was added to their product line

Simon Strachota

§1976- 1998: Orville Strachota’s 3 sons Tom , Steve and John,run the company



Seeds & Biotechnology market (1)Adapted from exhibit 3

Asgrow

Dekalb

Holdens

Jacob-Hartz

Stein

Delta & Pineland

Dairyland

Pioneer

Asgrow sales-force

DEKALB sales-force

Retailers

Jacob-Hartz

Stein sales-force

Delta & Pineland Sales

Pioneer sales-force

Contractagreement

RoundUp

STS

Cargill’sinternational

BiotechnologyCompanies

Seed GeneticsCompanies

Contact with Farmers

Collaboration

51 countries

Optimum

Joint venture , bring new addedvalue corps to the market

2nd

1st

Dairyland sales-force

Acquisitions

Partial ownership 20%

http://www2.dupont.com/DuPont_Home/en_US/index.html



Seeds & Biotechnology market (2)

AgroEvo Asgrow

Holdens

Owned by Monsantoand represent a

problem for AgroEvo

Seed GeneticsCompanies

Liberty

BiotechnologyCompanies

3rd

American Cyanamid

Pursuit

Zeneca

Flextar – broad leaf weedcontrol for soybean

4th 5th

Represent a challengefor Monsanto’s

Roundup Ultra andDuPont's Symphony

Herbicide Profile

Round Up® More convenient and economic

STS Longer weed control

Liberty® Faster acting than RoundUp®

Pursuit® Used with non herbicide-tolerant soybean



Performance indicator 1.1Market Share

NB : Monsanto acquired seed companies represent almost 26% of the marketDuPont acquired company (Pioneer) represent 14% of the market as shown in thenext graph.

2%

Privatevarieties(52.5%)

15%

32.5%



Performance indicator 1.2Market Share

1998 National Market ShareAdapted from exhibit 4



Performance indicator 2

Brand equity:

Dairyland has worked hard to build its image around quality products, high standards of business ethics and as a successful family-run business.Along with highly visible commitment to research and first class physical plantdemonstrating employee pride in the organization.

The company positioning efforts over the years resulted in a positive and consistent imageamong customers and even competitors





Dairyland seed company structure and process

Performance indicator 4

§Dairyland employees almost 100 Employees plus seasonal help, 40 % of them work inresearch, executive management is located at the headquarter, while sales and productionemployees are located throughout the market and production areas .§

§Dairyland Seed is headquartered in West Bend, Wisconsin, and has research locations inIllinois, Indiana, Iowa, Wisconsin and California.§



Otterbein, IndianaCrops: Corn and Soybeans

Gilbert, IowaCrops: Soybeans

Mt. Hope, WisconsinCrops: Corn

Corporate HeadquartersWest Bend, Wisconsin

Research HeadquartersClinton, Wisconsin

Crops: Alfalfa, Corn & Soybeans

Homedale, IdahoCrops: Alfalfa

Sloughhouse, CaliforniaCrops: Alfalfa and Corn

Gibson City, IllinoisCrops: Corn and Soybeans

Dairyland seed R&D centers



Products (1)

Products:There are three major products lines (Alfalfa, Corn & soybean) supported by R&D to producehigh yield genetics rather than specific traits.



Production of hybrid corn began in 1961Dairyland seed currently offers over 40 corn varieties to meet the needs of farmersThe company has “ Stealth hybrid breeding program

Dairy land seed started its soybean line in the 1960’sThey have varieties of Soybean mainly in collaboration with biogenetics companies

st Alfalfa breeding programneeds including varieties suited for wet soil and high traffic fields

tial Maturity AlfalfaTM

which provide farmers with high quality forage

Products (2)



Promotion process

Dairy land Seed uses several promotional programs to communicate the

benefits of its products to farmers:§ Direct mailing§ Printed materials :

o The Dairyland Soybean Management Guide ( technical & practicaladvice to farmers)

o Pocket sized Dairyland seed reference guide and calendar o Quarterly newsletter "The Leader”

§ Tours of research and production facilities , crop management clinics, fielddays at the test plots

§ Advertising:o Ads in state farm facilities publicationso Ads in Magazines “Soybean digest”o Radio ads in local channels to promote field days or educational

program

§ Incentive and gifts:

o Incentive for dealers and their customerso Caps & Jacketso Larger value gifts (TV sets, trips to Florida - cars)o Sales incentive and bonus awards for achievement

§

§



Pricing strategy

Pricing strategy is slightly (5-10%) above the market average in all product lines . Thisstrategy encourage the premium quality image that is the core of Dairy land seed marketingstrategy, which generates margins necessary to support aggressive R&D

Tom Strachota believes thispremium value strategy ishighly successful

Adapted from exhibit 1



Performance gaps



Performance drivers



Environment trend

Dairyland face a lot of competitors from huge multinationals to regional or local companies

Some competitors develop and sell proprietary products while others sell public varieties(identical to each other)

Pioneer is the market leader in seed corn, Asgrow is the market leader in Soybean

There is no dominant supplier for Alfalfa

Customers’ buying behavior has changed and become less brand loyal & more

economically focusedLarge farms, more people influence buying decisions and farmers become more business

educated

There is rapid acceleration of product innovation and leapfrogging of technologies

DuPont and Monsanto the two big biotechnology suppliers are currently pursuing a strategyof rapid growth through aggressive marketing programs and forward integration through

acquisitions of seed companies and becoming more closely to Dairyland competitors



Environment impact on Dairyland

Large agricultural producers often demand seed with high yielding genetics along withspecialty traits specific to their particular needs

Dairyland Seed Company prides itself on its superior genetics and a research program thatadds specialty traits while retaining the qualities of the original variety

Tough competition and price cuts made Dairyland pricing strategy questionable and acritical survival issue.

Retailers and distributors are pushing toward other products rather than Dairyland’s for the

sake of the generous incentive and rebate programs offered by Dairyland competitors

DuPont and Monsanto becoming more closely to Dairyland’s competitors which may leadthem to drop the collaboration with Dairyland eventually or at least offer the competitorswith more assistance than Dairyland which will create a competitive advantage for themover Dairyland

The rapid acceleration of product innovation and leapfrogging of technologies with the too

many acquisitions leave Dairyland with strategic decisions to make for ensuring long-termsurvival



•

External factors listing:AgroEvo critical distribution situation, after Monsanto acquisition of (Holdens & Asgrow) (O)Monsanto & DuPont intensified competition (O)Rapid growth of RoundUp ready market share andits acceptance (O)Risk of being bought by Monsanto or DuPont (T)DuPont become more tight with Pioneer

Dairyland's main competitor (T)Monsanto acquisitions made Dairyland competitorsbecome stronger (T)STS markets may become less attractive due toMonsanto's rebate program& high growth of Round- Up. (T)Farmers are becoming more economically focusedand less brand loyal. (T)Creation of Optimum by DuPont and Pioneer willmake a new competitor in R&D (T)

•Internal factors listing:1st in market with extensive experience withcustomers. (S)Extensive R&D and innovation in alfalfa, corn, andsoybeans (S)First in the development of STS varieties (S)Customer and quality focus (S)

Premium price leading to higher profit margins (S)Products and company has good reputation in themarket (S)Largest alfalfa breeding program in industry (S)New Dairyland varieties demonstrate resistance toparticular plant diseases (niche market opportunities)(S)No Specific, strong relationship with either (DuPont or

Monsanto) (W)3 product lines only, no diversification (W)Distribution is weak (W)Has no exposure on national basis (W)No plans for expansion, the guy (Tom Strachota) istotally reactive (W)Premium prices may be a constraint to the cost-conscious farmers (W)

SWOT



Probable impact on companyHigh Medium Low

Probability

of occurr ence

High AgroEvo critical distribution situation,after Monsanto acquisition of (Holdens& Asgrow)Risk of being bought by Monsanto or DuPont

Monsanto & DuPont intensifiedcompetitionRapid growth of RoundUp ready marketshare and its acceptanceCreation of Optimum by DuPont andPioneer will make a new competitor in

R&D

STS markets may become lessattractive due to Monsanto's rebateprogram& high growth of Round- Up.

Medium

DuPont become more tight withPioneer Dairyland's main competitor Farmers are becoming moreeconomically focused and less brandloyal.

Monsanto acquisitions made Dairylandcompetitors become stronger

Low

External Issues Priority Matrix



Probable impact revenueHigh Medium Low

Probable impact on investmentHigh

Extensive R&D and innovation inalfalfa, corn, and soybeansNo Specific, strong relationship witheither (DuPont or Monsanto)3 product lines only, no diversificationNo plans for expansion, the guy (TomStrachota) is totally reactive

1st in market with extensiveexperience with customers.Customer and quality focusLargest alfalfa breeding program inindustryDistribution is weak

New Dairyland varieties demonstrateresistance to particular plantdiseases (niche marketopportunities)First in the development of STSvarieties

Medium

Premium price leading to higher profitmarginsHas no exposure on national basis

Products and company has goodreputation in the market

Low

Premium prices may be a constraintto the cost-conscious farmers

Internal Issues Priority Matrix









TOWS

IFAS

EFAS

Strengths ()1st in market with extensive experience withcustomers.Extensive R&D and innovation in alfalfa, corn,

and soybeansFirst in the development of STS varietiesCustomer and quality focusPremium price leading to higher profit marginsProducts and company has good reputation inthe market

Weaknesses (W)No Specific, strong relationship with either (DuPont or Monsanto)3 product lines only, no diversificationDistribution is weakHas no exposure on national basisNo plans for expansion, the guy (Tom Strachota)is totally reactivePremium prices may be a constraint to the cost-conscious farmers

Opportunities (O)AgroEvo critical distribution situation, after Monsanto acquisition of (Holdens & Asgrow)Monsanto & DuPont intensified competitionRapid growth of RoundUp ready market shareand its acceptance

SO Strategies

Using the company resources to fund theacquisition of AgroEvo and benefit from itsLiberty technology to have an edge and competewith other seeds and biotechnology companies

WO Strategies

Invest in acquiringDuPont to build better distribution system and national exposure throughPioneer, and fortify its R&D through Optimum

Threats (T)Risk of being bought by Monsanto or DuPontFarmers are becoming more economicallyfocused and less brand loyal.Creation of Optimum by DuPont and Pioneer will make a new competitor in R&D

ST Strategies

Invest in acquiring DuPont through Bankpartnership or loans or internal funding

Invest in introducing 3 levels of each productline (A premium price one , an average priceone and a lower price one) each with differentpositioning and branding strategy Envelopmentstrategy

WT Strategies



Conclusion of Diagnosis

1.Dairyland seed should choose between dealing with DuPont or Monsanto

2.Assess AgroEvo situation and do whatever possible to benefit from it3.Distribution system should be revised and actions should be taken for improving the

distribution

4.The current pricing strategy need to be revised

5.Investment of resources should be rearranged and give more attention on other departmentrather than R&D



Issue #1

Dealing with both biotechnology suppliers who are becoming closer to Dairyland directcompetitors

The diary land soybean business is at high risk & influenced by the competitors

Tough competition will lead Dairyland to lose market share and sales will drop leading to

lower amount of profit which in turn will lead to low fund for the R&D which is thecompetitive edge for Dairyland

Dairyland product portfolio should be revised using the BCG investing more on the starsand kill dogs and looking for diversifying their product portfolio to ensure long-termgrowth

1.Dairyland seed should choose between dealing with DuPont or Monsanto



Acquiring AgrEvo

1.Enriching its portfolio through entering new industry (herbicides) will give the company astronger position in the market and be able to survive and compete with the marketgiants.

2.Developing a new product (Liberty tolerant seeds )which may gain a market share (as

liberty is faster acting than the others)3.Capability of having new product line with different pricing strategy targeting all farmers

segments

4.Large fund will be required for the acquisition (obtained through bank loan or partnershipor even by selling more stocks

5.Diary land has to be prepared for any attacks from the competitors

Solution # 1



Solution # 2

Continue with the status quo producing both the STS seeds & Round up ready seeds

1.Targeting all the market needs due to the expected growth for round up

2.Preserving the loyal customers for Diary land STS seeds and gaining new customerswho want the Roundup ready seeds

3.Focusing on the R&D to produce seeds with special traits for more yield gain

4.Continue the unfocused strategy with no clear vision for growth

5.Aggressive competition will continue

6.Continue having the same issues concerning distribution and new products



Dairyland have only 2 % market share

40 % of Dairyland manpower are in the R&D department

Low investment in the sales force & distribution leading to low coverage

Issue # 2

Distribution system should be revised and actions should be taken for improving thedistribution



Solution # 1

Acquiring DuPont the biotechnology unit

1.Acquiring DuPont will give Dairyland the access to benefit from its acquired seedcompany Pioneer leading to enhancing the distribution

2.Acquiring Pioneer will lead to increase in the market share

3.Stronger company position in face of Monsanto controlling the STS technology

4.Gaining sales team & distribution management know how which will add to the

company distribution5.More coverage to the US market gaining more market share

6.More profit gain will lead to more funds for R&D to produce more seed varieties

7.Fortifying the R&D through Optimum

8.Need a Huge amount of funding to acquire the huge company

9.Losing the round up market completely

10.Aggressive direct competition with Monsanto



Reallocating the resources in order to strengthen the distribution of Dairyland

1.Working on the distribution issue to gain more coverage in potential territories

2.Expanding the sales force and the distribution network will require a additional financialresources

3.Losing the working hands & resources for R&D which is considered the competitive edge for diary land

4.Dairyland don’t have the know how of managing a large field force

Solution # 2



The current pricing strategy need to be revised

Customers’ buying behavior has changed and become less brand loyal & moreeconomically focused, more educated looking for the new product innovation &leapfrogging technologies & cost saving at the same time

Monsanto main strategy is working on incentives & rebates which are very appealing tothe farmers & Monsanto is gaining more market share

DuPont and American Cyanamid also cut their prices to match Monsanto pricing action

Issue # 3



Solution # 1.1

Invest in introducing 3 levels of each product lineA premium price level with augmented extra benefits ,

An average price level with matching benefits to the competitors

A lower price level with less benefits

Each with different positioning and branding strategy related to its level

1.Targeting all customers segments (looking for quality, looking for economic value andlooking for benefits )

2.Dairyland will maintain its image of being the high quality company

3.Will be hard to competitors to match their prices with Dairyland

4.Keep or increase the profit leading to more funding for the R&D

5.Enveloping the competitors will gain Dairyland more market share and sales growth.



CompetitorsDairyland

An average price level with matching benefits to the

competitors

A lower price level with lessbenefits

Solution # 1.2



Price cut and rebates on its current products

Solution # 2

1.Gaining the price oriented target customers

2.The issue considering the farmers being more economically focused will be converted to anopportunity instead of being a threat

3.Dairyland build its image through years from being the high quality with premium priceseeds, this image will be lost

4.Reducing the profitability range and this will in turn lead to less funding for the R&D5.More aggressive attacks from Monsanto

I d i l (1)



1.Acquiring AgrEvo company2.Introducing 3 levels of each product line

A premium price level with augmented extra benefits ,

An average price level with matching benefits to the competitors

A lower price level with less benefits

3.From a very powerful position acquire DuPont (Herbicide unit) & gradually decrease theproduction of the round up ready seeds

4.After the acquisition restructure the company under the name of Dairyland Agrotech asfollows :

Dairyland research unit (R&D unit)(combining the R&D of Dairyland, AgroEvo and Optimum of DuPont )

Pioneer unit (sales and distribution unit)(combining Dairyland and Pioneer’s sales force and distribution networks)

5.A Full IMC campaign to leverage the awareness about the new company and promotingLiberty and STS and their tolerant seeds variety

6.Pursue for other opportunities of acquisitions and mergers

Integrated action plan (1)

I t t d ti l (2)



Integrated action plan (2)

Dairyland Agrotech new structure



Learned lessons

The learnt lessons from Dairyland seed company are:Focus is the main key of success

Be proactive

Respond flexibly and always monitor the consumer behavioral changes

Adapt easily to new or emerging technologies .

Distribution is very important factor of success

Premium prices may be a constraint to the cost-conscious customers and the changingeconomy (Pricing flexibility)

Be fast or you will be food



Thank you

Documents

Dairy Land Case Final