Identifying Agricultural Retailers' Gaps in Understanding of the Value Proposition for Large Commercial Producers

In order for agricultural retailers to remain successful in a volatile market, it is imperative that they understand the needs and buying behaviors of their producers. These producers can be divided into four buying segments: the Economic buyer, the Agronomic buyer, the Business buyer, and the Performance buyer by identifying similar buying characteristics. The retailer’s ability to correctly predict their producers into the correct buying segment would allow them to optimally market to individual producers offering a consistent value proposition across all farms. This research uses cluster analysis to segment the agricultural market, multinomial logistic regression models to extract the variables that determined cluster classifications, and accuracy measures from a multilevel confusion matrix to assess retailers’ ability to classify their producers into the correct buying segment. Retailers predicted 70% of their producers into the correct segment. However, the accuracies differed across each segment leaving opportunity for an inconsistent value proposition across all segments.