Marketing, Economics and the 4Ps
I am progressing through “Implementing Value Pricing” by Ron Baker, and really enjoying the process and the parallels that are drawn to everyday topics and other industries. I was amused and excited to hit a section where he began an interesting parallel of pricing strategy to… farming. Now, I’m a South Georgia girl, through and through. My father managed his own farm (grain, pigs, cotton, peanuts, all over the board) through the early 80’s when he left the industry as many others did at the time. He jokes that the general changes in the farming economy weren’t what caused issues; it was a certain little girl being born who “bankrupted him.” For example, as a child, I would intentionally bust open watermelons in the field so I could gobble them up. I have such vivid memories of sitting on the back of fertilizer trucks feeding peanuts to cattle. I even heard that as a toddler I gave my bottle away to George the Pig. My Dad continued to manage farms for other people for a significant part of my formative years. When I saw this comparison, I began to feel a deep affinity for the analogy.
I love this section of the book because it again reminds me that topics like Marketing and Pricing are universal. They are not the absolute property of accountants. In fact, as Ron Barker reminded me of on Twitter after my first blog post on this topic, pricing “draws on 2 disciplines: economics and marketing. But it’s economics that intellectually owns the pricing/value topics.” I always knew there is significant price sensitivity and impact in farming, but I’d never really thought about marketing because my personal experience was so small, independent and local.
Product – Seed, Crop, and Your Unique Service Culture
Think about the crop or product you are delivering to your customer. It’s not just the bag of peanuts or the watermelon; it’s what makes yours better. Is the soil organic? Do you have a special process you follow that makes the watermelon sweeter? Do you have a seasoned expert that knows just when to pick peaches for peak ripeness? Are you a large farm that grows for volume or a small one that serves the local community with niche services? All of this forms your unique product, which has different value from your competitors.
Promotion – Fertilizing, Watering and Communicating your Value
How are you watering and fertilizing? How do people KNOW what makes your watermelon better? Why are your peanuts the best? Why should I buy your peach and not the next guy’s? There is something more valuable about the watermelon at your firm; you need to figure out what that is and the best way to communicate that to your customers.
Place – Land and Your Niche Market
This was the hardest parallel but when I really thought about it, it’s about what niche you occupy. What land do you grow on? Are you growing your product or service on the RIGHT land? Do you know what your niche is? Do you know your place? Make sure you’re tilling the right land, at the right time, suitable for the crop you have. You may be selling or targeting your product to the wrong market.
Price – Harvest and Get Paid
And here is where we get to the value. Sometimes, you are selling a watermelon, just like 14 other guys along a 2 lane back road in the summer, or the 5 grocery stores in your hometown. But your price and value has to be differentiated. Why is your watermelon more valuable? It’s not because your fertilizer cost more, or your tractor was more expensive. There’s something about your Product, Place, or Promotion that substantiates your price. What is it?
Farming, Economics and Marketing – Back to Basics
Remember it’s back to the basics when you start thinking about value pricing. Farming is an elemental industry to feed the world. Farmers have one of the most basic, but important jobs in the world. Accountants have to remember the basics of marketing and economics as this change in pricing strategy continues to press upon our industry. It’s not about how good an accountant you are at this pivotal juncture. It’s about the other basic things you learned about business. Just like farmers must pick the right seed, plot of land, and spots to sell, and let people know about it the right way, so too must CPA firms sell the right services for their firm’s culture and skill set, get the word out the right way to hit your target market, and price to demonstrate the value of your firm’s unique service. Get your hands dirty and get back to basics.
I happened to read this section again over a beautiful summer weekend, where my love for fresh summer foods, recently picked or dug from the ground is at its absolute peak. I wrote this while I enjoyed an amazing Jubilee watermelon from my friend’s farm, peaches from the groves in South Carolina, blackberries from the woods beside my house, corn from my dad’s garden, and boiled peanuts, maybe the absolute best summer snack ever put on this earth. Don’t argue with a southern girl about her boiled peanuts! I hope the analogy rings true to you as well, and you can apply some of this thinking to your firm’s look at Value Pricing as you get get your hands in the dirt and get back to basics.
To learn more about communicating your firm’s value to clients, Download the whitepaper “Focus on the Client: Developing a Client-Focused Firm”