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MARKET RESEARCH, ONE SALE AT A TIME
PRICE TRACKING PRODUCT GIVES COMPANIES A COMPLETE PICTURE OF THE MARKET
Company alliances and joint projects can be a tricky beast - they require a careful balance of skill sets, shared goals and novel ideas. But when those pieces fall into place, success can come easily.

In late July, Doane Marketing Research Inc., St. Louis, and Nterline, a division of XS Inc., Raleigh, N.C., announced a strategic alliance to develop and market new research products for the agriculture industry. The initial product to come out of this collaboration is EZTrak, a system designed to use point-of-sale transaction level data to track movement of prices paid by producers for their farming inputs, such as chemical and seed products.

But, as mentioned before, a strong alliance requires more than just a great idea, and the development of EZTrak is an example of the slow and steady process that collaboration requires.

PERFECTING THE PARTNERSHIP

The key to the development of the EZTrak product has been the relationship between the two companies. "Over the past two years, we've been able to get to know the skill sets of each company and what our specialty areas were," says Dennis Block, CEO and chief operating officer of Doane Marketing Research. "During this process, we met several times and brainstormed about what might be good product opportunities for us to work jointly on."

Out of this collaboration came the development of the original EZTrak product. When a basic chemical manufacturer approached Doane Marketing Research with an interest in tracking prices at the farm-gate level, Doane immediately thought of Nterline as a partner. "Doane Marketing Research had the expertise in handling the survey data necessary for the project," says Harry Albert, Nterline vice president of business development. "But they also thought it would be great to add a Web-based vehicle, so that producers could enter the information electronically and manufacturing companies could access it as needed." To meet this need, Nterline worked closely with Doane to develop an online system to allow companies to obtain pricing information in ways that were useful to the business. Over time, this product was expanded and sold on a syndicated, or shared cost, basis among multiple clients.

The original EZTrak product allows companies to obtain a variety of customized reports and to search for pricing information on a variety of factors, including geography, size of units, sales dates and much more. "The conventional wisdom among many chemical manufacturers was that prices for these products always went down," Albert says. "But the chemical market is just like every other industry - there are always fluctuations in the market. This survey data from producers allowed manufacturers to see these changes."

With easy-to-use queries and online accessibility, the only downfall to the original EZTrak product was that it relied on survey data supplied from producers. The reliance on respondents meant that the survey was dependent upon producers first responding to the surveys, and secondly, providing accurate purchase data. "We began to realize that the only way we could expand this into a much larger product is if we got actual pricing data from distributor transactions across the country," Block says.

BRINGING CUTTING EDGE TECHNOLOGY TO AG

The concept of tracking point-of-sale pricing data is not a new one; similar systems have been used for years in the consumer and pharmaceutical industries. "But collecting POS data is not always as easy in agriculture because containers of Roundup or bags of seed don't go across a price scanner. Agricultural product sales are handled differently than in consumer markets," Albert explains. "The technology hadn't developed until recently to allow us to collect that type of POS data from agricultural distributors."

Harry Albert, vice president of business development, Nterline
And once again, Doane Marketing Research and Nterline were the perfect partners for the new project. "Our expertise is in collecting POS data from distributors - this is something we handle all the time, in and outside of the agriculture world," Albert says. "And Doane has the expertise in research methodology. This is just a natural extension of their tracking studies."

Most manufacturing companies maintain proprietary databases, but EZTrak offers clients a larger view of the marketplace. "No one in the industry really has access to pricing information on a market-wide basis, and certainly not on an ongoing basis, as this product will offer," Block says. "That means that companies are currently basing decisions on hearsay from their sales representatives, rather than real pricing information. EZTrak offers value in that it brings stability and understanding to these companies' decision-makers."

BUILDING THE CLIENT BASE

But before beginning work on the actual product, both companies must develop the network of distributors, retailers and manufacturers that will be using the final system. Nterline is primarily working on lining up the distributor-retailer network, while Doane Marketing Research is focusing their attention on attracting the manufacturing companies.

One of the keys to building the project is a strong distributor-retailer network, as that is where the pricing data will be obtained. "Most distributors' first reaction is that they already know the price of the products because they're selling them," Albert says. "But individual distributors don't know the price relative to the rest of the market - and that is the valuable information that this product can provide to them." Just as with the manufacturers, distributors will have the ability to access the reports and data within the system, and at no cost to them.

Both companies are also working hard to address one of the distributors' major concerns: anonymity. "As a market research firm, we are an independent party that is selling this product, and that has real value to these companies," Block explains. "It is our responsibility to ensure the confidentiality of both sides." For example, to maintain confidentiality, there will be a minimum of three distributors in any given area to ensure that no manufacturer will be able to identify an individual retailer when geographical searches are performed.

The anticipated release date for the new EZTrak product is early 2005, but both companies point out that it is more of a process than a product. "Right now, we will be collecting the product data from the manufacturers and working to aggregate all the product information supplied via transactional data along a common product master," Albert explains. While the current focus is on agricultural chemicals, the system could be expanded to other sectors of the industry, depending on manufacturer interest.

Dennis Block, CEO/COO, Doane Marketing Research
In addition, Block explains that additional data besides pricing could be added along the way to paint a more complete picture of the industry. "Doane Marketing Research has invested a great deal in numerous multiclient tracking studies of the marketplace," Block says. "We are able to use Doane's proprietary data that we've collected to help explain some of the factors that companies don't see through the transactional data, such as tillage practices, timing of chemical application and more. The more we layer this research, the more valuable of a picture this will be to companies." Block predicts that outside secondary data, such as climatic or topographical data, could also be added further down the road.

But no matter how the product develops over time, Block says that EZTrak will offer value to any manufacturing company in the agricultural industry. "It all comes down to understanding the marketplace, and EZTrak is a way to do that," Block says. "It's an exciting concept, and great potential lies in the fact that we're bringing together two companies who have a lot of experience with this process." AM


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