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Part 1: Based on the reports given for June to January quarters of 2016 and 2015, here are a few insights and recommendations on marketing inputs and strategy.
Global Breakout
In the overall context, the revenue per day has grown 9.066% from $96,976 to $105,768. The contribution of revenue from Domestic segment has increased by 9.98% while the International segment grew by only 2.4%.
On a quarter to quarter growth basis, the JFM quarter revenue for 2016 is $66,119,977 and the April to June quarter revenue is $7,024,096. This comes to a growth of 5.75% from Q1 to Q2.
The month of June has performed better at $2,257,102 as compared to other months. A high GP average of 8.3% also means that the months of JFM have contributed more to the GP than AMJ, with June having the highest contribution of 11%.
Customer Ranking
On a comparison of data from 2015 to 21016, the highest growth in revenue has come in from acquiring new customers. The rate of revenue growth per day is 58%. This means that our marketing efforts for the Jan-June quarter have yielded good results and the same efforts need to be continued for July-Dec.
However we need to make more efforts in sales and customer support to ensure that contribution from existing customers is also higher. The GP for this segment is also high which means the costs of acquisition have been optimized and yielded good results.
The second highest revenue increase has come in from Services related to product sales. This increase is about 15% in 2016 over 2015. The third contributor by customer ranking is due to retention of existing customers. This strategy has yielded us a growth of 7.8%.
The last segment of Expand gives us a contribution growth % of 2.8 which is the lowest. More efforts are needed in the Expand segment by ensuring that Account Managers consult with clients on a regular basis to understand their core needs and proactively sell solutions to them before any competitor can.
In terms of Customer Class the highest growth is seen in Other with 197%. Government class follows with 23.4% and by Education class at 16.2%. The highest average GP is also seen in Government which shows a lesser cost of sales, implying better efforts by sales force in Government segment.
The next highest revenue contributor is Reseller-Other at 9.87% followed by Commercial at 9.76%. This is again followed by Reseller-Industrial Hygiene, Municipal and INTL. The GP for Reseller-Industrial Hygiene is lowest for June as compared to AMJ.
This essentially means that the overall gains in GP were driven in the first quarter of JFM. Increase in cost of sales in APJ quarter needs to be investigated, since that really has impacted the GP.
Top Customers
In terms of top customers, the larger contributors such as ABC and Fish Limited have shown slower growth in Revenue in 2016 as compared to 2015. The GP% is also lower as compared to some other companies.
This could indicate attrition in business due to competition and needs more attention from the Account team. It also poses a risk to future growth. Check GMBH and Francois and Sons are showing high growth and penetration. The GP is also highest with Francois at 72%.
These customers are cash cows to be grown rapidly over the next years. Delta Appliances is showing sales of -1.8% which used to be a good customer. More investigation needs to be done here in terms of Delta’s industry growth and challenges and our sales visit and account management.
Here4U and Fish Limited are showing more than average growth and should be nurtured strongly with marketing and sales efforts to cross sell and up sell products or solutions. Expert Engineers shows a very low growth in sales and opportunity over 2 years and a negative GP. This client needs to be removed from our core list. Marketing Accounts show high growth in revenue per day which shows the success of marketing spend.
Part 2: For the purpose of this document we have chosen the company Monsanto.
Monsanto began operations in 1901 and is a relatively new company as compared to others like GE or IBM. Headquartered in St. Louis, MO it is a global organization with operations across the world (Monsanto, 2016).
Monsanto focuses on supporting farmers across the globe to help them produce more and also conserve resources. It is an agricultural giant and has many corporate and sales offices across the world in addition to manufacturing plants, seed production labs, research and learning centers. All these efforts are targeted to help the farmer and support agriculture.
As a strategy Monsanto believes in locating its offices and facilities closer to where their customers are. This helps the company fulfill customer needs faster. The company also prides itself in making customized solutions and innovations to help farmers. It supplies solutions and products to help close to 9 billion people conserve our natural resources.
Monsanto is involved in the production of seeds, biotechnology products, herbicides and also digital agriculture. These products are designed to help farmers improve productivity of their farming and land while reducing the cost of farming. This also ensures the production of better produce and food for consumers as well as high quality feed for all animals.
For the purposes of this discussion we will consider and analyze their product - Agricultural Seeds. The core purpose of this product is to deliver the best seeds to farmers across the world to get the best produce. This is done by a high quality breeding initiative which enables Monsanto to find the best plants that are suitable for local conditions.
Many of such plants undergo genetic modification to add to benefits such as higher tolerance to drought conditions, lower resistance to herbicides and to fight pests. Monsanto produces and delivers seeds in 8 crops which are essentially row crops such as alfalfa, corn, canola, cotton, soybean, sugar beet, sorghum and wheat.
They also sell conventional seeds in countries where there is strict regulation against Genetically Modified (GM) foods. The various brands of seeds that are sold under Monsanto brand are DEKALB, Asgrow, Deltapine, Seminis and De Ruiter. These are sold and distributed worldwide through a global sales and marketing organization.
The channels used are distributors, retailers, agricultural cooperatives and agents. Competition in the seeds market stems from global companies and also government led product companies. The competition is severe with many small and large companies vying for share.
Four largest distributors in the U.S. account for 20% share of worldwide sales. In 2016, the company had 20,800 regular employees and 3,300 temporary workers. It invests a large amount of funds in R&D – close to $1.5 Billion which helps the company drive competitive advantage.
It enjoys and holds many patents for products in the agriculture area and its range of products and services. For the year ended August 2016, the company had revenue of $13,502 Million against 2015 revenue of $15,001, showing a negative growth. The 10% decrease was primarily due to the reduction in sales of corn seeds, soybean and cotton.
This was impacted by currency fluctuations and a reduction in net sales price. The results are low on GP for 2016 as compared to 2015, primarily due to rise in SG&A expenses and cost of goods. Net sales of Corn seeds went down from $5.9M to $5.8M in 2016. Similarly, the sales of Soybean also witnessed a downtrend.
In 2016 Monsanto sold $2.1M as compared to $2.2M in 2015. Net sales of cotton and vegetable seeds have also seen a decline. Other seeds segment has shown an increase – from $675M in 2015 to $760M in 2016. The company also faced a takeover bid from one of the largest companies in this industry – Bayer.
For fiscal 2017, the company has a positive outlook and expects an EPS of around $3.83 to $4.35. After adjusting for costs related to restructuring, taxes and Bayer acquisition in December 2016, it has adjusted earnings of $4.50 to $4.90. According to Monsanto CEO, Hugh Grant, the company is focused on “delivering on the operational plan” and will plan to carry out and implement key actions to finalize the takeover deal with Bayer. (Caplinger, 2016).
References
Caplinger. D. (2016). Monsanto Grows Faster as It Prepares for Bayer. foxbusiness.com.
Retrieved from http://www.foxbusiness.com/markets/2016/10/05/monsanto-grows-faster-as-it-prepares-for-bayer.html.
Monsanto. (2016). Annual Report 2016. monsanto.com. Retrieved from
http://www.monsanto.com/investors/publishingimages/annual%20report%202016/2016_monsanto_annual_report.pdf.
