Although recent farmer surveys suggest producers remain loyal to their preferred farm equipment brands, other industry research indicates machinery purchase decisions are becoming more dependent on bottom line.
Chad Goldsmith, AgDirect territory manger in Oregon and Washington says this shift in buying activity is already a reality in his region.
“As farms and dealerships have consolidated, brand loyalty has become less of a factor in producer’s machinery buying decisions,” he says. “Today it’s simply a bid process. Producers look at equipment as a line item on their balance sheet and whoever can come in at the best price gets their business.”
Meanwhile, in other areas of the United States where manufacturers have maintained market share on specialized equipment for commodities such as cotton, brand loyalty continues to reign.
“Cotton is big in my territory, and when an equipment dealer like John Deere is the industry leader in the type of equipment most of the region is needing, that can be hard for the competition to beat,” says Nick Johnson, AgDirect territory manager in Oklahoma and Texas. “In terms of brand loyalty, there really hasn’t been a big shift yet in the southcentral region. The frontrunners have only gotten stronger.”
These contradicting case studies demonstrate that brand loyalty is not a one-dimensional phenomenon. Rather, there are many factors influencing producers’ paint color preferences, including the economic environment, geographic location and local business relationships.
Despite brand loyalty differences in their territories, both Johnson and Goldsmith recognize the role the downturn in the ag economy has played in producers’ machinery buying habits.
“Over the past five years, equipment buying has become a more calculated decision,” Johnson says. “Low commodity prices have hurt producers’ margins and net worth while the cost of owning and operating farm equipment has consistently continued to rise.”
According to Goldsmith, generational viewpoints have played a part in shifting producers’ color preferences, too.
“For many young producers, brand loyalty is a number and economics game,” he says. “At some point, dollar differences become great enough to persuade them to make the switch. What dad or grandpa drove doesn’t carry as much weight as it once did.”
Another underlying component of brand loyalty includes geographic location, which in turn, determines producers’ equipment needs based on cropland type, production practices and operation size.
“If you look at some of the rural areas we work with, geography is a huge factor when it comes to brand loyalty,” Goldsmith says.
“In eastern Washington where we work with smaller, more traditional dry-land farming operations, brand loyalty is really driven by what dealer is closest,” he explains. “Some producers are willing to pay a lot more money for the same equipment if it means being two miles away from the dealership instead of two hours.”
Goldsmith explains this same logic doesn’t always apply to larger operators whose farm ground may span a much wider territory.
“When operators get big enough, dealer proximity and access to service, parts and repairs become less of a factor, especially when they can afford their own shop and labor,” he says.
Local business relationships
While the internet has altered the dealer customer dynamic through the popularization of online equipment sales, Johnson says brand loyalty remains an important aspect of a producer’s identity, in part, due to the strength of local dealer networks.
“Producers have always been prone to trying to find the better deal. The internet presented a new avenue for them to do just that, but at the end of the day local dealerships still have the stronghold,” he says. “Producers are going to stay loyal to dealers who are not just part of their business, but part of their community.”
United by the strength of participating Farm Credit System Institutions, Johnson says the AgDirect team is motivated to serve their customers using this same relationship building model.
“At AgDirect, we finance all brands and colors of ag equipment and we know that every dealer, customer and partner we work with has different needs,” Johnson says. “That’s why we strive to develop relationships built on trust. It’s our job to listen to our customers to make sure they are getting the best financing and to find new ways to improve the customer experience.”
To learn more about AgDirect or locate your nearest AgDirect territory manager, contact the AgDirect financing team at 888-525-9805 or visit agdirect.com.