Kill-Insect was a family business that manufactured insecticides based on natural pyrethrin extracted from the pyrethrum flower, a plant endemic to the region where the company had set up shop.
After two decades of success producing and marketing its active ingredient and some liquid and solid insecticides – such as the insect repellent spiral in the image below – the company faced severe difficulties related to its products’ demand, price, and profitability.
These difficulties resulted from the advent of synthetic pyrethroids, the entry of new competitors into its market, competition from repellents in refillable electrical devices and aerosol sprays, a weakened sales force, and a lack of alignment with its clients.
In addition, the company had high production costs given rise by the remaining rural partnership system, somewhat artisanal industrial processes, and a poorly qualified workforce that caused productivity, quality, and labor relations problems.
Despite these shortcomings, the company had a recognized brand, consolidated finances, quality suppliers, mastered the technology involved, and its market was expanding. All that needed to be done to overcome its deficiencies was to promote the already evident changes.
The correct market perception could be obtained by having its leaders participate in specialized trade fairs, meetings with the sales team, and visits to key customers. The company’s future could be planned by benchmarking some successful players. The operational restructuring could be done by recruiting specialized professionals, attracting technology suppliers, launching new products, reconfiguring manufacturing facilities, and reviewing commercial and communicating practices.
None of these measures happened. Finally, a few years later, the company was sold.
For their part, the company’s new owners professionalized its management, modernized its facilities, qualified its product line, and successfully adopted marketing practices consistent with their market share and profitability goals.
Once done, its pricing problems are over.
Note: Kill-Insect is a fictitious name.
Claudio Luiz Eckhard is a former professor, business consultant, and author of the books “Ajustando o Rumo”[Adjusting the Business Course], “Gestão pela Margem”[Management by Margin], “A Empresa Saudável”[The Healthy Company], and “Pricing no Agribusiness”[Pricing in Agribusiness].
