Determining the value of canola seed traits and pricing competitively
Our client wanted a better way to set the right price for each canola seed hybrid, especially as the main herbicide traits became available from multiple seed brands. They needed to know the value in the brand, yield, herbicide trait, harvest trait and each type of disease resistance.
- Stratus annually conducts a detailed syndicated survey of canola growers, collecting details on hybrids used, agronomics and yield results. Those same growers were invited to participate in this study, so we could connect the analysis to the data they had already shared and avoid asking them to repeat those many questions.
- That meant respondents could focus on the complex Discrete Choice exercise. Over multiple screens, they assessed scenarios where the canola seed brands were presented with a mix of herbicide traits, levels of disease resistance, harvest traits, yields and prices.
- A Market Simulator was produced with the ability to model tens of thousands of possibilities. In each scenario, the model showed acres, sales value and share. It could also calculate the client’s gross profit*, both from the seed and the associated crop protection sales on those canola acres.
*The model was built for the client to input their confidential financial information so that they could calculate profitability on their own, separate from Stratus.
The results enabled the client to consider various price strategies with an eye on total profitability:
- Establish a general view of price elasticity by brand and trait system.
- Know the impact of price changes on share and profitability.
- Calculate the market value of each trait, as a guideline to pricing hybrids.
- See the affect of price changes on the associated crop protection business.
- Assess the implications of competitor pricing strategies.
Our client was able to use this information to assist in critical pricing decisions.