Title page for ETD etd-4698-11503


Type of Document Master's Thesis
Author Wilson, Amanda Janice
Author's Email Address awilson@vt.edu
URN etd-4698-11503
Title Database Marketing Management Strategies for Agricultural Lenders
Degree Master of Science
Department Agricultural and Applied Economics
Advisory Committee
Advisor Name Title
Kohl, David M. Committee Chair
Kenyon, David E. Committee Member
Reaves, Dixie Watts Committee Member
White, Alexander B. Committee Member
Keywords
  • banking
  • farmers
  • products
  • services
  • marketing
  • influencers
Date of Defense 1998-04-10
Availability unrestricted
Abstract
This study examines the use of databases to improve marketing techniques and

customer segmentation in lending institutions. Specifically, this study examines the use

of products and services by agricultural customers, and then determines the relationship

between the use of those products and services with farm business characteristics.

Information is also obtained on the interest rate sensitivity of the producers and correlated

with farm business characteristics. The importance of technology and strategic alliances

and other influences in the decision making process are determined after survey analysis.

The survey was sent to producers who had some type of loan. Respondents from

this study used an average of 3.2 loan products and 7.6 services for a total of 10.8 loans

and services. Only 1 percent of the respondents indicated that they did not have a

personal checking account. Twelve percent of the respondents indicated that they did not

use a credit card. Only 16 percent of the respondents indicated that they used leasing

services. Investment products did not have a high percentage of use. Thirty-three percent

indicated they were using certificates of deposit, while only 21 percent indicated the use

of money market funds, and 30 percent indicated the use of mutual funds. Thirty-seven

percent indicated they were using IRAs. However, most of the respondents were using

some form of insurance. Three-fourths of the respondents were using life insurance,

while only 21 percent indicated that they did not possess disability insurance. Other

services were also analyzed in this study. Only 15 percent of the respondents indicated

that they were utilizing estate planning services, despite the 67 percent of respondents

who were greater than age 41 and the 58 percent of respondents with greater than

$500,000 in assets. Seventeen percent of the respondents were using an appraisal service.

Due to the lower levels of usage for the investment products, this study focused

on the relationship between farm characteristics and the investment products. This study

showed that a relationship existed between farm and non-farm income with IRA usage. iii

Only farm income had a relationship with money market fund usage and mutual fund

usage. While, the use of estate plans was related to asset level.

The analysis on interest rate sensitivity was determined by the amount an interest

rate would have to decrease for a producer to switch lending institutions. The producers

who were found to be less interest rate sensitive were those who had lower farm and non-farm

incomes, lower asset levels, lower education levels, higher debt-to-asset ratio, and

those who owned a computer. This implies that these are the more loyal customers to an

institution or perhaps these producers have fewer opportunities to switch institutions.

Producers in this study indicated that when selecting a lender/service provider, a

competitive interest rate (76 percent of respondents) and the institution being a

dependable source of credit (75 percent) was important. Knowledge of agriculture was

also very important (69 percent of respondents). Internet banking and educational

seminars rated as the characteristics that were least important, 3 percent and 9 percent,

respectively. However, in the decision making process, lenders (69 percent of

respondents), accountants (53 percent), and veterinarians (38 percent) were shown to be

very important. The spouse/partner has considerable influence also on decision making.

Sixty-seven percent of the respondents indicated that the spouse/partner had a

considerable influence on investment decision, while sixty-one percent of the respondents

indicated that the spouse/partner had a considerable influence on credit decisions.

Five specific recommendations were made to the institutions following this study.

These recommendations include: use of technology, institutional use of databases, use of

influencers, and targeting and segmenting the marketplace.

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