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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