Something Good

Pfizer Inc. Animal Health Products (B)

Industry Downturns and Marketing Strategy[1]

Gail Oss, Territory Manager of Pfizer Inc. Animal Health Group in western Montana and southeastern Idaho, was driving back to her home office after a day of visiting cattle ranchers in her territory. The combination of the spring sunshine warming the air and the snow-capped peaks of the Bitterroot Mountains provided a stunningly beautiful backdrop for her drive. But the majestic beauty provided little relief to her troubled thoughts.

The NAFTA agreement with Canada and Mexico had hit local ranchers particularly hard. The influx of beef cattle into the U.S. market from these countries, as well as beef from other countries (e.g., Australia) that entered the United States via more lenient import restrictions in Mexico, had wreaked havoc over the past year. Prices of beef had declined precipitously from the prior year. Ranchers in the past had retained sufficient reserves to come back from a bad year, but this year, things were particularly bad. The prices being offered for the calves by the feedlot operators were, in many cases, less than the costs of raising those calves. Ranchers' objectives had changed from making some modest income off their cattle operations to minimizing their losses.

In this environment, ranchers were actively seeking ways to cut costs. Gail sold high-quality animal health products, oftentimes at a premium price. One way in which ranchers could cut costs was either to skimp on animal health care products, such as vaccines and antibiotics, or to switch to a lower-cost alternative. The current environment posed a particularly severe threat, not only to Gail's company, but also to her very livelihood. Gail had spent a substantial amount of time and effort cultivating long-term relationships with many of these ranchers-many of whom she had to convince of her credibility, given her gender. Given the time and effort she had spent cultivating...