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Positioning and Differentiating the... Marketing Spotlight-Monsanto Company In the 1980s, St.

Louis-based Monsanto Company repositioned itself as a cutting-edge biotech firm with a concentration on food and nutrition. During the next two decades, the company dedicated millions of dollars to scientific research in biology and life sciences for the purpose of developing genetically modified (GM) agricultural and food products. In 1996, then-CEO Robert Shapiro spun off Monsantos $3 billion chemicals business, the old core of the company. Three divisions remained: a pharmaceuticals division, a food ingredients division, and an agricultural products division that produced GM foods. Such foods included a potato designed to fight potato beetles without pesticides and corn that is resistant to herbicides. The new Monsanto, bearing little resemblance to the small pharmaceuticals company founded in 1901, became a leader in the biotech revolution. The company felt that biotechnology would be the key to feeding the worlds rising population currently growing at a rate of 800 million per decade and improving global nutrition standards. Monsanto claimed that genetically superior crops of corn, wheat, tomatoes, and soybeans will yield larger harvests, while biotech improvements in the food supply will help prevent illness and boost human productivity. In the companys view, the next two decades would bring a biotechnology revolution that would blend the pharmaceutical, agricultural, and food and nutrition businesses into a single "life science" industry. To improve the companys reach in this industry, Monsanto spent millions amassing biotech patents by acquiring smaller companies and making deals with agribusiness firms. Such moves included the 1995 acquisition of Mercks specialty chemicals unit and the purchase of Unilevers wheat-breeding business in 1998. Monsantos aggressive move into the biotech industry met with approval on Wall Street. In 1997, Monsanto stock sold for close to 23 times earnings, compared with pure chemical company Dows stock, which sold for 10.5 times earnings. In addition to being a favorite of investors, however, Monsanto became a target for environmentalists and consumers opposed to GM products. Backlash was particularly harsh in Europe, where the mad-cow scare made food products an especially sensitive consumer issue. British newspapers repeatedly referred to the company as a "Frankenstein food giant" and "biotech bully boy," while Prince Charles vowed never to eat food containing Monsanto products. Monsantos attempt to win over U.K. citizens with an expensive public relations campaign failed: following the campaign, 51 percent of British consumers expressed negative feelings about GM foods, compared with only 44 percent beforehand. This sentiment was shared throughout much of Europe. In 1998, the European Union declared a moratorium on the approval of new GM seeds for planting. Several European countries, such as Austria and Luxembourg, banned GM foods altogether. Other hotspots for public criticism of the company included Japan, Australia, and India.

Monsantos financial fortunes turned as hostile public receptions throughout the world left it unable to either sell expected volumes existing products or introduce new products. Following a merger with drug company Pharmacia & Upjohn, the pharmaceuticals division of Monsanto became part of the new Pharmacia Corporation in 2000. The remainder of the Monsanto Company is now a subsidiary of Pharmacia and strictly a biotechnology corporation. Pharmacia spun off part of Monsanto into a public company while retaining majority ownership. In 2000, Monsanto issued a statement apologizing for its insensitivity and arrogance and formally pledged to be "honorable, ethical, and open" in all its future actions. New CEO Hendrik Verfaille admitted that the company "missed the fact that this technology raises major issues for people of ethics, of choice, of trust, even of democracy and globalization. When we tried to explain the benefits, the science and the safety, we did not understand that our tone, our very approach, was arrogant." Amid mounting consumer concerns about GM crops, in November 2000 Monsanto adopted a restricted planting schedule for a GM corn product and delayed introduction of another variety until 2002. The growth potential for the company is huge: Monsanto estimates that more than 70 percent of the worlds insect- and herbicide- resistant crops come from the company. Anywhere public contempt for GM products lessens, Monsantos opportunities improve dramatically. The company has undertaken various advertising, public relations, and education campaigns to improve public perception of its products. The prevailing attitude at the company is now much humbler than it was during the mid-1990s, when then CEO Robert Shapiro declared that "worrying about starving future generations wont feed them. Biotechnology will." (New sources: Amy Barrett, "Rocky Ground for Monsanto?" Business Week, June 12, 2000; Scott Kilman and Helene Cooper, "Crop Blight: Monsanto Falls Flat Trying to Sell Europe on Bioengineered Food." Wall Street Journal, May 11, 1999; "Pledge to Turn Over a New Leaf." The Guardian, December 14, 2000.) 1. What marketing mistakes did Monsanto make to cause the firm to receive such bad press in Europe and elsewhere? 2. What lessons concerning public relations marketing does the Monsanto spotlight case indicate? Are there additional issues that Monsanto should consider for the future?