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December 2009 Archive for Marketing Strategy

RSS By: Scott Stewart, AgWeb.com

Marketing Strategy

Resolutions for Marketing in 2010

Dec 28, 2009
I’m an optimist. Most farmers are too. You plant a crop each year, knowing you will have to battle all kinds of obstacles enroute to harvest. Sometimes even the harvest doesn’t go well, like this year. Yet sure as can be, you’ll be an optimist when spring comes again. Thank goodness for your annual optimism—it’s what feeds the world.
 
And yet farmers do not always have the same optimism when it comes to the markets. In my many years of hosting marketing workshops, frustration with marketing is always evident in the surveys.
 
I think we are all naturally frustrated by things we can’t figure out or control. It’s human nature.

As 2009 draws to a close, I encourage you to make a resolution that markets are not going to frustrate you in 2010.
 
  • Resolve to lay out all the possible scenarios that 2010 could present to your business, to come up with strategies to address each possible scenario, and to set trigger points that help you recognize when each of those scenarios is beginning to play out.
  • If you cannot do all this advance work on your own, resolve to find someone you trust to help you.
  • Resolve to stop the endless pursuit of information that will help you make a “better” decision.
  • Resolve to find good, trusted sources of information that will alert you to your trigger points, and help you stick to that approach.  
Yes, make the resolution that you are going to take control of your marketing in 2010.
 
By now you know that this blog is not about giving you market information or helping you discern what the market might do. Rather, I strive to be that little voice on your shoulder, encouraging you to be more strategic and more disciplined. You need those reminders (whether from me or from someone else), because there is always another headline, another piece of information, another voice, making you doubt your decision or telling you marketing cannot be done well. I believe you need to hear positive messages over and over again, because it is human nature to get down and out about the things that frustrate us.
 
Don’t allow frustration to take over. Believe that marketing in 2010 can be done well with the right resolutions in place.

It is my pleasure to wish you the very best for the New Year.
 
Scott Stewart is president and CEO of Stewart-Peterson, a commodity marketing consulting firm based in West Bend, Wis. You may reach Scott at 800-334-9779, email him at scotts@stewart-peterson.com.

The Gifts the Markets Are Giving You

Dec 17, 2009
When someone hands you a gift during the holidays, will you wait to take it because a bigger one might come along? No, the right thing to do is reach out and take it, perhaps adding, “thank you.”
 
However, if there is a gift receipt attached to the gift, you might save it, in case you need to take it back.
 
Think about that concept as it applies to your marketing right now. As I write this we are sitting with corn at $4.10. We’ve produced a good crop. Yes, there is still some out in the fields. But by and large it was a good crop, even with less than desirable weather this year. So why are prices high right now? It’s a gift from the markets.
 
There is talk that the corn left in the fields may result in lower bushels in ending stocks, and therefore supply on what was once a potentially record crop might not be as large as initially perceived. Remember that markets work on perception and anticipation. Sometimes there is no hard data available—only perceptions and anticipation and talk. So when the market hands you good value, it’s a gift. It’s your opportunity to gain.
 
If prices are at historically good value, you don’t want to wait around too long for prices to go higher. The chances of them going higher is low, given the world deflationary environment right now.
 
That said, prices could move higher. We are in volatile times. If it quits snowing after the New Year, we could see a dry spring, and everyone will start talking drought. This could be more than enough to get people nervous and keep prices trending higher. So, as a contingency, you may want to protect against the possibility of rising prices by keeping a receipt—call options. That way you can reown that crop if prices go higher.  (Note: I would wait to buy these only if fall prices highs are taken out.)
 
In the big picture, frustrating as it may seem, volatility is a gift the markets give you. Volatility means opportunity if you manage it correctly. Over time, commodity prices tend to average out at the average producer’s breakeven point. Good marketers can capture above average prices, and that’s a gift that the markets can give to those who are willing to reach out and take it.
 
Scott Stewart is president and CEO of Stewart-Peterson, a commodity marketing consulting firm based in West Bend, Wis. You may reach Scott at 800-334-9779, email him at scotts@stewart-peterson.com.

Undisciplined Players Don't Make the Playoffs

Dec 11, 2009
The Green Bay Packers rolled to victory over the Baltimore Ravens this week in Monday Night Football. It was a good game for the Packers, but the team racked up tons of penalties. In the post-game talk, those who analyze the game will likely call the team “undisciplined.” Undisciplined teams usually do not last long in the playoffs.
 
Because I’m passionate about marketing, you know I’m going to find an analogy to marketing here. OK, here it is: Even the best marketing strategies require discipline to be successful long-term.
 
There are many producers who post wins now and then with their marketing, but many lack the discipline necessary to be successful long term. Consistency over time moves the ball ahead in football, and in marketing. Consistency carries a team through 16+ games of a football season, and likewise it can carry you through many years of farming.  
 
About a year ago, Top Producer editor Greg Vincent also used a football analogy to describe marketing. “The key is to be ahead at the end of the game—not to win only the first quarter,” he wrote. (You can still find the article in the Top Producer archives. “Playing for Field Positions,” November 2008. Here's the link-- http://www.agweb.com/TopProducer/Article.aspx?id=146863 .)
 
What does consistency in marketing for the long haul look like? We characterize it as follows:
 
Your marketing objective should be to…
  • maximize the separation between the average price you receive for your crop and the final market price in a bear market, and
  • minimize the separation between the average price you receive and the final market price in a bull market. 
Consistent marketers may not hit the tops every time. Consistent marketers are disciplined and can make good decisions, even in the heat of the game, when markets are volatile.

Why is this so important? Because in the commodity business, prices offered by the market over the years tend to average near the average producer’s breakeven. If you consistently take out of the market as much return as you possibly can within a reasonable risk parameter, you’ll do better than average. And that will ensure your success long-term.
 
Here’s the kicker: Either you have that discipline internally or it needs to come from an external source like a marketing consultant. A consultant can assist you from the sidelines, coaching, guiding and encouraging good decision-making in the heat of the game.
 
Sure, games can be won without discipline, but it isn’t pretty. You pay a price in the form of missed opportunity or stress or frustration. Sooner or later, those things catch up with you.
 
I want you to be in the game as long as you wish to play it. That’s why I will continue to encourage readers to develop or find discipline in their marketing.
 
Thanks for reading.
 
Scott Stewart is president and CEO of Stewart-Peterson, a commodity marketing consulting firm based in West Bend, Wis. You may reach Scott at 800-334-9779, email him at scotts@stewart-peterson.com.
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