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Marketing Strategy

RSS By: Scott Stewart, AgWeb.com

Marketing Strategy

Don't be fooled by average

Feb 21, 2011

 

As a word, average is deceiving. When carelessly used in writing, average provides an excuse for lack of effort. It can lull you into accepting mediocrity.
 
The other day, I read an article in which the author suggested you shouldn’t spend time focusing on marketing in volatile times because your reward will be an average price. Let’s put aside the obvious—that I think you should focus on marketing—and look at the trouble caused by average.
 
This is important for a few reasons.  For one, it’s irresponsible to suggest that the best you can be is an average marketer. Articles and blogs that frame marketing as a management challenge offering only an average return are harmful to your business.  You might begin to believe it. You might assume it’s not worth trying to improve.
 
Producers who invest time in their marketing—who are strategic, consistent and disciplined in approach—can build a better-than-average price over time. Yes, it requires effort. However, with the proper approach, you can avoid the frustration felt by the average marketer.
 
You’re no stranger to effort, are you? Did you give up when fields were wet last spring or when corn was still in the field last winter? You’re often faced with challenges. My guess is that when adversity strikes, you look for ways to overcome it. That’s why you’re still in business today.
 
Moreover, you can’t afford to be satisfied with average. Case in point: Our firm researched USDA data to determine how many years it takes for the number of farms in the United States to be halved. We call this period of time the “half-life” of American farms. Since 1919, the number of U.S. farms dropped by half four times. At the current pace, the number will halve again in 2022, 11 years from now.
Of those producers no longer farming, some retired well, some retired hurting and others went bankrupt. Those who retired well did not assume being average was good enough. They likely owned a good portion of the land they farmed, managed their operations better than average and consistently did a better-than-average job of managing market volatility.
Eleven years from now, we are going to see some very big operations. The spread between the haves and have-nots will be wider. We’ll see average and above average marketers. As the years pass, I firmly believe that producers who do an average job with their marketing will struggle and fold.
Why? We are in what’s been described by executives at respected companies like Nestle and in magazines such as the Economist as a period of permanent market volatility. Marketing isn’t getting any easier. Producers who capture more opportunity when it’s available—and minimize risk in down years—will be financially stronger than the average marketer. They will have the means to pay higher land rents, purchase more efficient technology and survive volatility.
Perhaps the reason some people equate marketing to average returns is because much of what is written about marketing is based on a price outlook approach. Price outlook is a useful tool through which you can get a feeling for what the market may do so that you can filter strategic decisions. However, you shouldn’t leave your marketing to it. It is virtually impossible to consistently predict price. Price can drop when all of the fundamentals in the world point higher. The opposite is also true. If you spend your time chasing price, you most likely will see an average return at best.
 
I encourage you to develop strategies that minimize the difference between your price and the market highs and maximize the difference between your price and the market lows. That’s good marketing.
Most of all, don’t buy into the average myth. You can be better than that.
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 data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report.  Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results. Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2011 Stewart-Peterson Inc. All rights reserved.
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COMMENTS (1 Comments)

ag1
If the average price is not good enough I would invite you to take a look at your own marketing results They are here http://www.farmdoc.illinois.edu/agmas/reports/06_02/AgMAS06_02.pdf. To save you some time it looks like your firm failed to hit an average price in corn by .10. As an indrusrty advisors did not beat the average. Maybe I am wrong but average is better then .10 less then average. please respond if I am wrong
7:01 PM Feb 21st
 
 
 
 
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