I received an email this week from a cattleman who wasn’t feeling particularly optimistic about profitability in his cow-calf program over the next couple of years. He asked how someone could effectively market cattle in a down-trending market where the cow-calf side of the business was losing leverage?
A good question, it got me thinking about the next several years from a marketing standpoint. The first step is to look at your assumptions/predictions about where the marketplace is going and determine if they’re correct.
Certainly, we know margins will tighten because input costs have risen dramatically; in some cases, showing a 300% increase (e.g., feed and grain, energy and land values). There are also legitimate concerns about beef demand as the overall economy slows down.
All that said, things may not be as bleak as some project. The feeding industry, suffering from significant losses, will be looking to buy profits, but the cow-calf industry will continue to benefit from excess capacity in the segments above it, as well as tight supplies.
The question won’t be one of leverage, but whether the total dollars being generated will fall below total production costs.
The answer to the marketing question is much simpler. Our customer every day decides who will succeed and why. We will never have the leverage to force someone to use our product – unless we can come up with a way to get the government to subsidize our business in some form. All we can do is give our customers a reason to choose us over our competitors.
That principle applies to the industry as a whole, or to individual producers. Certainly, if you’re not among the really large operations that can offer uniformity, volume and other purchasing advantages, you’ll always be at somewhat of a disadvantage.
But the exciting thing about being moderate-sized is the advantage of being able to employ the number-one strategy of all time – establishing a relationship with your customer. It allows the customer to trust you when deciding whether to do business with you, and/or pay a premium for your product. It also serves as the foundation of loyalty, which keeps your customers buying from you.
Building relationships isn’t rocket science; you do it in business the same way you do it in your personal life. Nobody has a close relationship with Five Rivers per se; rather they have relationships with their buyers, their managers, or others within the organization. It’s that relationship that helps you express your true interest in your customers and their problems.
I once mentioned this line of reasoning and someone responded: “I could care less about their problems or my buyer's; I’ve got problems of my own.” While there’s an understandable grain of truth to that statement, how loyal do you think any of that person’s buyers were?
The marketing dilemma always boils down to establishing relationships; the obvious question is: how do I do that?
There are many answers but some general rules seem to work.
- First, focus your efforts. Niche marketing has always been successful because it allows you to build relationships and address specific needs. And narrowing your focus always increases your potential to build relationships and thus profits. When you specialize and deliver a product designed for a customer’s specific need, they know you actually care about their goals.
- Second, take the time to understand what your customers need from you, and the problems they face with your product or similar products. If your product will make their lives better or easier in some clear, discernible way, you’ll never be short of customers. It also helps you to build and improve your offerings over time.
- Third, a relationship is built on personal-level communication. The phone is a wonderful tool, but you indirectly communicate with them via your product and info, as well. If in every load, your customer seems to find a “realizer,” that will tell them volumes. So does the degree and type of info and documentation you can provide with your product.