Marketing: In NFL and marketing, odds of ‘perfection’ are small
A new NFL football season is underway, with 32 teams again battling to become Super Bowl champions. Since the 1966 American Football League/National Football League merger, there have been 46 Super Bowl games. In the 46 seasons leading up to each Super Bowl, only two teams managed to post a perfect regular season, winning every one of their games: the 1972 Miami Dolphins and the 2007 New England Patriots. Only the Dolphins capped off a perfect regular season with a Super Bowl win.
From a statistical perspective, that equates to only 2% of the time that an NFL football team achieved total perfection by winning every game they played, from the first one of the season all the way to the Super Bowl.
So what does NFL football have to do with marketing?
When it comes to milk and feed marketing, many producers try to achieve the football equivalent of the perfect season. Their sole objective: try and sell every pound of milk at the high, and buy every ton of feed at the low. While this goal is understandable and desirable, the reality is marketing perfection to that extent is nearly impossible.
“Top and bottom picking” is one of the biggest marketing mistakes anyone can make. Many experienced marketers have learned this lesson the hard way, either by stepping in front of a barreling freight train of a market move and getting run over, or by completely missing a major market trend altogether.
A good quote on the topic of “top and bottom picking” comes from an old-time cotton trader, Bernard Baruch: “You can have the first 10% and the last 10%, I’ll take the middle 80%.”
That’s what marketing is all about, being protected against or capitalizing on the meat of the market move. If milk falls from $20/cwt. to $10/cwt., does it matter the milk is sold at $18/cwt.? Or if corn rallies from $3/bushel to $10/bushel, does it matter the corn is bought at $4.50/bushel? No, it is a moot point, because the brunt of the market move that would have caused the most pain was protected against.
Let’s look at it from the other perspective. If milk rallies from $14/cwt. to $22/cwt., is it a disaster to have milk sold at $20.50/cwt.? If corn tanks from $9/bushel to $3/bushel, is it a disaster to have corn bought at $4/bushel? No, because the meat of the market move was capitalized on, and when that happens year-in and year-out, moves at the fringes matter less and less.
Perfection is not the key to successful marketing. The keys to successful marketing are establishing a solid weighted average price, staying consistent and disciplined in implementing the strategy, and staying steadfastly dedicated to long-term goals. There will be many challenges – and undoubtedly some setbacks – along the road to successful marketing. Marketing, just like winning the Super Bowl, is not easy, and comes with ups and downs. The long-term rewards are worth every ounce of effort.
The Super Bowl champions of the last two years can relate to challenges and setbacks. Both teams nearly missed the playoffs with mediocre regular season records. The Packers had 10 wins and 6 losses; the Giants had 9 wins and 7 losses, yet both teams persevered to become world champions.
In marketing, winning the equivalent of the Super Bowl is when that bear portion of the milk cycle kicks in, the bottom falls out, and the milk is sold at levels well above the low. The dairy operation is protected at a price level allowing it to have positive cash flow and maintain profitability through the worst of times. And, it is when the bull market kicks in on feeds, corn and protein prices rally to new all-time highs, and the feed is locked in well below the high. This allows the producer to maintain a feed ration that works best for the cows, without having to scramble to find a substitute to try and bring down costs as much as possible.
While marketing successes such as these don’t come with a trophy and a large diamond-studded ring, the positive emotions experienced are likely the same.