Map out your playing field with the Competitive Index and get the most from every inch of your market
By Tim Kerstein, Director of Solutions Development
If there is money to be made in any market, companies will go there in search of their share. Economics tell us that. But do we know how great that competitive pressure really is? Most would say yes.
Here lies the problem—our sense of competitive pressure is based on intuition. In an age where data is revolutionizing production economics, as marketers why are we not using data to augment intuition?
Recent mergers will require all marketers to consider how their territory realignment needs to change. Past Entira articles have focused on creating territories based on acres, but a new day calls for a new process.
Enter Competitive Index. Entira’s Competitive Index blends the granular market analysis features of Enspire™ with our vast retailer database. Together, we can quantify precisely how many retailers touch a user-defined footprint. We will get to the ‘how’ in a second; but first, the ‘why’…
I imagine many of you are thinking, “I know who the players are in my territory." Frankly, I hope you do. But the real question is: Can you quickly analyze this information at scale?
I am sure every reader could sit down and draft a list of the major competitors or customers in your territory. That task would be time-consuming and we just got done talking about a new process. But if you were rebellious and went ahead and did that exercise anyway, your list probably would not be comprehensive. You would have some top-of-mind answers, no doubt. Those are the obvious rivals you know about, but it’s the ones you don’t know about that are the most troubling.
For the sake of argument, let’s say you already have this list developed. My next question is: Can you quickly analyze the underlying market value of that area? Maybe. Can you tell me the market value potential of all your markets and how many competitors or customers touch each market? I sense a few more “no’s” are being whispered.
Why is this information valuable? Again, efficiency. It helps marketers at the retail level quickly quantify the competitive pressure of their market or desired future market. You define the markets, we provide the data and help you analyze the results. If you want to look at all or a few of your locations, we can do that. If you want to compare those numbers to your competitors' locations, we can do that. If you are looking to acquire assets in a new geography, we can look at those as well. If you want to do all those things, even better. I like your ambition.
Manufacturers can use the Competitive Index to allocate resources (people, dollars, assets, etc.) more efficiently. Mergers require everyone—those involved and those on the sidelines—to reassess their approach. New territories, new budgets, and new problems are likely a part of everyday lives now, so let’s use data to simplify the problem. Like farmers, marketers are often asked to do more with the same or less resources. The Competitive Index can help you more efficiently cover markets with less resources.
That is the “Why” … Here is the “How”
Efficiency is vital to agronomic progress. To feed the world in the future, we will need to grow more with the same or less acres than today.
That was one of the reasons we created Enspire™, our analysis platform that provides agribusinesses with granular-level data to quantify market value potential. Enspire shows how much seed, chemical, and fertilizer value is available for each location in a specific market. You define the markets/locations for us, we give you the goods. If you want to go more granular, we compare the market value potential against actual sales information to create market share. Again, if this information excites you, I like your ambition. If you want more information on that, you can read our earlier article that introduced Enspire.
What Enspire did not reveal, initially, was how much the competition was factoring in to the location’s share of the total value. We needed a way to show how much impact the concentration of competing business had on a location’s potential for growth, which led us to the Competitive Index.
Simply stated, Enspire reveals the value of the opportunity within a specific market, and the Competitive Index shows how hard you’re fighting for that opportunity.
The Competitive Index layer of analysis will show an even more meaningful quantification of market value potential. High potential is great, but economics tells us others will be there fighting for it too. Many of you are or will be entrusted with how company resources are used and it is unlikely you cannot invest indefinitely. These stewardship decisions are tough and the Competitive Index can help you efficiently and confidently identify the best use of finite resources.
What the Competitive Index Tells Us
The more concentrated the competing companies are, the higher the Competitive Index. A Competitive Index of 12.8, for instance, indicates there are 12.8 competitors on average vying for the crop acres served by that location.
A higher Competitive Index means the market is sliced among more players, making their “fair share” smaller. A lower Competitive Index means fewer players are splitting the pie, but the slices are bigger if the market share is split evenly. So, if you are the ambitious type and use your sales data to quantify your market share using Enspire, the Competitive Index provides an additional data point for a more “apples-to-apples” comparison.
To illustrate an example, let’s say you have two locations with similar market shares—locations A and B. Location A has a Competitive Index of 20 and Location B has a Competitive Index of 10. Although their market shares are similar, once we factor in the Competitive Index, Location A is more impressive because they obtained a piece of the market larger than their “fair” share. In other words, they beat out more competitors to get the same market share output.
In pure market share, the locations were equal; but in reality, one is outperforming the other.
How the Competitive Index Can Help Drive Change
With the Competitive Index and Enspire, we’re giving clients another tool to help accurately diagnose what’s going on inside their markets. The numbers don’t tell you why discrepancies exist, but they prompt the right questions to ask to explore the situation.
Here are some of the benefits of using the Competitive Index:
- Create parity in location or customer performance. Enspire and the Competitive Index allow you to see a wider picture of the competitive situation, which may be affecting performance.
- Deploy resources more effectively. This level of granularity allows you to break decisions down into smaller, more manageable parts so you can allocate finite resources to the areas with the best ROI.
- Better management of your sales organization. This insight can help measure individual sales performance more accurately and direct you toward strategies to optimize your sales organization.
- Qualify expansion opportunities. If you’re looking to expand through acquisition or just grow into new markets, it can reveal the locations and/or geographies with the highest likelihood of success.
Who Needs This?
For agronomic retailers looking to expand through acquisition, this is an exceptional tool for giving insight on the value of potential acquisition targets. This is also useful for those looking to put more rigor behind analyzing current operations.
Manufacturers armed with this insight can help their downstream partners be successful. Where should retailers and distributors dedicate their time? How can they craft a more focused marketing plan? It can also be beneficial in directing sales development efforts, showing your team where to focus on demand creation and building greater awareness about your products.
Knowing the Competitive Index is beneficial for any company in that it can give you better information about your locations so you can customize your strategies accordingly.
Enspire has given our clients a granular view of their local performance—we’ve been able to calculate market size and opportunity in new and better ways. What we have learned is that every market or location is unique. Those who seek to understand “why” are inherently more successful.
Standard metrics oversimplify analysis. Complex situations rarely have simple answers. The Enspire Competitive Index provides data to accurately tell the complete story.
If you’d like to learn more about the Competitive Index or Enspire™, please contact Tim Kerstein at email@example.com or 719.244.5969.