August/September, 2004

From the Editor

Brand Marketing MIA

It is both true and obvious that there is hardly a deli department in the country that wouldn’t like to see sales increase. Yet, in a form of unilateral disarmament, most deli departments eschew the classic tool of grocery marketing: Brand Promotion.

Recently I got a call from a marketing agency for Healthy Choice, surveying industry experts to ascertain if deli departments were doing all that could be done to promote brands. The answer is no.

Healthy Choice is a great example. Because it has a distinctive product positioning, a brand such as Healthy Choice can function as the holy grail of deli marketing — a way to increase incremental sales, attracting new buyers to the deli counter and high-value buyers to the store.

And Healthy Choice isn’t alone. A kosher line, such as Healthy Choice’s sister company, Hebrew National, offers a distinctive flavor profile on products such as salami and bologna and a natural affinity with products such as pastrami and corned beef. On its whole product line, Hebrew National offers an alternative perceived by even non-kosher consumers to be of extra high quality. Here is another brand that can perform.

A line that emphasizes natural and organic product, such as Applegate Farms, is another example. Once again, distinctive positioning can lead to sales of this line without cannibalizing other sales. It can lead people who normally steer clear of the deli to step up and order, and it can bring a class of high-margin organic- and natural-products consumer who might have gone to a specialty market into a mainstream supermarket.

Brands that are well known in another context, such as Butterball or Sara Lee, regional favorites, foreign brands, etc., offer a unique proposition to consumers. Yet most deli departments fail miserably at capitalizing on the opportunities presented by the plethora of available brands. Some departments have sold their souls to one brand and carry only a discount private label line and a few specialty products under any other label.

The mistake is that retailers who do this are working in broadcasting mode, but we are in a satellite TV world. In the same way that the three national broadcasters in the old days tried to get the largest share of the audience by offering only the most popular programs, retailers who commit to one brand perceive it to be the most broadly popular one.

They may be correct, but in today’s world the way you maximize sales is to pick up market share by offering a diversity of brands. Just as satellite and cable TV companies attract the largest possible subscriber base by offering a vast assortment of channels, so must the deli department maximize its appeal by offering many brands that attract the passionate devotion of small numbers of consumers.

This is a concept at war with the overly simplistic implementation of category management that is often followed at retail today. Under this cheap and easy category management approach, you review your hams, find out which is the slowest selling and eliminate that ham.

In fact, however, that model is a disaster because it asks the wrong question. Satellite and cable TV vendors know they could replace any number of channels with higher rated alternatives tomorrow. But the specialized nature of these low-rated channels, whether specialized by language or appeal to certain interests, helps increase both overall subscriber numbers and average per household expenditure on cable and satellite services.

In other words the issue in carrying a health-oriented brand, kosher brand, natural brand, specialized brand or a brand whose name has emotive consumer connotations is not whether these individual items are the best selling items one could add. The issue is whether the total scheme of offerings has been designed to maximize sales and profits.

Merchandising in the deli department goes far beyond product selection, and one of the biggest problems is that even when retailers get the selection correct, the promotion is often non-existent. Merely throwing a kosher salami, a healthier alternative or natural or organic product in the case doesn’t suffice. Sure, some consumers will recognize these brands and buy. But to build demand for specialized products, there is a need for more marketing and promotion. More sampling, more staff education, more signage, etc.

These more specialized products require a double-barreled promotional approach. First, efforts must be made to reach a core audience of supporters: this might mean ads in a local Italian-American organization’s newsletter referencing the new line of Italian or Italian-style products. It might mean sponsoring an event at a local health club to promote the new line of healthy products.

Second, there needs to be an in-store effort to expand beyond the core constituency and explain the charms of these products to unknowing consumers.

All too often retailers take on a new product, put it out for a few weeks and then declare it a failure. The truth is the product was never given a chance.

Retailers can certainly do a better job and only they can change their procurement practices. Beating up on retailers is also the favorite sport among manufacturers, yet very few manufacturers really put the promotional dollars behind deli products to entice retailers to do the right thing.

It is going to take a joint effort: manufacturers who don’t just want to sell pounds of product, but want to build networks of consumer demand, and retailers who look at products not as numbers on a sell report but, rather, see each product as the favorite of a different consumer.  DB