November, 1999

From the Editor

Six Ways To Kill A Business

There are so many products in so many specialty food categories that the frustration of manufacturers is understandable. I regularly receive poignant calls and letters from struggling small specialty food marketers, each claiming they produce the best product in its class. Yet they are frustrated to find that despite, at least in their perception, having created a better mousetrap, the world does not beat a path to their door.

Part of it is just business ignorance – business plans, for example, made without adequate allocation for sales and marketing. It is shocking the number of people who think that the hard part of business is arranging for a co-packer.

Often it is a lack of courage on the part of business founders. Although many businesses have humble starts – Jobs and Wozniak in a garage starting Apple – they usually have intense backers. Above all else, what a new product needs is someone to believe in it passionately and unconditionally. If a business founder hedges his bets by keeping his day job and trying to build the food company on the side, it is much harder to obtain success.

But even among those who have the courage of their convictions and are dedicated full-bore to building their company and selling their product, I see several serious mistakes being made every day.

  1. An over-reliance on distributors to actually sell product.

     

    So many manufacturers are desperate to get into distributors and then bitterly disappointed when, goal achieved, not much happens. The truth is that, with a few lucky exceptions noted, manufacturers have to have either a substantial budget to provide all kinds of incentives to distributors, brokers and retailers or they have to, themselves, promote like crazy. Getting a distributor in L.A. is great, but it just starts the work – if that business owner isn’t ready to camp out in L.A. and start visiting prospects, not much will come of it.

  2. Always going for the biggest.

     

    In looking for distributors, many manufacturers gravitate toward the big names. These guys are big for a reason and if they offer something a particular manufacturer needs, then, of course, that is the way to go. But very often what a new specialty food product needs is tender loving care. If the category is small to begin with and one’s product is inconsequential within the category, one might do better with a smaller distributor, perhaps one focusing on your niche. This is particularly true with some of the organic and ethnic products.

  3. Selling to anybody.

     

    One of the most important things for an order-starved marketer to do is to turn down business. That’s right! One has to know what kind of customer is right for a product and what kind of image one is building for a product. All too often, marketers think they can sell to anybody and everybody. A few people have pulled this off but usually only through careful product segmentation and after they have established a strong brand image. For most, having your product wind up in Marshall’s when you are aiming for Neiman-Marcus is pretty much the kiss of death.

  4. Waste of promotional dollars.

     

    Very few specialty food marketers have enough money available to do consumer advertising in any meaningful way. The tape of the radio ad or the video of the TV spot may play very well when presented to one’s backers, but without the dollars to gain meaningful frequency, it is very difficult to budge consumption numbers.

  5. Failure to integrate marketing efforts.

     

    Very often I hear that someone is cutting back on something, i.e., advertising or trade show exhibiting. The reasoning is so they can emphasize something else – a new corporate brochure or video, a new web site, a new radio commercial, etc. It is true that priorities have to be set, but in most cases, new initiatives actually require greater attention to a company’s traditional marketing efforts. It is great to have a new web site, but if you want to drive trade traffic there, abandoning Fancy Food shows with their capability to influence tens of thousands – is counterproductive.

  6. Lack of understanding what kind of company one has.

     

    There is no one magical solution for everyone. You need to know what kind of company you are building if you want to be successful at marketing in the specialty food trade. If you are a large venture-capital-funded company, you probably have to go for broke since your investors have no interest in a company eking out enough to pay a good salary and nothing more. But if you are a bootstrapping start up, a focus on local markets where you can easily and inexpensively promote – paired with a plan to gradually build over the years, may make sense.

This much is clear: Distributors and retailers are overloaded with product opportunities. Only businesspeople who recognize that shrewd marketing is as important as good product are apt to taste success.  FDM