September, 2003

Fruits of Thought

Seven Sins Of Marketing

The cover story this month is about the winners of PRODUCE BUSINESS magazine’s 15th Annual Marketing Excellence Awards. This column is about the ones that didn’t win. Don’t call them losers though, as that is exactly the wrong word. In a tough competition, most entrants will not get a trophy, but the very fact that these people are working hard to do creative things to help sell produce makes them winners in my book, even if they didn’t happen to get our coveted Silver Cup.

Perhaps the biggest marketing problem in the produce industry is that so many growers and shippers perceive marketing as someone else’s problem. Perhaps they expect a commodity promotion group to handle the marketing or feel the retailer should know how to move the product. Or they think the national 5 A Day effort will build demand for their products.

However, if the vendor abandons the marketing arena to some other organization, the vendor loses the opportunity to provide an added value. In a world where commodity prices are often brutal, being completely dependent on the swings of the market isn’t a great place to be.

Commodity promotion groups have done some great work but all too often have been compelled by their own growers to focus on short-term promotions rather than building long-term demand. Sometimes it is even worse. Small organizations spend all their money on TV ads they can’t afford to show anywhere, or they pull back from very successful programs because growers don’t like them or they don’t like the implications of the program proposed.

Max Brunk, a departed but still revered professor of ag economics at Cornell and a founding columnist of PRODUCE BUSINESS, used to tell the story of when he was hired by Roses, Inc., a group dedicated to assisting the rose-producing industry, to study how to get vendors to sell more roses. The research result: If those same vendors would carry a larger variety of flowers, they would wind up selling more roses. It seemed that a larger variety attracted more customers and kept the customers coming back.

So disturbing to rose producers was this research that when the producers heard about the study, they sent the good professor his check and put the report on the back shelf never to be looked at again.

In looking carefully at this year’s entrants, a rising level of sophistication is evident and, indeed, with consolidation at retail, only a more sophisticated effort is likely to produce results. Both the organizations doing the promoting and the industry as a whole will be winners if future promotions avoid some typical mistakes by those that didn’t make this year’s cut:

  1. Think dollars, not pounds. Hard as it is to believe, some of the entries – in their reports of their own results – indicate that though sales of products in pounds went up, actual retail dollar sales were down due to price-cutting. Selling more product means more work, and doing it for less money is a tricky proposition.
  2. Think profits, not sales. Many of the promotions report higher sales numbers but never attempt to relate these numbers to profitability.
  3. Don’t celebrate the obvious. A number of efforts demonstrate that if you devote more shelf space to an item, you sell more of that item. But shelf space isn’t free, so one must demonstrate that the higher sales more than make up for what was selling there in the first place.
  4. Stealing sales from next week isn’t a great achievement. Don’t stop your study after the promotion period is over. What seems a very successful promotion with some items can be worthless if you look at the 52 weeks after the sale. Are you really increasing annual sales of the item or just moving them around?
  5. Where is the money coming from? If your promotion has tripled dollar sales of oranges, where did that money come from? Is it money that would have been spent at McDonald’s? If so, you have a big winner. Is it money that would have been spent in the grocery store candy aisle? Well the produce people will love you, but you may not be helping the store at all. And if all you did was switch people from bananas to oranges, you may not be of any real interest to the produce department.
  6. Test one variable at a time. Several people submitted programs that involved many variables – a sale price, expanded shelf space, newspaper ad, radio ads, demos, special signage, aprons, in-store display contests, forced distribution, etc. The problem with this is that even if you have a success nobody has any idea why. Variables need to be tested independently to ascertain where the value actually lies.
  7. Execute effectively. So many good ideas failed due to sloppy execution – misspelled Point-of-Purchase material, sloppy results evaluation, product not getting there in time for the promotion.

Remember having the idea is the easy part. Making it happen is a lot of work.  pb