December, 1989

Fruits of Thought

A Brave New World

A new trend at the retail level may open an astonishing marketing opportunity for vendors of produce. The trend is database marketing, and the opportunity is a chance to engage in the target marketing of consumers.

Recently, many retailers have been introducing frequent shopper programs. These programs, roughly modeled after the airlines’ frequent flyer programs, offer consumers credits on merchandise or cash rebates based on a consumer’s pattern of purchases. Sometimes the pay-off comes as a result of total purchases, where a consumer might spend $100.00 a week and get a rebate. Sometimes the bonus is based on purchasing a specific product, where a consumer might buy a certain brand of coffee four times in a month and get a coupon toward a fifth can. Very often the cost of these rebates and credits are paid by the manufacturers.

These frequent shopper programs have been getting most of the excitement lately, but what really is interesting is the concept that makes these specific programs possible: database marketing. This form of marketing basically means that each store, usually through use of a scannable check cashing or “frequent buyer” program card, maintains a database on each individual customer. If this database is of sufficient sophistication, and if stores know how to use the data, the retailer should be able to determine, for example, which customers never purchase anything in the produce department and then send them direct mail, coupons or other incentives to get them shopping for produce in the store.

But the real revolution database marketing could bring involves private shippers of produce. If they utilize PLU’s (price look up numbers) and UPC codes, stores could be able to identify buyers of individual produce items. We would know that Mrs. Smith buys 2-lb. bags of Fancy New York State Red Delicious apples and that she never buys kiwifruit, for example.

Of course, some ideas are obvious. The kiwifruit commissions might surely like to send Mrs. Smith a coupon for free kiwifruit. If the store sells gassed green Florida tomatoes, the day a shopper purchases them, the Florida Tomato Growers might want to send that consumer a little brochure explaining how best to ripen tomatoes, perhaps even put in a little coupon and thank the consumer for his patronage.

But the most exciting idea is how the availability of target marketing could open up consumer advertising as a real possibility for the produce industry. The truth is that very little consumer advertising goes on in the produce industry. Watch TV, and the odds are you will see over a thousand packaged goods commercials before you see one fresh produce ad.

There are a lot of reasons for this. One of the most prominent, however, is that advertising produce to consumers is highly inefficient because distribution is not universal.

Campbell can advertise soup with the knowledge that virtually every outlet that sells soup sells Campbell’s. This means that if Campbell runs good ads and makes consumers prefer Campbell’s soup, Campbell can count on the soup being there for consumers to pick up and purchase. Compare this with even a giant produce company. Even the biggest produce organizations are likely to have the same item in less than half the nation’s supermarkets. This makes consumer advertising problematical for the produce giants and virtually impossible for the bulk of produce companies.

But database marketing changes everything. Now, even a small company, with enough production to supply only one small chain, can advertise directly to the consumer by utilizing the supermarket’s database. A shipper of bagged McIntosh apples could negotiate an exclusive arrangement to supply a chain for say, 6 months. Then, the shippers could back up his product with direct mail to that chain’s shoppers. In fact, the shippers could offer recipes, care instructions, coupons, etc., to consumers who are the heaviest buyers of McIntosh apples. Or, the shipper could provide coupons to customers who never buy bagged McIntosh apples. The shipper could also survey consumers who had purchased the bags of apples or find out how satisfied the customers were. The shipper can also fund rebates and credits to be given electronically through the store’s “Frequent Shopper” program. In fact, the possibilities are endless.

For the packaged goods manufacturers, many feel that database marketing could lead to a shift from general consumer advertising to more direct marketing. And this may well happen, but packaged goods manufacturers have always had an efficient way to reach their consumers: mass market media, particularly television and women’s service magazines (Good Housekeeping, etc.). But for the produce industry, database marketing may mean the entry to a brave new world. A world where for the first time, shippers are able to communicate in an effective and efficient way directly with consumers. The implications of such a possibility are outstanding, and intelligent produce executives will be starting to figure out exactly how these new databases of consumer purchases can actually be used to build and retain market share.  pb