February, 2006

Research Perspective and Comments & Analysis

What Consumers Want

I’ve suggested our industry’s use of the term “supply chain” gives us a somewhat distorted image of what really matters in marketing produce — or any product — because we can get caught up in viewing that chain as a series of steps flowing in linear fashion from production and packing through distribution and ending in consumption. Far better, I’ve suggested, is to look at how we supply produce as a circular graphic in which we start and end with the consumer.

Many in our industry now realize consumer marketing has to play a greater role than traditional production-based marketing. For example, much of the planning for Fresh Summit 2006 in San Diego is based on what attendees report about Atlanta — what met their needs, what didn’t and what they still need. They say the most valuable things they learn at Fresh Summit educational sessions focus on consumer marketing. The speakers and sessions that give new insights into understanding what consumers want and how the industry might respond get the highest kudos.

Our produce industry provides consumers with the greatest products in the world: fresh fruit and vegetables. Fresh produce provides health benefits, fits into all sensible diets, requires minimal preparation and is available year-round. Even though consumers are increasingly aware of these benefits and are receptive to eating more fresh produce, invisible barriers prevent them from consuming it in the quantities they say they want. It is up to us to discover and remove these obstacles.

This process is not advertising or sales; it is marketing. Marketing is matchmaking — matching what we offer to what a consumer needs and wants. It focuses on the needs of the prospective acquirer of goods and services.

To gain a marketing mindset, we first need to “de-commoditize” our thinking. We know how to sell a commodity, but we need to improve our marketing to consumers. The consumer is first and foremost; he or she is where the product flow chart begins and ends. The late, great Peter Drucker put it so succinctly, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”

Our research says consumers need convenience and want great taste and high quality. Convenience means more than peeling, coring, slicing and dicing; it also means conveniently available wherever eating decisions are made. Consumers also want information, such as how to select and use produce. They require choices, such as packaging options — by serving size, by level of preparation.

Supermarkets themed around lifestyles are a physical acknowledgement that the traditional department boundaries between food categories do not have the needs of the shopper first and foremost. That’s why so much attention is paid to recent innovations in the stores being developed by Marsh, Sweetbay, Safeway, Wegmans, Whole Foods and others.

In today’s fluid environment, consumer demographics change and shift faster than ever before. It has been reported that almost a billion new consumers will enter the global marketplace by 2016. Global business, economic and societal changes, and competitive developments will change who consumers are and what they need. The continuous explosion of information greatly affects what our current and future consumers know and want.

Not only is the current consumer population aging and developing new needs and desires, there are new, additional groups of consumers. In recognition of this, the focus of PMA’s Retail Produce Solutions Conference this year centers on marketing to “new consumers,” specifically, Hispanic, Asian, Gen Xer and children consumer segments.

We are not only in the business of providing fresh fruits and vegetables; we are also in the business of providing solutions to consumers’ lifestyle needs. We must proactively obtain information to drive marketing efforts. Frequently, this is consumer-directed research. The industry must hear and respond. Responding appropriately will require us to innovate in the areas of convenience, taste and choice. Not surprisingly, the New Products Showcase was one of the most heavily attended areas of Fresh Summit 2005.

Innovation isn’t always about creating something new. It’s also about finding new ways to communicate and merchandise. As people become more educated about food, they require more information. They want to know country of origin and how to store produce items. They are asking to be taught how to select produce and use it. Those under 30 years of age are looking for recipes, those 50 and older for nutritional information and health benefits. A pro-active produce staff, chef demos, tastings and signage help provide some of this information. (Is it really any wonder the stores offering more of these gain favor from consumers, media and, in the case of public companies, the equity markets?) Shoppers also want options in packaging, such as a variety of sizes. Convenience is the most cited reason for buying pre-packaged produce, which is also viewed as safer.

Whether we come from the buying side or the selling side, it is important to view our industry relationships as partnerships. Technology and standards need to be our shared language as we focus more on our shared customers. Each link has insights that benefit the other, and by working together we can design our supply chain to deliver a consistent experience. Equally important is seeking complaints; find out what isn’t working. “Your most unhappy customers” according to Bill Gates, “are your greatest source of learning.”

Fresh Summit attendees want PMA to continue to focus on consumer trends, new products, and marketing. That is precisely what we will continue to do. Because, at the end of the day, there is absolutely no substitute for passion and excellence in marketing to serve one’s customers’ needs.

More Than Words

One of the true services PMA has provided to the industry in the past several years has been an emphasis on consumer marketing. People are listening, but the folks in Newark, DE, need to keep preaching.

Although producers pay a lot of lip service to the consumer, very few are spending the time and money to do real consumer-driven product development.

I was on a weight-reduction program lately, and my maintenance plan calls for a daily workout at 6:00 am and eating an egg white omelet before I go the gym. I spike the omelet with vegetables for flavor and nutrition. Because every second I save in cooking time is a second I get to sleep, I am always looking for convenience produce to put in my omelet. Yet most don’t meet my needs.

I was thrilled to find my local Publix stocking a hard plastic package of sliced scallions. Just the kind of item I was looking for. Yet, I rarely buy it anymore.

Why? It was a 5-ounce package and I only needed a ½ ounce in my daily omelet. In my real life — with an imperfect refrigerator often jammed with food blocking air flow, an imperfect chef who would leave the package on the counter too long and sometimes skip a day or two because he was out of town — the scallions, though delicious and beautiful, deteriorated substantially once the package was open. I never was able to finish the package before the product was unusable.

What would have been convenient for me would be a master package with individual ½-ounce serving packages. Since the unopened container stayed fresh quite awhile, I would have been able to buy a package once a week and have fresh pre-cut scallions every day.

Perhaps my use is atypical and the producer had done extensive research of consumer cooking patterns and determined that 5-ounce packages are the correct size. Perhaps. But I doubt it.

That is the difference between trying to sell a product and trying to meet a consumer need. One approach says, “If I cut the scallions for consumers, it will be more convenient and I bet I’ll sell more.” The other says, “I carefully observed how consumers really live, including how they use, and don’t use, this product, and I’ve learned they typically use it one ounce at a time and, in real life, an opened package only survives three days. Consumers like to go food shopping once a week, so they need ½-ounce packages of my product in a master package of 3½ ounces so they can have fresh, unopened scallions to use all week.”

It is a big change from the way produce products have traditionally been developed. This type of consumer-driven product development would not just serve the consumer with more appropriate products; it would also improve trade relations. Producers of innovative produce items complain that retailers don’t give the products the support to make them work. And the producers have a point. These products are new and unfamiliar to consumers, so it can take months of exposure before they really take off. Many a time you can find a supermarket displaying a single row of an innovative product and, when it doesn’t sell in two weeks, it is not reordered.

Unfortunately, few producers can legitimately demand more space and time because they don’t do the research to make a convincing case that consumers will buy the product if they come to know what it is and that it is available. The research required is different from what passes for consumer research. It includes survey responses only as an adjunct to observational data about how people live.

Lately a lot of trade associations have gotten into the habit of putting together consumer panels at conferences and trade shows. These are always highly ranked by attendees. But they trivialize the truly difficult work of learning about consumers.

First, the consumers are not geographically representative; they typically are drawn from the local town. They are usually not representative by age, sex, income, ethnic group and a host of other variables. Sophisticated sampling techniques adjust for all these problems by properly weighting a sample, but none of this is evident in a panel discussion. And these people know they are at a produce industry function — distorting what they might say.

Good focus group researchers study dozens of groups in different geographic areas with many different types of people and make sure the consumers being studied never know the study is for a produce group. The results are mostly used to do things such as define terminology so that a quantitative study can be rolled out. Yet I’ve been in meetings in which senior executives have referenced these open panels at an industry conference and said the consumers told us they wanted something. It is a case of a little knowledge being worse than no knowledge at all.

Gathering a group of consumers and asking them questions is easy; knowing what their answers mean and how much weight to give those answers is the hard part.

On the revolutionary questions, consumer research has its limitations. If in the age of the steamer ships you had surveyed passengers to find out “what they want,” you doubtless would have gotten recommendations for more customer service, better information on ship amenities, more ports of call, etc.

What you wouldn’t have gotten is a mass of consumers saying they want huge aluminum tubes to fly through the air and transport them in hours from London to New York and, by the way, can we have little screens showing picture shows at every chair?

Yet today, over 99 percent of transoceanic travel is on airplanes, not boats. Which tells us that as important as focusing on the consumer is, that shouldn’t be mistaken for simply doing what consumers ask for in surveys. Sam Walton never lost sight of the consumer, but neither did he launch Wal-Mart because a survey demanded it.