In the last two blogs we talked about food safety & seasonal marketing. The success of seasonal marketing over the past 25 years has led to the increase in “LTOs” or “Limited Time Offers.” Both have driven trial, incremental growth and developed new customers through products, packaging, promotions and merchandising. This blog will focus on getting back to basics. There has been a lot of consolidation over the past 25 years in the business from both the food/beverage retailers, manufacturers, distributors and brokers. The primary driver of this was Wal-Mart and everyone felt like they had to get bigger in order to compete.
Many of these decisions were driven by supply chain implications of scale and the many benefits that it provided to both retailers (lower cost, less vendors to deal with) and manufacturers (production efficiency, less retailers to deal with). We’ve also had to deal with younger people who typically have been the “frontline” pipeline workers for wanting something “different” than previous generations. This also put many independent retailers out of business and forced many manufacturers to “innovate or die.”
The game changed in March of 2020 with Covid. As I write this, we have just begun 2023 and most “experts” expect this to be another volatile year for our industry. And while Wal-Mart is still a force to be reckoned with, people are now looking at Amazon the same way we looked at Wal-Mart in the 1990s. Add the advent/adoption of new technology like AI and Machine Learning to the mix. All this proves is that “change is constant” and while we can’t change the wind, we can adjust our sails to insure that we are moving in the right direction. So how can small/independent companies compete in this environment?
Not on price! This is one fight that I guarantee you will lose. I am not saying that lowering your price temporarily is always bad. What I’m saying is that anyone who uses low price as a strategic lever HAS to have the lowest cost structure or they are doomed to failure. This is why K-Mart/Sears (and many other retailers) lost to Wal-Mart and are now out of business.
Negotiation leverage works both ways and is the reason why manufacturers both large and small should be supporting the growth of smaller independent retailers and food service establishments. While many companies perished as a result the shutdown for Covid and the many restrictions that were put in place in 2020 & 2021, those that survived did so because they offered something different that was meaningful to their customers.
That leaves Product, Promotion and Place as the other “P’s” that you can leverage. As a small independent business, you should know your market and customer better than the big companies.
I do think the craft beer, seltzer and RTD categories have done a great job with product innovation driven primarily by smaller companies and adopted by the larger ones. Besides the actual product, the promotions, merchandising/POS and advertising that breweries provide should help create excitement and drive incremental purchase which is what we all want. Their marketing departments are staffed with people that can also customize their marketing materials to cater to your customer. Think about how you can create a “destination” by combining these programs with your own communications programs.
Much of what we talk about today around promotion centers around social media, not traditional media like television, radio and billboards. You NEED to have a social media presence. Use that to your advantage by creating a contest or promotion to let people know and take advantage of the word-of-mouth marketing opportunities that technology presents through all social media platforms. You don’t need to pay for influencers, just create something compelling that your customers will share.
And, if your budget permits, I would do both old and new media. The rule of thumb has always been that it takes 3-4 exposures of your message to sink in with consumers. Hit them from both sides, but be smart about where, when & how you communicate.
You need to understand how your customers think about your brand and products and how they influence the behavior of the others (what to drink, where to drink it, what day/time etc). This could be as simple as talking and listening to them directly or hiring someone to conduct some basic marketing research for you. Or simply monitor all of your social channels and look for trends. Then, adjust your marketing and merchandising strategy based on this information.
Whether you are an on or off-premise business, you need to make sure that you understand YOUR consumers and build your products, merchandising, and marketing programs around them. It will positively impact your bottom line!
And remember, Marketing is a race with no finish line.
George Latella teaches Food Marketing at Saint Joseph’s University in Philadelphia. Food Marketing which is the largest major at Saint Joseph’s University recently celebrated its 60th anniversary. George is also a partner in Beacon Marketing group which provides Marketing planning, research, and e-commerce/direct marketing communications for food and beverage companies. George can be reached at glatella@sju.edu or 610-660-2254.
