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Art Turock, one of the industry’s most popular speakers and sales growth strategists, is on the impressive roster of presenters at the upcoming Food Marketing Institute (FMI) Advertising/Marketing Executive Conference, scheduled for April 22-24 in Miami Beach, Florida.

While Turock is slated to speak about “The Health Consciousness Tipping Point: From Wellness Niche to Mass Market,” we were intrigued by a related part of his portfolio – which is laid out in a new report entitled, “Creating Sales Calls Customers Would Pay For,” which looks at how manufacturers brand not just their products but themselves..and what retailers can learn from such companies.

So, we decided to engage Art in this exclusive e-interview to examine some of his premises and conclusions…


MNB: Art, for the past few years you have been largely focusing on retailers and what you called “the Wal-Mart death spiral,” which takes place when retailers engage in all the wrong strategies and tactics to compete with Wal-Mart. What led you to focus more specifically on the manufacturer side of the equation?

Art Turock: As a sales growth strategist, I’ve spent 20 years listening to retailers and realizing they have a number of skill deficits and latent needs that go undiagnosed, that can be addressed by enlisting well-honed capabilities of manufacturers. For instance, supermarkets have competent advertising departments but the capabilities for marketing the brand equity for a chain are lacking. When advertising and promotional efforts aren’t linked to a coherent brand strategy, the typical result is a series of short-lived sales surges with no enduring emotional connection with the shopper. In contrast, strong retail brands like Starbucks, Costco, Whole Foods, and Trader Joe’s engage in minimal advertising because they’ve already invested in orchestrating a brand promise that’s permanently imbedded in the customer’s mind as vitally relevant and unique from competitors.

Supplier expertise in brand equity management can be shared in a number of ways. For instance, a supplier might loan out a talented brand manager for “consulting days” to conduct a branding audit for the retailer. The consultation could include an assessment to determine if senior management is clear on all the components of their brand such as: meaningful difference, personality or attributes, functional benefits, emotional benefits, and product/service features. A second part of the branding audit could entail a store visit, exploring the website, examining circulars and media advertising, and observing the interactions of associates with shoppers to determine how well a chain’s performance is communicating a congruent brand message. When Wal-Mart and Safeway committed to rethinking their brand, they hired VPs of Marketing, Steven Quinn and Brian Cornell, who migrated from PepsiCo and Frito Lay respectively.

When suppliers go beyond expectations of their customary role, they brand the way they sell (not just what they sell). Top retail accounts recognize such a supplier’s commitment to improving their total business, not just moving cartons of their own brands.

MNB: What suggestions would you make to retailers looking to make center store a point of differentiation...and how should manufacturers help (beyond simply paying for shelf space and endcaps) to make center store a more positive experience?

Art Turock: In response to the challenge of creating an emotional connection in center store and recognizing in-store marketing is becoming more compelling than traditional advertising media, Kraft created an In-Store Merchandising Center of Excellence. As an example, Kraft and Buehler Food Markets are collaborating on a cookies-and-cracker aisle designed around a theme of “Mom’s Kitchen” complete with products merchandised in cabinets surrounded by cooking utensils, cookie jars, and kitchen tables. The design aims to trigger a nostalgic emotional connection to Nabisco brands like Chips Ahoy, Oreo, and Ritz in a kitchen setting where many shoppers were introduced to these products as kids. Other center store categories where emotional connection is most likely include pet, baby, wine, beer and snacks, ice cream, greeting cards, coffee, and cereal.

With retailers seeking to serve growing customer segments like foodies, health conscious shoppers, or ethnic populations, they can’t depend on historical shopper sales data to dictate effective assortment and merchandising decisions in center store. Tree of Life’s Smart Marketing Service provides data-driven category management capability for products of over 2000 niche manufacturers of natural, organic, ethnic, specialty, and gourmet items. Customized assortment recommendations are made for individual stores within a chain.

MNB: How should smaller and medium-sized manufacturers attempt to define their relationship with retailers? What should these retailers expect, and what kind of skin should the retailer have in the game beyond simple sales goals?

Art Turock: Virtually every category has its version of David beating Goliath: Ben & Jerry’s in ice cream, Body Shop in HBC, Coors in beer, Gatorade in beverage, and Starbucks in coffee. The most fruitful question to inquire into is “What are big CPG companies notoriously bad at?” For instance, big companies tend to milk core brands rather than innovate, pursue mass markets rather than emerging niches, and utilize traditional media. Noticing these vulnerabilities, Jones Soda pursued a game changer strategy by focusing on Gen Y, engaging in internet marketing with an invitation for customers to submit photos to appear on soda bottles, and limiting their products availability to upscale retailers like Whole Foods, Barnes & Noble, and Starbucks.

To benefit from collaborations with small suppliers who may conceive many of the most creative products, retailers may need to waive slotting fees, and allocate off-shelf space for more creative merchandising without the accompanying massive promotional dollars.

MNB: You say at one point in your report that “one single assumption can shape a customer’s destiny, for better or for worse.” Can you give us an example of each – a correct assumption that worked well for a company, and an incorrect assumption that led to disaster? (And, out of curiosity, has there ever been a case when an incorrect assumption actually worked out well for a company, despite the efforts of management?)

Art Turock: Correct assumptions: In the mid-1980s, Proctor & Gamble reinvented their relationship with Wal-Mart by challenging their assumption, “Wal-Mart inefficiencies are none of our business as a supplier.” P&G went from doing $300 million in sales with Wal-Mart to nearly $8 billion 20 years later, and their model for dedicated account sales teams became the standard for Wal-Mart’s suppliers.

Study any of the alternative formats and their sustained success came from adopting assumptions counter to the prevailing conventional wisdom of supermarkets. For instance, Aldi, Trader Joe’s, and other limited assortment retailers countered the assumption--“Variety is a competitive advantage of supermarkets. No format has comparable depth of SKUs encompassing variety of brands, sizes, colors, and flavors.” But increasingly shoppers want the convenience of edited assortment over sheer quantity.

Incorrect assumptions: Manufacturers of Nescafe, Folgers, and Maxwell House assumed that “Coffee is a commodity product that will only sell for pennies per cup.” Given this assumption, the possibility for premium coffee and offering a coffee café experience was ruled out, leaving uncontested market space for Starbucks.

Until recently, most supermarkets and suppliers assumed “Most shoppers won’t pay higher prices for organic products.” As healthy eating becomes a higher priority and sales of organics surge, this assumption becomes invalid.

Many of my clients have found that for any given category, the conventional retailer thinking contains about 3-5 assumptions that limit sales and may be antiquated or erroneous.

Maybe the point is best captured in the words of Sam Walton, “It’s not that you know that will hurt you, it’s what you know that ain’t so.”

For more information about Turock’s special report, just email him at: art@turock.com.
KC's View:
By the way, if you happen to be attending the FMI Advertising/Marketing Conference, stop by on Tuesday morning and say hello…because we’ll be doing a presentation called “The Decision Zone: Six Issues You Must Confront In 2007.”