Retail Edge

March 9, 2017

 

There has been a lot of consolidation over the past twenty years in business from both the retailer and manufacturer sides. 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). This also put a lot of independent retailers out of business and forced many manufacturers to “innovate or die”. 

Fast forward to 2017… while Wal-Mart is still a force to be reckoned with, many people are now looking at Amazon the same way we looked at Wal-Mart in the 90s. All this proves is that “change is constant”. 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 am 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 have been losing to Wal-Mart for the last 10 years. 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.

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 beer category has done a great job with product innovation, especially in the craft segment. Besides the actual product, the promotions, merchandising/POS and advertising that the breweries provide help create excitement and should drive incremental purchase which is what we all want. Their marketing departments are staffed with people that can also customize their 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 in terms of promotion, centers around social media, not traditional media like television, radio and billboards.  If you 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. 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!

Become familiar with the way 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. Then, adjust your marketing and merchandising strategy based on this information.

Whether you are on-premise or off-premise, 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 55th 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.

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