Successful Produce Promotion: Consumer and Retailer Trends

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Successful Produce Promotion Consumer and
Retailer Trends
Wen-fei Uva Senior Extension Associate Department
of Applied Economics and Management Modified by
Georgia Agriculture Education Curriculum
Office June, 2002
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When the Prices are High, Who Cares About
Marketing?
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Marketing Program
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Your Marketing 4 Ps
Products
Promotion
Target Market
Price
Place
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Promotion is an attempt to influence.

• 5 Components of a Promotion Program
• Advertising
• Sales promotion
• Public relations
• Sales force
• Direct marketing

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Marketing Program
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Advertising

• Most effective when trying to reach large amount
  of people to build awareness
• Most effective advertising is narrowly targeted
• Does not increase sales quickly - Changes minds
  but does not change behavior.
• Select a media
• will reach the target audience
• is appropriate for the message conveyed

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Sales Promotion

• Coupons, discounts, in-store displays, trade
  shows, samples, in-store demonstrations,
  contests, and sponsoring retailers.
• Motivate target market to change behaviors
• Overused? Weaken brand loyalty
• To supplement efforts in the advertising and
  personal selling.
• Sales promotion often loses money - except a
  superior product paired with low awareness

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Public Relations

• Publicity (or public relation) uses non-paid
  communication presented by the media.
• Publications, Events, News, Community
  involvement, Identity media, Lobbying activity,
  Social responsibility
• A broad effort to influence publics attitudes
  toward the firm or its products.
• Create a positive image

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Sales Force

• Most expenses (only 30 of time is spending on
  selling)
• One on one selling can effectively find what
  customer really want
• Hire good sales people, help them do a better job
• Average retailer spent 65 on advertising for
  every dollar spent on training employees

Direct Marketing

• Retail stores, direct selling, direct mailing,
  internet
• Data -base marketing
• Never forget customers, never let customers
  forget you

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The Promotion World According to Retail
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Sales of Top 8 Chains as a of Total Grocery
Sales
By 2004 - Top 8 food chains will account for 65
of total U.S. retail food sales
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Shares of fresh food sales will continue to
increase in respect to total store sales
Produce Sales
percent of total store sales
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• Retailers dominate the retailer-supplier
  interface
• Tough competition among suppliers
• ECR and category management come to age

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Promotion Most Effective in Moving Products
1. Shipper Displays 2. Targeted Direct
Mailing 3. Frequent Shopper Programs 4. In-Store
Demos and Sampling
Promotion Most Effective in Increasing Overall
Store Sales
1. Targeted Direct Mailing 2. Frequent Shopper
Programs 3. In-Store Demos and Sampling 4. Retail
Generated Shelf Talkers
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Top Considerations When Evaluating a New Product
Introduction
1. Potential to increase overall store
sales 2. Potential to increase overall store
profit 3. Potential to increase product
movement 4. Create a price image for the
store 5. Potential to promote customer loyalty
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Over 80 of new products fail
Top Promotional Programs Used for New Product
Introduction
1. In-store demonstrations and sampling 2. Slottin
g allowances 3. Co-op television
advertising 4. Co-op radio advertising 5. Paperles
s couponing
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Marketing Program
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The Promotion World According to Consumers
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American Food Consumption Trends

• American spent 789 billion in 1999 and another
  96 billion for alcoholic beverages
• 47.5 of the U.S. food dollars spent on
  away-from-home meals and snacks in 1999, up from
  34 in 1970 and 26 in 1960
• Per capita expenditure on food 2,891
• at-home - 1,517
• away-from-home - 1,374
• Only 10.4 of disposable personal income was
  spent on food in 1999 (25 in 1960)

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American Food Consumption Trends

• More ready-to-eat food is offered by grocery
  stores - 14 billion in 1997
• More take-out food sales - 85 billion (12 of
  total food sales)
• Todays consumer motivators
• Convenience
• Wellness
• Safety
• Gratification

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Trends in Fruit and Vegetable Consumption

• Changing Food Preferences
• More attention to dietary and health
• Exposed to more varieties of cuisine
• Developed an upgraded palate
• Looking for new ways to cook traditional
  favorites
• New Product Introduction
• Produce departments carry over 400 produce items
  today, up from 250 in 1980s and 150 in the
  mid-1970s
• Fresh-cuts, packaged salads, locally grown items,
  exotic produce, and natural foods

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Trends in Fruit and Vegetable Consumption

• Convenient Items Continue to Grow
• Packaged salads and precuts increased from 6.5
  of produce department sales in 1994 to 11.4 in
  1998
• Changing Consumption Mix
• Traditional varieties have lost share to
  specialty varieties.
• Exotic produce has gained favor
• Consumption of fresh fruits and vegetables
  increased more than processed products.
  (especially fruits)

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Per Capita Consumption of Fruits and Vegetables
Total per capita use of the 129 commercially
produced fruits and vegetables rose 24 from 573
pounds in 1970 to 742 pounds in 1999
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To Meet the Food Guide Pyramid
1995 Food Supply Servings Compared with Food
Guide Pyramid Recommendations
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• From 1970 to 1997, each American consumed
• 81 lbs more of vegetables
• 57 lbs more of fruits

• 65 lbs more of grain products
• 32 lbs more of caloric sweeteners
• 13 lbs more of total read meat, poultry and fish
  (boneless, trimmed equivalent)
• 17 lbs more of cheese
• 13 lbs more of added fat and oil
• 3 gallons more of beer

• 70 fewer eggs
• 10 gallons less coffee
• 7 gallons less of milk

Americans Are Consuming More!
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Socie - demographic Trends Favor Produce

• Aging Population
• More active, have and looking for foods to help
  prevent disease and improve quality of life

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Socie - demographic Trends Favor Produce

• More Two Income and Single-Parent Households
• More families dont have time, but many have the
  extra income to pay for convenience, quality, and
  peace of mind

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Socie - demographic Trends Favor Produce

• Greater Ethnic Diversity
• In the first half of the 1990s, the non-Hispanic
  white population grew 3, and the minority
  population grew 15 in the U.S..
• The ethnic groups tend to use large quantities
  and many varieties of fresh produce in their
  cooking

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New York Population
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Max Brunk (1983) Marketing is Not Just
Selling! To Market is to Create Value To Offer a
Product or Service Which Someone is Willing to
Pay.
Differentiation and Diversification Give your
customer a REASON to buy your products
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Cornell Horticultural Business Management and
Marketing Program