1

Sales and Marketing in a Down Market: How to Sell Value Not Price

Recession overviewUnderstanding valueCase studiesGuerilla Marketing toolseMarketing toolsFood trends

2

Sales and Marketing in a Down Market: How to sell value not price

Premium and luxury brand marketers are now facing their biggest challenge in decades:

How to resist degrading their brand by selling price in a sustained down market

3

This program was designed for premium, high value marketers

• Passionate and firmly committed to their brand

• Committed to maintaining their special form of brand integrity

• Possibly benefit from the current economic “situation”

• Sell value as a recession strategy

Wolfgang Puck

4

About Presenters

• David Schwartz

• Katie Schwartz

• SOS, a premium brand marketing company

• Since 1984 - Branding, marketing, consulting ande-marketing premium brands

• Clients: Godiva, Hain/Celestial, Mercedes Benz, Caffe D’AmoreWhole Foods Market

5

SOS at Fancy Food Show

6

Recession & Price cutting

•Market dipped September 2008

•Current recession started December 2007

•Credit marketsdried up

7

The recession

• 11 economic recessionssince 1945

• Defined by 2 quarters of negative Gross Domestic Product

• Average duration of a recession has been 10 months.

• Predicted to last untilearly 20010

8

Recession in perspective

9

Price cutting inshrinking economy

• Shrinking markets

• Pressure on the supply chain to cut prices

• Destructive reaction

• No reason to cut price if value is demonstrated

• Don’t let your pricing be a victim of a hatchet job

10

Price cutting strategies

• Revenue loss comes out of margin

• Not sustainable for a prolonged period of time

• Cut price: Short term sales promotions only

• Do not lower price indefinitely, send wrong signal

11

Understanding your market: Where to spend

Recession is a contraction of your market

Spend majority marketing dollars with active customers:

• 60% Active customers

• 30% Inactive customers

• 10% Prospective customers

12

Maintain higher margins

• Be in high margin/medium to low volume business

• Not in a low margin/high volume business

• Don’t try to compete against discounters

• Sell value, not price

13

Differentiation + Reinvention

• Customers buy price or value

• Undifferentiated businesses fail

• You business must be differentiated - Positioning

• It is OK to reinvent yourself

• Reinvented brand: IBM1889 - Business machines1955 – Punch card computers1981 – PC’s2005 – Software, consulting

14

Cost cutting

• Sharpen your pencil

• Create and enforce efficiencies

• Best ingredients/materials at lowest prices

• Ask your existing vendors to help find ways to save you money

• We should all be doing this, all the time

• Insist on measurable marketing

• Marketing ROI

15

Understanding Value

16

Value

• “Value” is important and misunderstood

• Definition: “The monetary worth of something”

• Everything has a value

• Value is relative to values of customers

• Know your customers

• Know what your customers value

Rolls Royce – Aspirational value

17

Core value is “Brand value”

Robert Mondavi

18

• Culture

• Identity

• Business Plan

• Benefit

• Promise

• Quality

• Taste

• Performance

• Aspiration

Core value is “Brand value”

19

Value is “Presentation”

20

Value is “Presentation”

• 85% of value

• Packaging:“Trade Dress”

• Point of sale

• Location, lighting, cleanliness, orderliness

• Customer service

• Sales and customer service on-going training

21

Value is “Benefit”

22

Value is “Benefit”• Benefit beyond quality,

taste, prestige

• Implied health

• Energy

• Functional

• Rationalizations:OrganicFair tradeNaturalNon-GMOVeganNo-Trans fatsGluten free

23

Case Study: “Presentation”

24

Selling Value: Case studyGodiva – “Presentation”

• Since 1928, Belgium

• Founded by Master Chocolatier Joseph Draps

• Handcrafted packaging

• Multi-channel sales strategy

• Positioning: Leader in premium confectionary category

• “Taste”: Bought as “gift”

• POS dominance

25

Case Study: “Exclusivity”

26

Selling Value: Case studyIlly Coffee – “Exclusivity”

• Since 1933, Trieste, Italy

• Founded by espresso machine inventor, Francesco Illy

• Unique espresso blend & innovative packaging

• Positioning: Super premium espresso

• Only sells through premium channels – “Aspirational”

• Multi-channel sales strategy

27

Case Study: “Service”

28

Selling Value: Case studyZabar’s – “Service”

• Since 1934, New York

• “Best quality at fair price”

• Retail, mail order – 500,000 customers

• Family members runday-to-day business

• Excellent customer service

• Positioning: “Zabar’s is New York, New York is Zabar’s”

Saul Zabar

29

Break:15

Next:Value Marketing ToolsGuerilla MarketingeMarketingTraditional Marketing

30

Value marketing tools:High impact – Low cost

• E-mail marketing

• Web 2.0 Social networking

• Guerilla marketing

• Web optimization/SEO

• PPC – Google AdWords

• Traditional media

31

Guerilla Marketing• Viral

• Creative

• Humor

• Loyalty

• Fanaticism

• Continuity

• Word of mouth

Red Bull Flugtag

32

Guerilla Marketing: SOS Case History

• Viral marketing street “farm animals” event

• Kickoff retail redevelopment

• Gourmet food oriented

• Raised awareness, investment capital, city support

33

Web site optimization/SEO•KeywordsIn tagIn URLDensity in doc textIn anchor textIn headings

•LinksAnchor text in inboundOrigin of inboundFrom similar sitesFrom .edu & .govNumber of backlinks

•Metatags

•ContentUniqueFreq. content change

34

Pay Per Click/PPCGoogle AdWords

•Keyword auction

•Scalable pricing

•You pick demographics

•Competitive

•Less effective than “organic”

•Other Google programs

•Measurable analytics

•Must integrate with other programs

35

E-Mail marketing-Pro Active

• E-mail promotions

• Strategy/Objectives

• Landing page

• Sticky site

• Opt-in lists

• Affinity lists

• Newsletters

• MeasurableAnalytics

36

Web 2.0•Cross platform Social networking

•Customer in control Create community

•Drive traffic to your site

•Billions involved

•Special interests

•Blogs

•Facebook

•Twitter

•YouTube

37

Social Networking

•Future of marketing

•Customer driven

•Marketer “influence”

•Marketer becomes part of social networking fabric – or not

•Create social network brand

•Demographics: 12 – 45 GenX & GenY

•Peet’s Coffee shown

38

Paid links: Use sampling to build customer database

#1Gmail link

39

Paid links: Use sampling to build customer database

#2 Landing Page

40

Paid links: Use sampling to build customer database

#3Opt-in page

41

Traditional value media

• Sales promotionsShort term “2 for 1”CouponingCo-op advertisingTPR’sRebates

• Multiple sales channels

• Alternative sales channels

• Trade Magazines

• Trade shows

• Broadcast

42

Value selling• Consultative selling

strategy

• Guerilla selling tactics

• Pioneering

• Dedicated sales force

• Reps & Brokers

• Distributors as sales reps

• Sales management

Shakti with Whole Foods

43

Trends

Giada De Laurentiis

44

Culture: Comfort, Rewards, Frugal, Benefits, At-Home

• Home Gourmet – Giada “Every Day Italian”

• Traditional comfort foods – Mac & Cheese, Chocolate Chip Cookies, Meatloaf with Artisan/Exotic ingredients

• Buy from Wal-Mart andWhole Foods Market

• Lunch out, not dinner

• Pre-prepared gourmet food

• Variety, healthy, conscious

45

Food: Variety, Simplicity, Frugal, Value, Benefit

• Frozen ethnic – Indian, Asian

• Benefit F&B – Teas, waters, foods

• Artisan – Anything

• Single Origin - Anything

• Chocolate – Exotic, Stone ground

• Noodles – Ramen, Udon, Soba

• Smoked foods – BBQ craze

• Regional – Produce, coffee roasters

• Blog rated, not critic rated

46

“We cannot direct the wind, but we canadjust our sails”Bertha Calloway

“We just stayed after it”Sam Walton

“Sell value”SOS

47

Selected ResourcesResearch

• http://reports.mintel.com

• http://naturalspecialtyfoodsmemo.blogspot.com

• www.webconfs.com SEO Tools & Webmaster Utilities

• www.specialtyfood.com

Web sites/Books/Magazines

• Guerilla Marketing online/Print

• Web Marketing for Dummies/Print

• Positioning-The Battle For Your Mind/Print

• Internet Retailer online/Print

• Sam Walton – My Story/Print

48

Q&A: Top 10 FAQ 20081. We need more sales

2. We need better quality accounts

3. We need alternative markets

4. We need to sell outside our niche (ethnic, Kosher, etc.)

5. We need to expand to foreign markets

6. We need to sell direct to stores

7. We need to sell to end user consumers

8. We need to look more premium

9. We need to get (more) distributors

10.We get lots of web traffic, little sales