Be sure to climb the tree and holler - The Packer

Be sure to climb the tree and holler

09/07/2012 08:45:00 AM
Armand Lobato

Armand Lobato, The Produce AisleArmand Lobato, The Produce AisleThis debate always flared up in our fall marketing meetings: Do we really need to offer deep discounts on key items?

With the Thanksgiving holiday as an example, the arguments sparked fiery debates. Why sell staple items like turkey, celery, cranberries, potatoes and sweet potatoes at or below cost — items that customers are going to buy anyway?

To answer this, not only from a retail point of view but also from a supplier perspective as well, sometimes we have to go back to Square One.

One of those marketing textbooks (“Basic Marketing,” published in 2005) defines promotion as: “Communicating information between seller and potential buyer or others in the channel to influence attitudes and behavior.”

Attitudes, meaning the perception of a produce department, and behavior, as in customers filling up their shopping carts.

It also is useful, according to the same text, to reduce all the variables in the marketing mix to four basic ones: product, place, price, and promotion.

Among the four P’s of the debate, promotion was the central theme. After all, while we can figure what promotions cost, it is difficult to measure their effectiveness. Would you really retain your customer base if Thanksgiving staples weren’t advertised and discounted?

One answer comes with the glaring spotlight of publicity. If your city is like most, a recurring story run by the media broadcasts lists of how much the annual feast will cost consumers — typically breaking it down comparing individual chain grocers. The argument would then sway supporting full-tilt promotion. After all, what chain would risk the negative publicity of being perceived as the most expensive to shop?

Similarly, when suppliers offer promotions the same questions are levied: “We’re discounting the cost of goods — and providing marketing funds? Doesn’t make sense.”

It can. And it does, because a promotion may prime the pump for subsequent orders and whet the appetite for more. Once chains increase item facings in a produce department, these tend to remain in place for some time. Likewise (and speaking from a weekly retailer-shopper point of view), once customers get into the habit of buying certain items (that originated with an advertised ad or promotion) the odds that these shoppers will continue to buy (at regular price) increases substantially.

This is true whether the purchase is a single 5-pound bag of gala apples or a full trailer to a chain.


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