RECIPE TO RETAIL: Part 37…
Food businesses are plagued with challenges on a daily basis. The big ones often revolve around sales, so it’s a natural response for brands to throw marketing funds at the situation. But, without getting to the bottom of the problem by understanding the root cause, they risk flushing money and resources down the drain.
To illustrate the point; a brand owner contacted me to develop a marketing campaign, remarking “Sales are down. We need to do more marketing.” In their mind, the problem was identified and the solution was clear. But I wasn’t convinced it was the best bang for their buck.
To discover the underlying issue, I asked questions, for which they had few answers. A cursory check revealed that the problem was in fact misidentified and two clues to the puzzle emerged. Firstly, products were not in full distribution, which is one of many probable causes for poor sales. Secondly, the broker was not engaged, didn’t support the brand and had decided to drop the line. But why?
Had the brand owner gone ahead with their plan to launch a marketing campaign, it would have delivered zero sales lift and zero ROI. In addition, brand loyalists and prospective customers looking for product that was nowhere to be found, would have been disappointed.
Clearly, it was necessary to dig deeper to uncover the root cause on the path to developing an effective solution.
Following a methodical, three-step process makes it easier to investigate the nature of the problem.
1. Define the problem
Identifying the problem correctly is key. It is seldom as straight forward as it seems and requires an objective viewpoint.
Consult with all areas of the business – finance, sales, marketing, operations, QA, procurement, etc. – as each silo has a unique perspective and may see the problem differently.
Also engaging external partners – distributors, brokers, customers, and even consumers – can yield unexpected results, turning the viewpoint on its head. And an unbiased third party is a valuable asset to challenge your thinking.
To probe the issue, use the “5 Ws”: who, what, when, where, why, how, and how many.
Look at what is being measured and review the results against targets. If information is lacking, additional metrics may be required.
A SWOT analysis, which examines internal and external factors impacting a business, can also prove useful to identify problem areas.
2. Analyze the problem
To further root out why the problem exists, apply the 7 Ps of marketing: product, place, price, promotion, people, process, and physical evidence.
Product
Is there an issue with the product itself: quality, flavour profile, sensory experience, obsolete fad, ingredients, attributes, benefits, packaging?
Does it satisfy an unmet need and is there a meaningful point of difference versus the competition?
Place
Is the product sold through relevant channels, instore and online, where the target customer shops?
Is product visibility obscured, highlighting planogram or merchandising issues that must be addressed?
Price
The pricing strategy, with its many layers, may be flawed. Examine the COGS and item profitability, as well as distributor and retailer margins. Ensure the retail price is aligned with the value proposition and what the target customer is willing to pay.
Promotion
Marketing and advertising may be misdirected or insufficient to raise awareness and motivate purchase. Perhaps the market positioning is off the mark or different promotional tactics are needed to drive trial and repurchase.
People
Does the company have a positive culture? Do team members, including external partners, possess the required skills and commitment?
Process
This broad area includes internal processes in all areas of the business. Also explore potential issues with external processes at distributors and retailers. For example, a data integrity issue in the customer’s order system can result in missed orders and out-of-stocks.
Physical evidence
Is there solid proof of the quality of the experience that is offered, such as certifications and endorsements from credible sources?
3. Identify root cause
The final step is narrowing down the findings to validate the root cause(s). Problems and root causes are typically multi-faceted, adding complexity to the situation.
Oftentimes a broken or non-existent process is at the heart of it. The “5 whys” methodology, developed by Toyota’s founder in the 1930’s, is another practical tool to delve into the inner workings of processes, revealing the root cause of issues.
With the problem correctly defined, and the root cause(s) understood, it’s time to set objectives and brainstorm solutions.
Birgit Blain’s packaged foods experience includes 17 years with Loblaw Brands and President’s Choice®.
© Birgit Blain 2024
This article appeared in Food in Canada magazine.