Thursday, June 3, 2010

Pricing, Packaging and Promotions ... What else is there?

This article was contributed by Jim Thaller, managing director of Talier Trading Group

SupermarketA buyer of a major supermarket chain walks into a room, and sees 10,000 hopeful manufacturers looking to sell them their products.  The first and only thought he thinks of when he sees each of those products is "where is that going to go"? 

This is a true story that happens hundreds of times a day, and one that African specialty food manufacturers should listen to quite carefully.  My name is Jim Thaller, and I'm the managing director of Talier Trading Group.  Every day, we handle the above scenario, and as the creator of the African specialty foods category, I see manufacturers and government organizations ignore this one time-honored question.

Pricing, packaging, promotions ... that’s all that matters!  Any buyer in any store, chain or distributor will ask the same questions.  It's because of this challenge that we created the African specialty foods category ... buyers simply could not find a home for 99.99% of all the African products being created.  Well, you may be asking yourself, why not just put it in category (i.e. tea in the tea section, etc)?  Good point, except now you need to find a way to pay the slotting fees charged by every major retailer in the United States ... some as high as $40,000 for one item, with no guarantee that it will ever sell.  Money poorly spent, if you ask me.

Since its inception in 2004, the African specialty foods category has grown by leaps and bounds and includes Nando’s, Something South African, Intaba Teas, Kula African Spices, Peppadew and Ceres Fruit Juices.  The secret to the success is never, ever deviating from the rules (pricing, packaging and promotions).  In that time, hundreds of products have come and gone, but the category remains strong.  Those that have been successful have done their homework.  They make attractive products which are competitively priced and are supported by a myriad of promotions, coupon programs, ad-spend dollars and more.  The supermarket business is not simply making something and then hoping it sells.  It requires thought, and lots of it.  The good news is that all this information is available on-line.  You can research stores, competitive products and packaging concepts.  You can look at shippers, demographic information, etc.  It's all there ... I've seen it.

Trade shows don't sell product ... programs do.  If you are not part of an African specialty foods program, or an organic tea program or something similar, then you are not answering the buyer's first question ... "where is that going to go"?  Which stores?  What demographics?  What section?  Which shelf?  Lots of questions that need answering, or you are just another ten seconds of wasted time.  Harsh, but very, very true ... just ask any company that's been dragging themselves (or have been dragged by someone else) year after year with no sales.  That's not an accident, I assure you.

Jim ThallerSo, for this first blog entry, coming to you live from the front lines of African specialty foods, I only want to leave you with those three immortal words ... packaging, pricing and promotions.

What else is there?

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Posted by saibl at 10:37 AM
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16 comments:

  1. SO TRUE! AT LAST SOMEONE SAYS IT LIKE IT IS!
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  2. Go get 'em Jim! :)
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  3. Jim- Once you have a spot inside an African Sp. Foods category, how do you go from a curiosity to a mainstream product?

    On a similar note, which type of stores are African products most successful in...small retailers, chain grocery stores, high end Sp. food shops, online warehouses, etc...?
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  4. Thanks for all the nice comments. To answer the question above, an "African specialty food category" is mearly a proving ground for products. Without a sales history, your products are just another aspiring brand that may, or may not, work. Buyers don't take chances like that, hence their need to be financially compensated by things like "slotting". Once in the African sections, these African products establish a track record, and then make the case to move the products into category. Usually, reviews are once a year or so.

    High end stores do best with African foods, in general. Specialty stores, A-level chains, etc. Strong cross over to the British category. Metropolitan areas as well, though we have strong sales in places like Kentucky as well (go figure). Feel free to contact me with any other questions.
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  5. Love your concept! This is a solid way to make a real impact for Africa. How do you handle promoting the concept though?
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  6. Francois te Water NaudeJun 8, 2010 01:54 PM
    It needs to be a pull rather than a push and that's what the African producrs get wrong. Start at the store end and not at the importer end. What Jim says all makes sense, the question is: Are we listening?
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  7. As an importer of African products into the EU, i can answer that last question: no! they are most certainly not listening. too many African producers think that the importers and distributors will do all the work. IT'S YOUR BRAND, people...if you don't support it, who will? answer: NO ONE! Let go of the donor-mentality and act like a business person. the rest of us have to and so do you
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  8. That's an easy question..."no...we are not"! I for one am tired of listening to know-nothing donor agencies, government officials who are only interested in their own mindless objectives, and so called "experts" who couldn't finalize a business deal with both hands. This is business, and if you want to succeed in business, you follow business leaders. I've followed Jim, and happily, have never looked back. So, to all those running after USAID funding and DTI directives, ask yourself this...what has it amounted to? Nothing, I'm sure!
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  9. It seems as though the frustration between producers and importers/distributors stems from a misunderstanding over who is responsible for the various factors on which success hinges-- branding, advertising, product development, pricing, etc...

    Can someone clarify these responsibilities? Once a product has found an importer, or found their way into the 'African set', what then is the producer's role?

    Producers: What do you expect from importers and distributors?
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  10. The producer is the owner of the brand, and therefore, is ultimately responsible for the overall marketability and direction of the brand development. An importer/distributor has no obligation other than to hold stock and deliver product. There really shouldn't be any frustration. I agree with the comment above about businesses needing to behave more like businesses and not waiting for someone else to carry the ball. Very common problem. If a product is not selling, it's the producer's job to fix it...period. The relationship with an importer should be a partnership, but the producer is the one most effected. SA manufacturers need to understand that. Too many people out there looking for someone to do all the work for them, and then complain that it's not working well enough. Coming to the Fancy Food Show on someone else's dime, with an unmarketable product, does not constitute focusing on your brand! :)
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  11. Jim-Thank you for your comments thus far.

    In places that the African set has been successful, why has it been successful, and it places where it has not, what do you think were the obstacles?

    With those successes and failures in mind, what do you think industry stakeholders (producers, USAID, SAIBL, etc...) could do to make African specialty food products, and thus the African set, more marketable?
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  12. Advertising has taken its toll especially now that we live in a small globalised village with mass media playing an important role.
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  13. Companies that are successful treat this as a business, not a charity event. They've done their homework, and put competitive programs together. We certainly do not need another company with overpriced products who depend on USAID or other donors for their profit margin. This is the major point African manufacturers need to understand...THIS IS A BUSINESS!

    Donor agencies and African governments need to focus on development for change...using the industry to implement social change at the ground level. They need to support PRODUCTION, PRODUCTION, PRODUCTION. These are companies who struggle going from concept to commercial production because of lack of financial and credit options. Put an end to ridiculous grant programs that aren't tied to anything tangible, and support companies who go through an incubation with initial production costs! Stop spending millions of dollars on useless programs run by people who don't know the industry, and streamline the process by using the experts in the industry to streamline the process directly to distribution. Companies that cannot meet those expectations will be dropped.

    The program is too big and has gone too far for anyone to be "carrying" anyone else!

    Thanks.
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  14. The problem is that most of the SA specialty food companies don't have the kind of budget that is required (a) for the listing fees, and (b) the promotion, on an on-going basis. Could govt and organisations like SAIBL consider choosing a company or two, on an annual basis, to assist them in this way? ie funds for marketing and promotion for a year, to really test the product. There could be dozens of SA products that would do very well indeed in the USA, if only given the real chance.
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  15. Great question!

    In my opinion, if a company cannot afford to promote their own products (10-20% quarterly, at least), then they should not be looking at an export market. If they cannot afford to send samples, initial consignment shipments, and "Net 30+" payment terms, then they should not be looking at an export market.

    For initial production, I agree 100% that there should be a government/donor program. Once a company has undergone an incubation program, there should be some help to go into initial production. Stripping away the profit margin, that amount has never been more than $20,000. If the products and business model are already in place, that aid would be tremendous in actually getting a product to market. I've been pounding this idea out there for years...someone will listen soon.

    There's enough government/donor money floating around out there to support activities that actually generate business. We certainly do not need another workshop, trade show pavilion or lecture series!

    Thanks again for your question.
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  16. In an African context, i dont think we should dismiss donor funding. There are great ideas and products, from companies with weak financial muscles.
    We should see donor funding and programs like SAIBL as catalysts .... to make things happen.
    CFM
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