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Expect year-end profits to set records for many companies that 'sizzle' in '89.

Expect Year-End Profits To Set Records For Many Companies That `Sizzle' In '89

"The Second Half Won't Sizzle, But it Won't Fizzle Either!" The headline caught my eye over an article in Business Week offering a point of view on the USA economy in 1989. The word "sizzle" always reminds me that as a young salesman I was taught to "sell the sizzle, not the sausage." Not that I was in the business of selling sausages, anyway!

But, seriously, the importance of the aura that could be built up around the product was often more telling than the public opinion of the product itself. This idea is very obvious in the mass production, mass marketing era of today. That is how some of the most successful brands have been developed as fairly utilitarian products were placed in the hands of clever copy writers and visualisers and advertised on network TV. The commercials might be boring to many, but they saturated the airwaves and repeated the product's name over and over again. Supermarkets stocked their shelves and consumers came and bought...until some of the old established and very successful brands began to look a little jaded and failed to "please everyone all the time."


In the UK, in particular, large retailers with their lower-priced "me too" versions began to cut into the high volumes previously enjoyed by some manufacturers. And more recently consumerist lobby groups -- not to mention food writers -- have turned their attention to encouraging the purchase of "minority," or alternative, items. So as markets fracture, many manufacturers are turning their attention to what is being described as "micro-marketing."

I understand, also from Business Week, that in the USA the market fracture is being caused because real innovations are now rare and fewer women are sitting at home watching the soaps and the TV commercials. They're in college or working as lawyers, cab drivers and lathe operators! Many customers are single, many are old, many don't speak much English, and some can't even read. Teenagers, still at school, often do the family shopping. Supermarkets have changed too and retailers, both in the USA and the UK, are no longer so willing to give manufacturers miles of shelf space to show off their soap or canned beans. Instead, they are more interested in selling high-margin items such as flowers or store-baked goods. They have to be "bribed" to squeeze a new product in somewhere no matter that a very powerful, and very expensive, advertising campaign is promised. I see that the senior vice president for marketing services at Kraft (USA) is quoted as saying: "The mythological homogeneous America is gone. We are a mosaic of minorities. All companies will have to do more stratified, or tailored, niche marketing."

It appears that the huge consumer products company that practically invented mass marketing -- namely, Procter & Gamble -- is now feeling its way to a whole new type of marketing.

Of course, micro-marketing is very much more complex than mass marketing ever was. More research is required to find out who the customers really are -- or aren't. Products are now tailored more to individual tastes. Maybe they're in the form of several different versions of the original basic item -- with and without this and that! Advertising judged to attract the special audiences is more apt to be seen on cable TV instead of the networks, in specialist magazines, and via event publicity and sponsoring. Ads over supermarket loudspeakers and on shopping carts are picking up. Manufacturers are even aiming coupons at competitor's customers, instead of "knocking copy" on TV!

Manufacturers must also learn to sharpen up their micro-marketing through the retail trade, with the avoidance of ever more confusion for customers. The lasting impression of some supermarkets -- on both sides of the Atlantic -- is that you need a Ph.D. to choose anything. The variety of brands, sub-brands and alternative versions is so baffling. At least in the USA there is generally plenty of space available in most large stores, even if it is so often misused. In the UK space is limited and expensive. And retailing is concentrated and national so that British retailers compete not only on price but, increasingly, on non-price factors such as "jokey" advertising, design, and in being first to introduce new fads.

Manufacturers are also joining in the "greenest retailer" race -- and not always with very valid claims. They simply accentuate the positive and overlook the negative. I read recently that a new shopping guide has been launched in the UK which -- if the American experience is anything to go by -- could change the way Britons shop. The guide will rate companies according to 10 social criteria. A spokesman for New Consumer, the group which compiled the UK guide with a grant from the Rowntree Trust, is quoted in Marketing Week as saying that "155 companies will be evaluated according to their perceived social advancement" -- whatever that may mean. This sounds like another "guide of confusion" for the shopper!

I also read that "affluence no longer means upmarket," and that a report from advertising agents Leagas Delaney indicates that companies are wasting money, and losing sales, by hanging on to prejudices about class and wealth. They suggest that about 3% of the UK's working population earn more than [pounds]30,000, and that more than half of these fall into the lower C1/C2 social groups. More than a third of these "high earners" are said to live on "council estates." Life-stage matters more than life-style.

So, what lessons are there in all this for frozen food suppliers? Well, first and foremost, to remember that they are in the food business -- and right in the deep end of that business! They also have the added disadvantage of a certain amount of inflexibility both in distribution and in store where, certainly in most countries outside the USA, the zero space is very limited and therefore the confusion for the consumer can be even greater due to a mish-mash of product varieties as each frozen food supplier attempts to achieve exclusivity with almost identical products. And the new entries, both in products and suppliers, continue to proliferate as volume increases year after year.

In 1989 the "sizzling" weather in the more affluent southern half of the country has meant record sales for ice cream, a market in which every year one can expect to see the introduction of two or three new "winners" amongst many, many near-misses. And provided the second half of 1989 does not "fizzle," the year-end profits of many companies will also set records, especially if they have the good fortune to have the kind of product listing that goes with record high hours of sunshine.

Of course, the sunshine was not ideal for the frozen vegetable harvest and that means that pea prices will remain at a sensible level for another year! All in all, this reporter detects more sizzle than fizzle in the UK market despite all the changing consumer habits. Such will clearly be the case if shoppers are put off by chilled or refrigerated items due to the succession of food scares. Frozens are bound to benefit from the safer "aura" around them.
COPYRIGHT 1989 E.W. Williams Publications, Inc.
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Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Author:Webb, Kenneth J.B.
Publication:Quick Frozen Foods International
Date:Oct 1, 1989
Previous Article:Brokers and dealers move up a notch in the global frozen commodity game.
Next Article:Novel frozen candy bar spawns new segment as British ice cream competition heats up.

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