April 21, 1999 - Live from the Meat Marketing Conference: Guru Urges Industry to Target Brand Product, R&D

by Dan Murphy

ANAHEIM, Calif.--Significant changes in demographics, consumer shopping and eating habits, as well as sweeping changes in the way the food industry produces and distributes its products will create widespread changes in the next several years, a marketing consultant told attendees at the 1999 Meat Marketing Conference here this week.

"In the future, branding will be key," said Roger Blackwell, a marketing consultant and professor of marketing at the Ohio State University. "Without branding, there is no margin. Plus, with export being the big growth market, meat processors should remember that even as foreign countries gear up to shut out commodity imports, their citizens are lining up to buy American brands."

Blackwell drove home the point that there are really no more mass markets, only market segments. That means processors need to more finely target their marketing plans and their product development.

He also said that the rapid consolidation evident in the grocery industry during the past few years is the result of a declining birth rate and the tapering off of U.S. population growth. Immigration is currently at 1 million people per year, and Blackwell said that needs to increase to more than 4 million a year to create a growth mode--"and I don't think that's going to happen politically," he said.

That has led to an increasingly competitive situation in retailing. "We have too many stores chasing too few new customers," he said. "In the past decade, we've seen the elephants stomping out their smaller competitors. In the next century, we're going to see the elephants fighting other elephants."

For meat processors, one key to dealing with the coming population demographics is targeting the older population. The fastest-growing segments of the future are going to be older people--or the "young-again," as Blackwell called them--and they possess several attractive aspects meat processors can exploit.

"Older people are used to cooking, which is more than most young even know how to do," he said. "But older folks need meat products that are healthier, more nutritious and geared to their tastes and preferences."

Ethnic groups will also increase significantly, Blackwell said, with Asians leading the way with a 40 percent growth rate during the next 10 years. "And Asians have on average earn about $4,000 more income per family than their White counterparts," he added. "That is a population segment processors and retailers need to consider."

Blackwell spent a big part of talk explaining that as more households feature twin-income earners, time has become valued far differently. Now, there are two "markets" created by the ongoing time crunch: time-using markets and time-saving markets.

"Time-using markets include people who spend exorbitant amounts of money on their leisure pursuits because they have so little time to enjoy the," he said. "If I have only an hour a week to play tennis, and a $300 racket might make me a little better player, I'm going to buy it."

On the other hand, time saving efforts apply as well to busy professionals and two-income families.

"The hottest trend in upscale home design now is two dishwashers for the kitchen," Blackwell said. "You fill one with dirty dishes, then take the clean ones you need out of the other. You never have to put your dishes away again."

The bottom line for all marketers both today and down the road, Blackwell stressed, is starting with the consumer. "You can't develop products in the lab and then go out and see if consumers will buy them," he said. "That's why more than 80 percent of all new products fail. You have to start with understanding how consumers think, how they look for products to solve their problems, and develop products from there.

"Understand what problems consumers have, and you'll be able to develop products they need and that they will purchase."

From there, the biggest challenge for processors is educating consumers on why new products will benefit them. "You've got to tell people why your product is better--and why it is worth a premium price," he said. "Without that understanding, consumers can't possibly understand why your product is worth the price you charge."

Meeting notes ... Last year, Wegman's Foods supermarkets took the bold step of placing specific temperature requirements and cooking instructions of packages of fresh ground beef. At the time it was considered a gutsy move by many in the industry. Now, several months later, Noel Batemen, a Wegman's vice president and director of their food-safety program, says the results have been gratifying. "Our sales are up across all lines of ground beef," he told MM&T. "We've gotten a lot of positive feedback from our customers." Batemen added that he thinks by the end of 1999, "most if not all" supermarket chains will match Wegman's move with safe cooking labels of their own. ... Will the beef industry follow the pork and poultry industry toward more consolidation and vertical integration? One cattlemen says not yet. "From the feeder onward, the industry is becoming more concentrated," said Ken Stielow, a cow-calf operator and a Farmland Industries board member. "But from the feeder back, it's not. For a breeder, it's just too hard to manage more than a thousand cows at most. Plus, you're always going to have so-called gentlemen ranchers who run a dozen cattle on their property. That helps keep the production arena fragmented. And that's not going to change." ... Featured motivational speaker Harold Lloyd showed quick wits and drew a big laugh when he was needled by John Story, a long-time meat executive with retailer Fairway Foods. "So you don't think us 'meat guys' are all that smart?" Story challenged. "You're just slower," Lloyd retorted, "but it's all a matter of temperature. Once you thaw out one day, you'll find out that you're even smarter than you thought."

This article reprinted with permission from Meat Marketing & Technology.

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