Sales Laundry

Posts Tagged ‘cereal’

I found myself in Walmart today finishing up some pre-Easter shopping and as I was waiting behind a lady with 27 items in the 20 item checkout lane I started thinking.

 Walmart is still making money and growing when the majority of their competitors’ sales are down by double digit percentages.

 What immediately comes to mind is the fact that they are the perceived “low price leader.”  That can’t be right though, because I have long accepted as fact that a strategy of being the “low price leader” is not a strategy that can sustain a business in the long run because low price strategies only hold up until the next guy shows up with a lower price.

 She still has 15 items in her basket.  How did she cram so much stuff in that little carry around basket?  No barcode on the Easter apple cover looking thing… 

 Walmart uses a host of strategies to be sure, but there are at least two that came to mind that are worth copying, and neither involve cutting your prices and praying for volume sales.

 1.  Walmart puts a relentless focus on finding any efficiency they can to get a product from the manufacturer to their distribution centers and ultimately their stores.  (They forced the issue with Electronic Data Interchange, or EDI, now an industry standard, and have recently nudged cereal companies to make smaller boxes that hold the same volume to reduce shelf space and paper waste among other things.)  As a result, it costs Walmart less to get a product on their shelves than it does their competitors, so an item for sale for $9.95 at Walmart and X Brand stores will likely have a lower true cost at Walmart.

Where competitors cut their price and profit to get in line with Walmart prices, Walmart cuts their cost, sells it for less and still makes more money doing it.

 
2.  When Walmart began, Sam Walton had a radical idea of putting stores in towns that were deemed too small for other major retailers, effectively going where the national competition was not willing to go.  This strategy continues to pay off even today as major retailers fight it out in every major metropolitan market, including Walmart, but Walmart has hundreds of stores in markets where there is no real competition and where future major competition is unlikely. 

 She has 7 items left in the basket, looks like egg dye, bubbles…

 Where can your costs be cut or efficiencies found between the idea stage and final sales/delivery? 

 Can you buy from your manufacturer/distributor differently to garner some savings?  Can you consolidate to a single distributor or is it time to see how hungry your distributor’s competitors are?  Maybe join a larger buying group?  Partner up to buy bigger shipments to get to the next break in tier pricing?

How many hands have to touch the products you sell or the orders for those products?  Is there an opportunity to negotiate, automate or eliminate some duplication?

 Look at your Cost of Sales.  Without damaging customer service, what is the most efficient, least time consuming way to sell each of your products?  Now, how are you selling each of your products?  Any appreciable room for improvement?  What admin tasks could you off load from your sales team to get them more customer face time?  Click here if you would like to go a little bit deeper discussing Cost of Sales.

 2 items left.  Why do they always put the slow Checkers on the Express lane?

 How can you follow Walmart’s example of having a presence where there is no real competition? 

 Is there a niche where you can plant your flag, dominate, and protect your margins?  Can you create that niche by building a rabid referral customer base like Joe Girard did?

 She is helping the Checker sack her goodies.  Finally.  At least she is helping sack the items.  There should be a faster way to check out when you only have a handful of things.

*beep*  *beep* *beep* Scanned, paid and done.

 “Sir, next time you could use one of the self check out stations if you are in a hurry.”  My Checker said.

 Guess that is a sales lesson I won’t be blogging about.  Too busy thinking.

 “Thank you for shopping at Walmart!”

Image courtesy of RichSellsHomes

I have talked, er, typed before about asking you to look for ways to add value to your product or brand by digging into the problems your clients are facing.  Dig deeper, that is, than the problems  solved by your present value statement.

Look for the the fundamental issues that might be preventing your customer from honestly even considering the problems your product solves, that may well be lower down the priority list.  Uncovering these problems, even if they are way beyond the traditional scope of benefits your product offers, and creatively solving them can lead to a competitive advantage, more business and a more loyal customer.

That is what the boys making Mini-Wheats are thinking, and I agree.

What problem does a Frosted Mini-Wheat solve?  Hunger.

What is the Frosted Mini-Wheat value statement?

“A fast, nutritious breakfast that you can feel good about that will keep your child full and focused on the day ahead.”

That is my take on their message, anyway.

So what bigger problems could a Frosted Mini-Wheat possibly solve to endear the product to its customers?

Frosted Mini-Wheats, with MSN.com has developed Moms Homeroom  

Moms Homeroom is a site featuring four mothers giving their thoughts on all aspect of educating children, similar to “The View” in that they are all piled up on a couch providing opinion and personal tips in a custom built community with polls, video clips, and most importantly, interaction with other real mothers and fathers (and the ones most likely to purchase the Frosted Mini-Wheats) out there asking questions, doing their best to raise smart, educated children.

The new Frosted Mini-Wheat value statement is “Frosted Mini-Wheats help your kid succeed in school.”

It is a unique move in the wake of smaller cereal boxes, reduced cereal quantities for the same price, or higher prices that Kellogg, the manufacturer of Frosted Mini-Wheats, and other cereal manufacturers are moving toward.

It is a bold, offensive move trying to partner Mini-Wheats with parents in their quest to seek a better education for their children.  Will it work?  It is already working on me, I have already forgotten about the other frosted shredded wheat products out there. 

If I buy Frosted Mini-Wheats I am helping support an organization that is providing a resource for parents to communicate, collaborate, and help their kids succeed in school. 

If I buy one of the other brands I am just buying, well…  cereal.

  Look at your own value statement.  Are you trying to sell me by solving a small problem of mine with milk covered cold wads of sugar coated wheat, or are you addressing a larger issue in my life of greater concern to me than which box I pick up at the supermarket?

Is your value statement solving what could be considered a “fluff issue” in these more challenging times, or are you refocused on solving some of my bigger problems that I might need to solve before I can even consider your original value statement or the thought of buying your product in the first place?

Help me solve my problems as a customer so I can be in position to help you solve yours.