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Pundit’s Mailbag — More Targeted Approach Needed For Generic Promotion

Jim Prevor’s Perishable Pundit, June 16, 2009

As part of our continuing coverage of the proposal for a generic promotion board for the produce industry, we ran two pieces on one day. Our piece, Got Produce? Unvetted Generic Promotion Research Biased From The Start, dealt with the problematic way that the Produce for Better Health Foundation was conducting industry research. Another piece, titled Pundit’s Mailbag — Generic Promotion Plan Does Not Allow For Differentiation, dealt with a letter from an industry executive who felt that the industry product offering was more the problem than a lack of promotion.

The two pieces led Eric Schwartz to send us a note. Now working as part of an organization assigned by the court to run Salyer American, where he formerly served as President, Eric first started engaging with the Pundit during the Spinach Crisis of 2006.

He is the first person to have had letters and interviews published in the Pundit while working for three different organizations. You can see some of his pieces and interviews right here:

Pundit’s Mailbag — How About Subsidy Money For GTIN Conversion?

Pundit’s Mailbag — PMA’s Opportunity To Learn From Friends And Foes

Pundit’s Mailbag — More Questions About Leafy Greens Board

Pundit’s Mailbag — Dole’s Schwartz Comments On Silent Buyers

Pundit’s Mailbag — The Deadline Approaches

Pundit’s Pulse Of The Industry: Dole Vegetables’ Eric Schwartz

Pundit’s Mailbag — Lesson From Avocadogate: You Get What You Tolerate

Dole Hit With Another Recall

Dole’s Schwartz Sheds More Light On Recent Recall

Pundit’s Mailbag — Organic Industry’s ‘Situational’ Standard

Arizona Marketing Agreement One Step Closer To National Leafy Green Standard

Why The Secrecy On Inspection Agency Lab Results?

Now he weighs in on what is surely a great challenge of generic promotion:

If American consumers really ate the five daily servings of fruits and vegetables (I believe the recommendation is now up to seven) that the USDA recommends, we would not have an obesity epidemic in the USA and the vegetable industry would be in a perpetual supply shortage.

The problem with focus groups and surveys is that even if the questions are not leading, people are well intended but rarely do they do what they say when it comes to diet.

Generic promotions certainly can’t hurt, but once a commodity line has reached a maturity level in terms of market saturation and growth, generic promotions by themselves do not move the needle of consumption. A more targeted and individual approach is usually needed.

— Eric Schwartz
Principal — Operations Management Solutions
Steve Franson and Company
Fresno, California

We appreciate Eric’s letter. His note that consumers don’t always report accurately on their consumption is well taken. This is why the claims of groups to have had success because consumers “report” higher consumption in surveys must always be viewed cautiously and compared to other databases such as retail sales, food disappearance data, etc.

We are a little less skeptical than Eric about the possible effectiveness of generic promotion on mature categories. We do think it very difficult, but have not closed out the possibility of effectiveness. What has made this particular proposal so difficult to analyze is that the proponents have not bothered to list any criteria that would allow the industry to assess the reasonableness of the aims of the proposal nor, after the fact, to assess whether the program was successful.

As we mentioned here, we feared the industry would be played for a sucker. After the money was appropriated and paid, one of three things would happen: Either consumption would go up or it would stay the same or it would go down.

And the response of those promoting this proposal is highly predictable. In three years or five years, whenever the program comes up for renewal, if consumption has gone up, they will claim the credit — though, of course, it might have nothing to do with the program. If consumption stays the same or goes down, the program advocates will simply say it would have been much worse without the program.

This is why we have urged a step back. We need some research to establish what are reasonable consumption expectations in the absence of a program and reasonable expectations of efficacy in increasing consumption with the existence of the proposed program.

Eric also raises the point that if consumption of produce reached the recommended level, it would both have enormous public health benefits and would be good for the produce business. This is almost certainly true, but probably not meaningful.

The advocates have a PowerPoint presentation they present, and it includes a list of what different organizations spend. It is a slide easily misunderstood by a casual observer because it juxtaposes two totally unrelated data sets in one slide. Part of the data is a list of what organizations such as McDonald’s and Coca-Cola spend on advertising, and injected into the slide is the total budget of commodity promotion groups.

The numbers listed for McDonald’s etc., are what are called “measured media;” this is basically things such as network television where data points are easily tracked. The numbers listed for the commodity groups — including the $30 million projected for the produce effort — are total organizational budgets.

The advocates provide no pro forma budget but our experience is that we would be surprised if a $30 million total budget translated into even $15 million in measured media.

The significance of all this is that when McDonald’s alone is spending each year — almost two billion… that is no typo, billion — on measured media, and the produce industry proposes to spend $15 million, we doubt that is putting Big Macs in any danger of extinction.

Or, put another way, no serious person can believe that the proposed level of spending is going to raise consumption to recommended levels. So we come back to our first piece on the subject of the proposed generic promotion board. In that piece we excerpted from an interview we conducted about 20 years ago in Pundit sister publication, PRODUCE BUSINESS, with Ray Cole, then Director of Marketing Services at Sunkist, who critiqued the idea of a California Orange Board with this point:

PB: How does Ray Cole feel about it?

COLE: I am opposed to the generic program on a totally different basis. I don’t see the industry taxing itself sufficiently to really do an effective job. I’m not even sure that Sunkist is doing the best possible job at the moment, because we’re not spending as much money as I think we should, but that’s a separate issue.

PB: Well, exactly how much money do you think Sunkist or the proposed commission should spend?

COLE: Let’s talk about what it takes to increase the consumption of California oranges, because I’m not sure we can promote navels without Valencias either. We did a lot of work in 1970-72 and repeated it in 1981 to see what the effect of more advertising on the American consumer would do in terms of consumption of California-Arizona oranges, particularly Sunkist oranges. We found a level of advertising that worked. We experimented with higher levels and lower levels and we did a test marketing program.

It was scrutinized beyond belief, because it was highly questionable here at Sunkist. The first effort was done when I was back at the agency, and we were trying to recommend this to Sunkist. I know from that experience that there is a level of advertising that it takes to change consumption habits, and I know that consumption habits, can be plused, at least I think they can. I’ve not yet heard any discussion in this talk of generic advertising that would come close to generating the dollars to spend at the rate necessary to increase consumption.

PB: You’re talking about a very big increase of how much?

COLE: I’m talking about spending probably $20 million a year. If you only spend $10 million and you don’t change per-capital consumption, what do you accomplish? You’ve taken $10 million out of the growers’ pockets for no end result. It’s kind of like trying to put a satellite into orbit and not putting enough fuel in the rocket. You blew a lot of money, for nothing.

PB: Some people would say something is better than nothing, when it comes to promoting citrus or any other commodity.

COLE: I think if you really want to do this you have to do it at a proper level, with a thought-out plan, and a comprehensive recommendation based on the size of the task, not what the grower can afford, necessarily. And let the grower decide if he wants to undertake that task. But don’t just assess him 7-cents or 10-cents a carton because that’s all he can afford. If it doesn’t give you enough money to do the job, don’t do it. That’s where my concern is about the generic program

Our assessment is that the industry has a nagging feeling that the assessment rate in the proposal was selected because it was “doable” rather than because there is much data that indicates it is sufficient to achieve a specified goal. Further, it is this notion that the proposal is “fudged” that leads to great opposition. It would have been far wiser to indicate what can be accomplished at various levels of expenditure and then allow the industry to decide if it was willing to pay the price to accomplish those goals.

Eric also raises another point: That the choice is not national generic promotion or nothing. The “targeted and individual” approach to marketing, whether by commodity-specific promotion organizations or through corporate branded efforts may be more effective, especially in an industry like produce where a mango has little to do with a potato.

At very least, this would seem to speak in favor of a brand credit and a credit for commodity-specific assessments. More broadly it raises the question of whether industry-wide generic promotion is the most effective way to spend industry funds.

Many thanks to Eric Schwartz for helping the industry to wrestle with this important issue.

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