When a sector (whether it be flowers and plants, fruit and vegetables, meat, oil or wine, etc.) wants to generally promote its products, it has to do it all together as if it wants results, it needs time and money and this is achieved more easily if all of its companies come together.
Many of us know from our own experience that this is not easy. Few sectors in Spain have managed to be united for many years by promoting their product. Some due to lack of results, others due to lack of understanding, and yet others due to lack of vision.
Before giving a couple of ideas to achieve our goal, I would like to go over the main reasons why, in my experience, many attempts at sector integration have failed, failures that may serve to give solutions in the form of proposals.
These reasons are:
1. Lack of culture and preparation in marketing and advertising, which in part is normal if we think that those who pay do not generally have great experience in these areas as they are more concerned with other marketing mix policies such as quality, price, distribution, etc. However, the consequences on possible promotion campaigns are catastrophic:
– Short-term results are pursued when, if the discipline you need is advertising, this will take three years or more supposing that the strategy is right, the creativity is sufficiently notorious and, above all, there is sufficient budget to be able to plan and purchase media (tv, radio, etc.) in the right form and quantity.
– This activity is considered an expense when in fact it is an investment that increases the notoriety and awareness of the product, company or brand and therefore its value in the form of greater demand or higher price.
– Creative proposals and ideas are assessed under the prism of the personal and non-professional taste of some independent expert. It is forgotten that the audience for this activity is not the sector in itself, nor the politicians or organisational managers.
2. Another reason I have seen consists of trying to stir up a promotion campaign simply with general advertising. This formula benefits the whole sector, which means that everybody has to contribute, although there is generally someone who refuses and prevents the campaign. Nobody wants to pay for and benefit someone who does not pay, especially if they commercialise the same product.
3. Very often the reason for failure lies in the will to bring many different groups into agreement: producers, wholesalers and retailers. This makes the job of locating them, calling them, etc. very difficult and excessively complicated to start.
4. Another reason: I have seen how the members of the sector agreed to start a fruit and vegetable promotion that failed because they did not agree on the fair and transparent way in which each party should make their economic contribution. In this particular case, given the chosen formula, few were prepared to give the details of their turnover or real sales to serve as a basis for calculating their contributions.
The last reason I know, and there are surely many more, is the dependence and trust on economic aid from the Administration to start the campaign. If this fails to arrive, the campaign does not go ahead; although the worst thing is the opposite case, which has happened to me twice and is that the sector asks the administrations for help, the administrations award it but the sector is incapable of giving and depositing its part, which is usually between 30% and 50% of the total investment. I believe this happens because the sector managers have not given basic information and education to their bases so that they might understand and appreciate the need for promotion in a market where every product has an alternative, and thus for gradually creating the “culture of advertising” that I was talking about. This work of internal communication must continue on the bases if we also want to receive their support during the campaign and when the prices fall.
Furthermore and given the precedents, no campaign agency or administration must be asked for a subsidy until the economic contribution of the sector has been placed in an account of the Administration.
After these reflections, I am going to give my first idea to unite a sector or part of it in a promotion, an idea that solves a large part of the above problems and which I successfully started some time ago (1995) in the citric fruit sector.
The bases we considered for developing the proposal were:
– First: to benefit only those who take on the economic risk, which in addition to being fair also unblocks the process and creates promotional culture.
– Second: to work at first only with part of the sector, the part that is most concentrated and most transparent to make it easier for everything.
– Third: flexible quotation formulae must be found that respect the privacy and freedom of the participants depending on their will, interest or capacity.
– Fourth: not to condition the existence of the campaign to the Administration’s economic contribution, but to ask for its collaboration and participation.
Based on these criteria, the actual proposal I used and which I still propose is:
1. To start with the wholesalers, but not with all of them, just those operating from the brands as there are fewer of them, they are together, can be located, are associated and have sufficient size. All of this helps in designing, approving and starting up the campaign.
Furthermore, this approach has an advantage for future expansion. As the wholesalers are in an intermediate area between producers and retailers, they can serve as a nexus between them all.
2. The formula to be used for the campaign to no longer be general, for it to benefit only those who take on the economic risk and for interest and motivation in participating to be created is to use the brand of the participating company or that of its fruit and vegetable. In this way they feel they are investing in something that is their own and also in the common interest of the sector. The brands are the distinguishing element of the participants and one of their main supports. Furthermore, a common brand or distinctive sign can be made to promote the campaign, which in this case I called “Punto Naranja” [Orange Point].
I believe that the EU should study the possibility of extending its support and allowing general-brand campaigns if it wants to have business people with vision who are really interested in promoting their products.
3. What’s more, by using all of the brands of the participating wholesalers we oblige some commercial communication disciplines to be used more than others. Specifically we will have to use the promotion at the point of sale with the brand or brands of the wholesaler supplying to each retailer and put the advertising we will use into the background for two things: to generally promote the product and report the promotion which will be carried out in the sales rooms of the participating wholesalers’ retail customers. These points of sale will be identified with loud sale point material (poster and hanging display) with the symbol of the campaign (Orange Point) so housewives might recognise the establishments as those taking part in the promotion.
4. The economic contribution is free and voluntary and will always depend on the number of kilograms that each wholesaler wishes to promote. The reasonable thing is that each wholesaler should contribute to the campaign by promoting as many kilos as they expect to sell so that their percentage participation is in line with the sales they expect during the period of the campaign. As a result of the promoted kilos, the agency will calculate the coefficient of Euros/Kg. of the cost of the campaign, which will be the same for everyone and will depend on the total amount of the campaign.
5. The specific device chosen in this case for promoting sales was the use of scratch cards that the wholesaler received in line with the size of their participation. Using a TV commercial and advertising at the point of sale, the housewife will know, for example, that for the purchase of every 2 kg of the brand of fruit or vegetables in question, she will be given a scratch card.
6. However, this approach has a weakness. We give housewives an incentive to buy the products of the participating brands throughout the promotion, but when the incentive or added value is taken away, we go back to the initial situation with respect to purchase motivation. We therefore have to send messages to the general population informing of the advantages, virtues and characteristics of all kinds that are offered by the promoted products, fruit and vegetables as the case may be.
I therefore suggest that if there are sufficient economic resources, a general advertisement should be made distinguishing the product in question and giving way to the promotional campaign, and finally, that a press office should be created. Both actions will be responsible for sending out messages to achieve a permanent culture of consumption. In 1999, finding a solution to this weakness led me to create the Fundación Sabor y Salud with the idea of developing a permanent press office for fruit and vegetables.
The second idea to be able to unite the sector and make continuous promotion occurred to me when I was studying the case of Colombian coffee at a seminar of the San Telmo International Institute in Seville.
In Colombia, a large part of the coffee sector is integrated in the National Federation of Coffee growers (FNC), which since 1960 through the advertising activity of Juan Valdez and his “Coffee from Colombia, the best in the world” has managed to achieve a historical premium for their coffee of almost 0.10 dollars per pound (0.45 kg.) more than coffees from other countries.
Since 1940 the National Coffee Fund has financed the programmes of the FNC. This fund was generated with the “coffee contribution”, a kind of tax that the government collected and the producing sector paid. It was not actually a tax because it was not paid into a Treasury account and was used to guarantee a minimum price for farmers and to pay for the advertising.
The key lay in finding the right balance between the sector and the government to manage the fund.
From all of this, before the regulatory extension was applied I thought of making the following proposal to the Government and to the sector wishing to make a joint promotion: that the Government should pay for all of the activity of advertising and promotion of a sector for a certain time (3-4 years) until results started to come in in the form of increased consumption or higher prices in exchange for the sector’s commitment to accept a special tax which the Government and sector would begin to collect at the end of these 3–4 years and which they would maintain for at least three or four times the time that the Administration had paid for the campaigns.
In this way, the public administrations help the sector to start out, which is the most difficult time, and with programs that are well-made for the medium-term, which are those that assure their effectiveness.