In episode 12 of Augurs on the Town, Josh is joined by John Loehr, a senior marketing leader in the CPG food and beverage industry, having worked at Land O’ Lakes, Kemps, Schwan’s, and Crystal Farms|Michael Foods.
Hear great stories from John about what it takes to bring a product idea all the way through to market and what some of the pitfalls are. Also learn about the history and cyclical nature of industries, where they go from a large quantity of small firms to consolidated larger firms and back again and what this means for marketers. For example, in the 1600’s everyone basically brewed their own beer. But over time large beer makers like Anheuser-Busch dominated market share. Today, the tides are turning yet again with the resurgence of craft breweries all over the US.
Join Josh and John as they explore the world of marketing from a Consumer Packaged Goods perspective.
Want more great insights, check out the full series of Augurs on the Town.
Interested in talking digital marketing Contact Us.
TRANSCRIPT
Josh Becerra: Hi everybody. This is Josh Becerra from Augurian. Today is episode 12 of Augurs On The Town. I’m here with John Layer. Thanks for being here, John.
John Loehr: Thanks for having me, Josh.
Josh: John, you’re a senior marketing leader, been in consumer products, CPG food and beverage for many, many years, and all the big companies Land O’Lakes, Camps Schwan’s most recently Crystal Farms and Michael’s Foods as a Director of Innovations and then senior director of marketing. I can’t wait to tap your brain for some of these cool insights that you must’ve learned in your time there.
John: I’m happy to share a few.
Josh: The fun thing I think about your background is that you do get to work in food and products, things that some of us might even relate to. We see the stuff that you’ve probably worked on on the grocery store shelves. Why don’t you tell us a little bit about a product launch story or something that, so that we get a little insight into what it’s like being a senior marketing leader in these food and beverage companies?
John: Yes, sure thing. Every company has its own culture. How you launch products really can differ from company to company. I’ve experienced successes and some failures in launching innovative products. Probably the most interesting stories are the ones that teach the best. They’re the ones that usually come from the failures and all of us marketers we’ve had failures and successes. I’ll share an example of one of those.
Invariably, what I can say is with failures, it’s that age old cliché really holds true, that successes, 25% strategy and 75% execution.
Josh: Right on.
John: It’s really the biggest lesson I have to share in the story here. What I’ll say is lots of marketers can create good, if not great, front-end strategies. Really understanding consumer wants, identifying product gaps, product development, market sizing, product design, branding, all that stuff. We all bring really rich varied experiences to the table, but where success really starts to break down, it was my experience, and I think many others, is really during execution.
A good example of that, I have a story here, is that I was in a business where we had a huge opportunity to offer consumers, call it cheese snack options. These are individually wrapped string cheese, Baby Bells, people are pretty familiar with.
Josh: Love it, love the Baby Bells.
John: That category was in a really strong growth curve, riding the consumer demand for all things snacking, all things, protein, cheese offers a lot of protein and really all things natural. Structurally strategy-wise, everything looks great. But our strategy was really to up the game in introducing a new product in that segment. The idea was to tap into one of the more powerful trends at the time, which was intense flavor.
I took a page out of what Blue Diamond Almonds was doing at the time, they had just launched their intense flavors. Really shaking me up that category of almonds. Basically, we’re going to take this intense flavor and put it on to cheese nuggets if you will. Beyond that, we went into really cool product design. These are going to be handheld, easy tear open options, you could call it poppables. You could eat these on the fly. Brand design, had a great bold name, which was right on target. The product development was perfect.
Josh: At this point, everybody is imagining whatever their favorite little poppable cheese snack is.
John: These were perfect. Right on target, in prelaunch testing consumers loved it. Then we launched.
Josh: You said, this was a failure story, right?
John: I know. This is execution. On the front-end everything’s going great. We get great acceptance from new big accounts like Safeway. We’re going to build up brand new distribution out West. We get full coverage of our existing markets, which is the upper Midwest. The product gets initial velocity targets but never ramps up to the numbers we expected. The question is normal, what goes wrong? Fundamentally, there’s a structural issue. There’s a disconnect between marketing and sales. At the root of it, really basic stuff, poor communication.
We weren’t fully collaborative in our partnership between marketing and sales. In new accounts, we didn’t hold firm, but we had a strategy that said, “Hey, launch this new product with brand new accounts and then build out the distribution of a much broader line,” which is really needed for staying power, at grocery stores, you just one or two items you need, you need more linear footage, as we would call it in the industry. In existing accounts, we need to get the promotional support, stuff that you’d see at a retailer to get a percent off or some money off to really get the product moving at shelf.
The lesson at the end of the day, if I had to do it all over again, sales would be in the development meetings, we’d have a clear tray promotional strategy. We would get senior-level signoff from all the sales VPs. We’d test different promotional levels, and lots of other things, but in short, we would have much, much better execution.
Josh: It’s amazing. We’ve done a ton of videos on sales and marketing. When they’re working well together, it can be awesome, but when there’s disconnects, like in our business, digital marketing, you’ll have salespeople say, “Those leads that are coming in off the website are horrible.” Then there’s marketing people are saying, “You’re not putting the leads into the CRM appropriately, so we can’t track them.”
It’s interesting to hear you talk about how even sales and marketing disconnect when it comes to CPG can really cause problems. Amazing. One of the things that I was listening to as you were talking about all this market research that gets done and all these focus groups that might occur where people are saying, yes, we love this or whatever.
There’s an interesting trend that you and I talked about previous to recording this, which is like the microbrands that are starting to pop up in CPG. It’s interesting how– I’m sure the big brands have these very big processes of gating, whether an idea actually gets to market or not. Microbrands are a little bit more nimble and they’re just running at ideas.
We’ve talked about this, but tell us about your thoughts on the microbrands in CPG, the trends and things? Why is this working now where in the past, it was really only big brands that had shelf space?
John: Happy to, have a real strong perspective on it. As you’ve mentioned, we’re experiencing, call it, a tsunami of small brand success. It feels like something’s changed. Never before have we seen this in our lifetime, in laundry cleaners. Then you’d say, “No one’s ever going to displace Tide,” beverages, beer, coffee, and obviously coffee has gone through a change over the last 20 years already, but it’s going beyond what we know, even from five or six years ago.
Josh: Beer is huge. Microbrew is just the only way to go now.
John: You can ask is technology leveling the playing field between the real big guys, the real big CPG manufacturers and smaller preneurs, could it be lower barriers of entry when you produce products to even things like communication, is digital advertising leveling the playing field. It’s much more approachable. It’s much more cost-effective for small players, small people to get into.
Or maybe it’s this new structure of shopping, of DTC, of direct to consumer. Decades ago, this was Amway and Schwan’s Home Services and local milk delivery and Mary Kay and Avon. Obviously that whole model has changed completely, or maybe it’s cultural, maybe it’s real innovation.
What I mean by it? I mean by corporate culture, so where real innovation gets led by the small guys who literally have nothing to lose and everything to lose. That’s not a unique story. That’s not a new story. That’s when the story of innovation since time began. But maybe culturally things are a little different place, where the big guys just have a lower propensity of risk at this point.
There’s lots of studies that talk about some of that stuff in terms of even how the tenure of people in C-suites at big companies, it’s very, very short. If your runway is short and you’re the C-suite, what’s your appetite for risk innovation. I love the history of business, mid-1800s after the Civil War to the turn of the century, post-World War II era and the exponential tech curve, all that stuff, I just really love. What I’d say is what we’re experiencing with micro brands today is not new. Look at beers in the late 1800s, cars in the late 1800s. A lot of people don’t know, there were dozens of car companies, hundreds of beer companies. Airlines. Airlines started out– you think oh, it’s just a few players? There were tons of airline companies. A little more near dear to me dairy brands. Just hundreds of dairy brands. To things that even outside of food, if you think of beds, where the bedding industry, mattresses how it started? Lots of different companies.
It all consolidates into a few and then it blows up again. My examples go on and on in terms of industries and how things change.
Josh: You’re thinking it’s like cyclical and we’re in the uptick, or down curve, or whatever you want to call it of where micro brands are at play?
John: That’s exactly it. The industry starters, they all start as cottage industries. It’s a new technology, someone’s putting their head out there like with auto cars in the day. They’re serving local markets. Dairy brands is a good example. Dairy brands, they had to be very close to the market because there wasn’t pasteurization earlier or it wasn’t that great in the day. Then there’s all this local appeal. Then there’s some factors that cause a convergence of these industries. They’re usually scale economies.
A new technology like pasteurization, like you just mentioned. There’s numerous factors. One I think that extends across all categories today, one that is a little bit different than I think we’ve ever seen in history before is it’s all around consumers’ need or wants for things being more personalized to them. I really think this is probably the single biggest driver of micro brands in this era today, is this idea of I want things more personalized to me.
You can look at all these industries and say that there’s a spectrum of personalization. All the way from things just for you, products that are out there, they’re tailored just for a particular person’s need. Then you can take that all the way to I’ll use bedding as an example, where you can sleep on your side of the bed and your spouse can sleep on the other, and you can have your own number. That’s personal need.
Josh: Temperature, number, all kinds of stuff.
John: I think that is one of the things that’s really different from what we would have seen 100 years ago or 50 years ago. As you mentioned, the cycle of big brands and this explosion of small brands and how it continues. I think the different factor here again is your own personalization. By definition, there’s more brands getting at this need that consumers have for all things more personalized.
Josh: Let’s take that conceptually around personalization and let’s apply it to the marketing industry, the agency industry in which a Augurian plays, of course. There’s a plethora of agencies out there. The brands or the companies that are looking for agency services have needs. Those needs are a little bit different for every single company. Can you talk a little bit about your experiences working with agencies as a senior marketing leader in these CPG companies and just your thoughts generally on the diversification of agencies and what we’re experiencing today?
John: Yes, absolutely. I think it really follows this idea of how industries change and these cycles in industries. It’s not just in manufacturing, it’s agencies from my perspective as well. Something happens on the agency side, a tech change, or a consumer need, or more of a customer need. I see it as workers, maybe big agencies realize they’re a big company, they just can’t respond as fast. There’s innovators there in your industry and entrepreneurs. They emerge and say, “Yes I can do that.” They leave.
They leave their big agency and they serve a niche. This whole world of boutique agencies blossoms. Eventually, I think the big guys probably take a back seat, they let the market develop. Because they can’t respond as fast, because they’re getting cultural issues, or whatever it is. Eventually again there’s the consolidation that happens. I’ve seen this in my tenure of marketing, where the big agencies will start to consolidate and acquire some of these boutique firms and add them to their portfolio. The problem is, first of all, it’s not just agencies and again this happens in every industry but in our position, the culture changes. The drive might change. What’s made that boutique firm a great pioneer, that gets lost. People in the bigger companies may start to rest on their laurels. That’s industry agnostic. [laughs]
Josh: Sure, for sure.
John: Again, a good example would have been when the world of all things website design and creation started, I don’t know how many years ago, how many new agencies popped up overnight serving that need? At the time, the big agencies would say– I was part of it, they would say, “Yes, we can do that.” and the billing for a new website will be $200,000 something astronomical in the day for services that you don’t see today, I’m talking about at the advent of all things [unintelligible 00:16:08]
Then there’s other smaller boutique firms coming up much quicker for literally 20,000 or 30,000. This huge disparity between bigger and smaller, and abilities and cost thing. For right now, I guess I’m just observing how agencies evolve in this next trend, this boom in digital communication services. Things that is right in your wheelhouse. Really specialized, highly technical services. What’s going to happen on that side of it? Simply summed up, and I guess my perspective, it comes right from strengths finder, which I’m a huge advocate of and it’s really do what you do best. When you get too big, you start to lose focus and you start missing out on what your true strength is.
Josh: I love that. It’s somewhat validating because the conversations that we have at Augurian are all about really sticking to what our core competencies are and not trying to be everything to everyone. I do find that there are agencies out there that have all the services, and they probably got their start being experts in one of those services and then they grew into the others. We are trying to kind of contain our enthusiasm for just offering everything and saying yes to everyone because I do think that when you can keep your focus on doing what you do best is the right way to do it.
John: You’re in a perfect space right now in terms of how needs are evolving from a customer’s pickup point. I love the approach. I really do.
Josh: Awesome. Thanks. This has been super fun. I thank you so much John for all your thoughts on business, both historically and current events. [music] We’re going to sign off for this episode of Augurs on the Town, but I really appreciate you, man.
John: Thanks for having me. I really appreciate it.
