reveries - mel korn - collaborative marketing

SEPTEMBER 1999

"We don't ask, 'how's your business?'" Mel Korn, ceo of Saatchi & Saatchi Collaborative Marketing likes to say. "We ask, 'how's your business at Wal-Mart, Kroger and CVS?'"

Chris Hoyt, co-marketing

(Editor's Note: Mel Korn passed away on March 10, 2005, but his vision lives on).

Collaborative marketing is not the same thing as co-marketing, which Mel says is tactical and occupied by traditional, co-op media approaches. "Co-marketing is fine as far as it goes, it just doesn't go far enough," he avers. Unlike co-marketing, collaborative marketing, is strategic, long-term and fully embraces the potential of the retail store as a marketing medium, he says.

It's an intriguing point of view, especially since Mel got his start at the helm of a mainstream packaged goods advertising agency, J.M. Korn & Son, in Philadelphia. The agency began as his father's, but that changed abruptly -- and sadly. "My father died on a Sunday night, and so on Monday morning I was president of an advertising agency." Mel Korn was just 25 years old.

Under Mel's leadership, the agency's account roster was heavily populated by family-owned, frozen food businesses, like Mrs. Smith's frozen dessert pies, and Mrs. Paul's Kitchens, famous for frozen fish sticks. Steakums was another key client. Mrs. Smith's was a particularly notable success story, rising from a $10 million fresh baked pie company into a $180 million frozen pie category leader. Mrs. Paul's and Steakums also became market share leaders.

Mel learned some early category and brand lessons that continue to serve him well today. One of his earliest successes was the marketing of a trailer-load of Mrs. Smith pies, on an account-specific basis, to Publix in Tampa, Florida.

Account-specific. In the late 1950s. That's Mel Korn for you.

He recalls: "We made sure we understood the distribution and every aspect that made a product sell. We never saw ourselves as just an ad agency. Back in the 1960s we were formally defining ourselves as a marketing communications agency. Nobody knew what the hell we were talking about."

The worst thing in this world is to be a drum major that's twenty blocks ahead of your band. People think you're crazy. You've got to be one block ahead of the band so everybody hears the drumbeat and gets it.

Not long after building that trio of brands into national market share leaders, Mel experienced the perils of his clients' successes. Within a short period of time, each of his client's companies was sold -- Mrs. Smith's to Kelloggs, Steakums to Heinz, and Mrs. Paul's to Campbell Soup Company.

At the time, Mel's agency also handled some local Pepsi Cola bottlers. "We created the bottler co-op concept that began as media co-ops but grew into marketing co-ops so Pepsi could present a single, strategic voice to the trade," he explains. "At one point we had seven bottler marketing co-ops, representing about 22 percent of Pepsi's national volume."

Along the way, Mel merged his agency with Ketchum, and then founded the Geographic Marketing Group (GMG) as part of Omincom's Tracy Locke agency, originally to serve Pepsi bottlers exclusively. The call came directly from Roger Enrico, then president of the Pepsi Cola Company. When Pepsi began re-acquiring franchises, Mel bought GMG and began bringing his hard-learned lessons about the power of the retailer to other brands. "When you work for a bottler you can never forget that this is a grass roots business," he observes. "That includes understanding the retailer's business, and bringing a sense of marketing to the relationship between the manufacturer and the retailer."

Starting around 1990, Mel says, he realized that "hey, there's a big tomorrow coming, a big opportunity for manufacturers to work collaboratively with retailers." Just a year ago, in July 1998, GMG was purchased by Saatchi & Saatchi, and was re-named Saatchi & Saatchi Collaborative Marketing. Clients are Procter & Gamble, General Mills and Reynolds Metals, among others. execution of supporting advertising, promotion and direct mail events that leverage the equities of both the manufacturer and the retailer to build volume and profits.

Consolidation has resulted in the concentration of the retail industry into a handful of players. A whole new marketing landscape is shaping up. Back in the '60s, '70s and even part of the '80s, consumers all used to sit around at eight o'clock on a Sunday night and watch shows like Ed Sullivan. Basically, a third of the country gathered at one time in front of the television screen. The next day they'd go out and buy what they saw advertised.

That's not the way it is today. Today, you have the consumer going from that consolidated audience that watched three television networks into a much more fragmented audience. They have so many options and so many varied lifestyles. It has become very difficult to reach consumers. So, on the one hand, we have consumers moving from being consolidated into a fragmented audience. Meanwhile, just the opposite is happening at retail, which is moving from being fragmented into consolidated.

Just take three categories of retail -- supermarkets, mass merchandisers and drug. We have about five key supermarket chains, three in mass merchandise and another four in the drug channel. In grocery, we've got about half of the business consolidated in just a few players. In mass merchandise, three players account for about 75 percent. In drug, it's about the same -- 75 to 80 percent of the volume is through four major players.

There will always be a place for the niche player. But long term -- and not that long-term -- we're going to have these power retailers driving the business and they will be in the driver's seat. The emergence of the power retailer is giving birth to collaborative marketing.

The way to get the best creative work is to imagine a hall or corridor with foam rubber on the ceilings, the walls and the floor.

Collaborative marketing simply means retailers and manufacturers working together to understand, anticipate and satisfy consumer needs. Collaborative marketing is just beginning to be understood and implemented. It's going to take a lot of mindset changes and education on both sides of the street -- manufacturer and retailers will be operating in a totally new marketing landscape.

The retailer today is not interested in talking about the manufacturer's brand. It's just like Sam Walton said back in 1985: "You guys are always trying to sell me more Tide. I really don't care if I sell Tide or Fab. I just want to sell what the consumer wants. Your efforts should be to help me bring more customer traffic to the store, and to increase total revenue per checkout station."

Retailers want to know what the manufacturer is going to do for the store, the aisle, the department and the category. How can the manufacturer drive the category? Let's not kid ourselves. Unless you are a Pepsi or a Coke and you've got some powerhouse stuff like Star Wars driving traffic to the store, you are going to need to collaborate with retailers.

Let's tell it the way it is here. The retailers drive their own traffic with their pricing and their differentiating strategy. The manufacturer must try to help that retailer get consumers into the aisle and the category -- and the brand will get the payoff.

For example, grocery retailers today face big challenges from the mass merchandisers. Cleaning agents, papers goods -- they've got problems in those categories. Manufacturers can help grocery retailers drive shoppers to the aisle and the category -- and of course to their brand. But the manufacturer had better understand the retailer's business is about, what their strategies are and how they can assist.

The retail mindset today is about destination -- they are thinking about their store, their chain -- they want to be a destination for shoppers. And they want to do it by differentiation. This is critical for them because they have had so many problems with category killers. They have to have a clearly defined differentiation strategy.

The retailer today sees the store as a collaborative marketing medium. The store is no longer just a point of distribution. The store today is an active medium unto itself.
Retailers are focusing on branding. That branding goes beyond just their banner. They want to brand their departments and their categories -- whether it's food/beverage, baby care, pet care, home care or pharmacy.

Retailers are beginning to put category branding above all those nationally branded products that sit under that banner. They want to separate and differentiate themselves from their competition. They're doing the same thing with events. If a manufacturer brings a retailer an event today, they better not bring them something everybody else has. They had better bring them something that's going to be theirs alone, that they can own.

Today, disposable income is up but disposable time is down. Albertson's, for example, has Quick Fixin' Ideas. That's their answer to the meal solutions situation and it extends into their grocery, frozen and deli departments. Quick Fixin' Ideas is a brand and a trademark for Albertson's. In Baby Care, it's Albertson's and Parents magazine -- a Complete Baby Care Center.

Albertson's Better Care. That's their pharmacy. It's not just a pharmacy, it's Albertson's Better Care. They're into the benefit now, they're marketing now. They are thinking like brand marketers. All of these concepts were based on results from consumer input. Gaining consumer insight has become a very key marketing tool for retailers.

You let the creative people bounce around without getting hurt by off-the-wall ideas in search of a strategy. You keep them in a certain corridor so they keep a sound strategic direction.

We put a collaborative marketing program in place for Albertson's and SC Johnson about a year and half ago. SC Johnson has a portfolio of products that don't have an umbrella name -- Windex, Drano, and so forth. Each brand has its own image. We were brought in by SC Johnson to see whether collaborative marketing could work in an environment where they didn't have an exceptionally strong relationship with the retailer. Albertson's, meanwhile, was very concerned about its loss of the cleaning agent business to mass merchandisers. Both Albertson's and SC Johnson's senior teams came together.

What we did first was look at the marketing objectives. Albertson's and SC Johnson stated their respective marketing objectives to each other so there were no hidden agendas. Albertson's wanted to increase incremental transactions by increasing penetration in the home-cleaning category among their current customer base.

SC Johnson, on the other hand, wanted to increase sales and market share of both its existing and new home cleaning category brands. Both parties agreed that the common goal was to drive consumption. Albertson's and SC Johnson agreed to do that together, and the focal point would be the consumer who came into Albertson's to shop. The objective was to drive the consumer to the cleaning agent aisle. Consumers were in the store but they were not going down the household cleaning products aisle.

The strategy was to establish and promote a benefit-driven, differentiated, branded home cleaning solution center at Albertson's. We were going to go for a bigger idea than just having a home cleaning products category. Albertson's wanted to get a "service" attitude across.

We held focus groups, gathered consumer and retailer insights, and the result was a consumer benefit driven category marketing program. The "Albertson's My Home Looks Great" center. It found its way into category branding, permanent signage, end aisle displays, a solution brochure and circular ads, radio support.

There is a calendar. There are national events. The plan is both top-down and bottom-up. They introduce different themes over the period of a year -- Company is Coming, Glow of the Holidays. The cleaning department message is kept fresh throughout the year.

SC Johnson brought the collaborative process and creative development to the relationship. That was their contribution. Albertson's participated in the strategic planning process. They conducted a pilot in Phoenix, re-setting the store's cleaning aisle and supporting the effort with displays, circular ads and radio airtime.

To make collaborative marketing work, manufacturers have to stop presenting and start listening. They have to be flexible too. They have to be prepared to adjust to suit the retailer's need, and provide business-building ideas that are based on consumer and shopper insights.

People say you're either hands-on or hands-off. I think I'm hands-around. I stay just close enough so I can keep my hands around things.

Manufacturers also have to have people who really understand the retail business. They need to work in the retail operation for six weeks and find out how the system works. Continuity is also critical. If the manufacturer expects to build a long-term collaborative process they need to have consistency in terms of the people they have working with the retailers, building customer knowledge and know-how.

You have to be prepared to bring the marketing tools and work together in specific categories over the long-term. Integrated, strategic planning will be critical. Innovative, proprietary store/category/brand building ideas will be critical.

Collaboration is about working together toward a common goal. It's about working together to understand, anticipate and satisfy consumer needs.

The book on collaborative marketing is just beginning to be written. Collaborative marketing is opening up a whole new era in marketing that is consumer-driven, retail-centered and consumption-focused.