Organic Processing Vo1.8 #5 - September/October 2011

you can’t prove the value of past marketing, especially to companies that have traditionally not emphasized marketing, you will have a hard time justifying increases. On the other hand, if you have solid data, you can prove what works and what doesn’t and the company can strategically choose which efforts to invest in and work to improve returns over time.

Budget as Percent of Revenues

One metric to consider when evaluating a marketing budget is the percentage of sales it represents. The average marketing dollars spent for all natural products companies (small, midsize and large) is only 3. 26 percent of sales. When breaking this down into small (less than $1 million in sales), midsize (between $1 million to $15 million) and large (more than $15 million) companies, the percentages change. For small companies, the average marketing budget is 13 percent of sales. For midsize, it’s 5. 3 percent of sales, and for large, it’s 3. 5 percent.

This shows that smaller companies need to invest a
greater percentage of their revenues to get their products
noticed, and that, as a company grows, marketing gets a
smaller percent of the overall budget. Also, there is a mini-
mum cost of entry into the natural products marketplace
(trade show fees, retailer and distributor fees, distributor
and retailer advertising, etc.), which explains where much
of a smaller company’s marketing budget goes.

Real Dollars

Percentages don’t pay for an ad in Organic Processing or booth space at Natural Products Expo West or a live demo. So what are the real dollars being spent in trade and consumer marketing?

To begin with, the split in spending favors the consumer, with on average 57 percent of the budget going to consumer marketing and 43 percent toward trade marketing

Strategic Advice

1. Have a strategic focus. Decide what you are going to do and align your resources behind that goal or goals (no more than three). Do not get distracted by what you didn’t do when one of your goals begins to falter (it will).

2. Be open minded and step outside your comfort zone to reach more local markets while using the internet to reach global markets.

3. Have both marketing and sales understand mutual company goals and create a plan around that.

4. Internal as well as external communication is the key to success. Natural products have to be explained even more in order to underline their advantages.

5. Be honest and don’t try to compete with the schlocky marketers on their level.

6. Spend money on raising awareness for core products rather than development of too many new ones.

7. If you are going to expand into mainstream channels, make sure you have a realistic pricing strategy.

Advice From Natural and Organic Marketers Themselves

So what sage advice do current natural and organic marketing profes-
sionals have to offer? Here are a few tips from the participants in the survey.

Note: These are direct quotes and do not necessarily reflect the views of the authors of the Benchmark Report.

Financial Advice

1. Spend your marketing dollars very carefully. There are many options, but very few will give you the exposure and return you desire.

2. Increase marketing budget substantially. Sell fun, not frump. Sell on the up, not on what organics don’t have.

3. Pay attention to high costs of creating and differentiating a brand. Getting the distribution is only part of the success.

4. Do not sacrifice profitability for growth.

5. Don’t market a commodity product that requires significant consumer education without adequate funding.

Research Advice

1. The times are different, the market is different and past experience is not necessarily relevant. Try to find what is relevant today.

2. Understand your customers’ pain points first and then work on creating a product that services that pain point.

3. Engage your customers to gain insight into their needs (product and information), buying patterns, etc. and from there work on developing targeted marketing materials.

4. Maintain internal communication of brand strategy and frequent updates supporting successes (trade feedback, consumer feedback, media attention, etc.).

5. Analyze your consumer and her values. Generation G is the new consumer who expects from brands more than products.

Tactical Advice

1. Work with like-minded companies (build partnerships). Leverage social media (cost effective). Create stories consumers can tell. Be disciplined (you know you have a strategy when you say “no” to things).

2. Set a clear goal & use imaginative guerrilla marketing. Position the product and the brand with the target consumer group as not only a health benefit but also as a lifestyle enhancement.

3. Do your best to focus efforts. Performing one marketing tactic well is better than committing to several tactics and executing them on a less-than-excellent level.