Business Case: Phillips Foods, Inc. 1) Problem statement: Phillips Foods Inc. just launched its new product called King Crab. It is a brand new product with a key innovation: a pasteurizing process which allows the product to stay fresh. The product therefore enjoys an 18 month shelf life. Management has decided to split the launch into two phases. Phase I is done; the company targeted foodservice buyers thanks to an advertising campaign through restaurant and institutional foodservice magazines. In the second phase, the target is now food retailers and wholesale distributors.
Ron Birch, product manager is now facing a critical choice regarding the approach strategy: should he keep up with the advertisement strategy or explore a new opportunity with the International Boston Seafood Show? If the tradeshow is chosen then: How many sales people should attend in order to appropriately cover the event? How big should be the booth? It should be big enough to set up the kitchen and have free space to talk with customers.
Where should the booth be located? These are important decisions that the company has to make. 2) Recommendation:
We would recommend attending the International Boston Seafood Show for the second phase of launching the King Crab product. 3) Rationale: There are several reasons why the tradeshow appear to us as the best option for Birch in the launch of phase 2. Firstly, the tradeshow is consistent with Phillips Food strategy of product development. 85% of visitors have a direct influence on the buying decision and are expecting new products; therefore it is a great opportunity for the company to promote its new pasteurizing process and address qualified leads.
Opponents may say that advertising in professional magazines would be better, because it reaches more people and their level of attention is higher than in a tradeshow, but actually sales people are more efficient in closing a deal after an initial sales meeting in tradeshows (1. 6 follow up field sales meetings) than after advertisement (2. 7 follow up field sales meetings). We believe that this is because people are more inclined to listening to the company’s message since they are coming to the tradeshow.
They are more involved and it is perceived as less intrusive compared to a regular sales call. Secondly, King Crab is a new product using a brand new process of pasteurizing; attendees do not know anything about it that is why the tradeshow is very convenient: it allows for demonstrations. Tasting is possible, sales people can have face to face interaction with the prospects and answer their questions, that kind of human contact is momentous when launching an innovation and is not possible when you advertise in magazines.
Phillips has here the opportunity for sensory marketing: using the five senses, create strong and memorable emotions. It has been proven that emotions play a very important role in the customer purchase behavior. For instance, in the Elaboration Likelihood model developed by Petty and Cacioppo, emotions are part of the peripheral route that determines attitude toward the product. Thirdly, the tradeshow has an international scope which is of a big advantage for Phillips Food for two main reasons.
On the one hand, an international tradeshow is a great way to professionally reinforce the image of the brand image and to keep building long-term relationship with customers but it is also a very strong message sent towards their competitors: “we know we are the first on the marketplace for crab meat but we do not rest on our laurels, we are at the right place at the right time with innovative products and processes”. On the other hand, tradeshows enable the company a competitive monitoring.
It is critical to always keep an eye on what national and international competitors are doing, especially when you have this number one position that so many are craving for. This was used in one of the team members’ internship in an American company where a significant amount of the Marketing budget was allocated to attend professional tradeshows in order to increase their visibility on the marketplace towards potential customers and competitors.
However some argue that these events are one-time events and that it is very hard to measure return on investment results compared to advertisements that stay longer because magazines are physical objects. We respond that there are ways of comparing such as the cost to close a deal: if you compare the cost in both medium of communication: it appears that tradeshow is actually cheaper than advertising: it costs $912. 5 to close a deal from a tradeshow versus $3881 to close a deal from advertisement in the Progressive Grocer magazine for example. Finally, in order to make the most of this event, we decided to have 17 staff people on the booth, it should be of 1200 square feet: 600 for open area, 350 for the kitchen and 250 for the exhibit, therefore we chose the #333 booth.