Shift Balance with Trade Promotion and Advertising Age

Marketing Summaries

Mattioli, D. (2011). Grocers Are Testing Smartphones. Wall Street Journal. Accessed 10 October 2011.

This article details the increasing use of technological innovations and integrations, and particularly the use of smartphone applications, in the marketing and sales promotion of items at individual grocery stores. In other words, grocers and other retailers are looking at ways to maximize on the way the people utilize smartphone technologies as well as at new ways in which consumers could use “apps” and other smartphone-based information to be directed towards specific purchases. For example, some retailers are looking at ways that people use comparative shopping features and experimenting to see if there is a way this could be done in a manner that allows for the marketing of additional like-items, or create larger purchases overall; sometimes it is believed that simply having more information available in the modern age can help a retailer (or a manufacturer) make a sale.

A major problem for many retailers has been that despite knowing about the importance of technological adaptations and having additional information available for consumers, costs have seemed prohibitive. The low margins in the retail grocery industry do not leave a lot of room for innovation in marketing strategies, especially when the costs of technology are seen as so high. With smartphones, though, the costs of creating information and avenues of access for consumers are minimal, as long as the right methods are employed.

These methods finally appear to be emerging, and this means that retailers will be able to better direct and better predict sales through the concentration and aggregation of their marketing efforts and new smartphone software. From accessing competing prices, companion offers, and basic product information through the use of Quick Response Codes to helping customers find items in stores, retailers are hoping that these new marketing technologies will both cut costs and increase sales at a time when economic uncertainty is still creating major worries for the industry. Increasing efficiency and effectiveness is always the name of the game in business, and it is of paramount importance in the current era; utilizing the now near-ubiquitous technology of smartphones and their applications is a must for savvy grocers.

Mourdoukoutas, P. (2011). How Greek Yogurt Captured the American Market: The other Half of the CNBC Story. Forbes. Accessed 10 October 2011.

Greek Yogurt, which was all but unheard of in the United States less than half a decade ago, now outsells traditional yogurt giants by wide margins and is an enormously popular product. This article details the rise of this product, tracing its popularity back to the first importer of FAGE brand Greek yogurt, a small retailer in New York City. Simple word of mouth from his Greek-Americna customers to others saw sales of FAGE rapidly expand, and from their the product really took off.

Kostas Mastoras first started importing the yogurt following a trip to Greece for the tasting and purchasing for feta cheese for his shop. By 2000, he was importing so much that FAGE approached him about starting a joint venture to distribute their product trhoughoutthe U.S.. Though FAGE and Mastoras could not agree on terms, FAGE did open a U.S. distribution subsidiary and Mastroas continued to sell the product at his New York locations and worked with the team at FAGE to develop the product for the American market. The lower fat and non-fat options that were developed in part at Mastoras’ insistence became FAGE’s most popular sellers, and when Trader Joe’s and Whole Foods began carrying the product demand increased so significantly that FAGE was no longer able to keep up.

Opening a production facility in New York helped matters somewhat, but at this point word had really gotten out about the yogurt and the Chobani brand was about to hit the market, and it hit hard. Up to this point, the growth of Greek yogurt sales had been almost entirely driven by word of mouth, and even the inclusion of the yogurt at the large-scale specialty foods retailers like Whole Foods and Trader Joe’s was spawned primarily due to the previous track record of yogurt sales, not the result of specific or concentrated marketing efforts. Chobani changed the game, however, and quickly became the top-selling yogurt maker in the United States — from no sales in 2007 to over $500 million in sales in 2011. The power of marketing — when combined with a good product — is truly astounding


The advertising to sales promotion ratio has changed during the past decade from what was once a 60:40 ratio, to what is now a 75:25 ratio. Reasons behind this change include the fact that it is a much more competitive marketplace overall, and that companies must compete for sales in an aggressive manner. Another measurement to consider is the Lifetime Value of Marketing Model that values the dollars spent on advertising over the life of a particular product, not just the life of the ad campaign itself.

“The so-called Lifetime Value of Marketing Model makes a strong case for sharper advertising copy, a higher advertising-to-sales dollar ratio.” (Neff 2000-page 4) Most for profit business’ consistently study industry trends, and are copiously aware of the costs of producing and selling their product. If studies show that more profits can be generated by spending additional advertising dollars on each sale, then most business’ will likely spend those dollars.

Another factor to consider as to why the ratio has changed so dramatically is due to the lower costs of producing the products (in inflation adjusted dollars). With globalization of production the costs to produce the product (whatever the product is) is generally lower percentage wise than it was just a few short years ago. Companies can apply those additional dollar savings to other areas, and the advertising area makes a certain amount of sense for using those savings, especially if spending such dollars on advertising leads to more sales, and even greater profitability.

Neff states, “the net effect is that a one-year campaign can pay off with a 9% spike in sales over a decade.” (pg 4) Those are numbers that will help any companies coffers.

Works Cited

Neff, Jack (2000) New Model: Ads pay off Longer Than First Year: Findings could shift balance with trade promotion, Advertising Age, Vol. 71, pg 4, Accessed July 22, 2007


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