BUZZ Marketing: Kayem Foods, Inc. Al Fresco Chicken Sausage

BUZZ Marketing: Kayem Foods, Inc. Al Fresco Chicken Sausage

State the problem – background

            Kayem Foods, Inc. is a well-known company in the industry and among consumers. The company was trying to expand its brand awareness and increase revenues through other products and, therefore, has introduced a new specialty product into the market. The new product Al Fresco Chicken sausage corresponded to the company’s overall brand image of freshness and quality and offered additional benefits for the proposed target market. Kayem Foods, Inc. realized that in order to make this product successful in its market niche, it had to spend certain amount of money on marketing the product line. The first marketing campaign involved buzz marketing, which was estimated to bring very good results. The increased sales numbers partially supported this estimation. However, since the sales team was also working towards expanding the customers’ base through offering discounts, it was impossible to determine whether the success of the sales of this product was a sole responsibility of the buzz marketing campaign. Whatever the case might be, the sales began to grow making the Al Fresco Chicken sausage a best seller among similar products. Therefore, the marketing team had to make sure the buzz around the new product would not fade and additional marketing plans had to be implemented. This is why for the next fiscal period of 2006, the company had to come up with another marketing plan with extra budget on hand, but was unsure what would be the most effective approach.

Background

            Kayem Foods, Inc. has been known for its success for over 100 years as a processor and distributor of fresh meat products. It offered a wide variety of meat products under several brand names mainly for the delicatessen section but also wanted to expand its offerings to the frozen section. The brand awareness was very high in the Northeast but the company also expanded into other regions such as Midwest and Southeast. The company experienced high sales volume but was not a number one company among competitors like Hillshire Farms, Johnsonville or Ball Park. In fact, Kayem Foods, Inc. was only third in the market share. The company lacked something distinctive. This resulted in the fact that supermarkets had “gaining power” over the company. This in turn affected the profit margins. After those concerns for profits were raised, the company decided to introduce a new well recognized “demand brand” that would set them apart from competition and consequently raise profits. Such product could guarantee the possibility to charge a premium price and somewhat eliminate price competition if it would be a success. In addition, this product could take the brand to the next level and open up new markets. The product, which was chosen for this step was Al Fresco Chicken sausage with several flavors, which put it into the gourmet food category. Now that the company had a distinctive product, clearly identified target market of 25-54 year old women, who was health conscious, all it had to do is spread the word about this product through several marketing channels. The problem that the company faced was the limited marketing budget. Therefore, it was proposed to implement buzz marketing campaign in addition to coupons with the total of $90,000 budget.

Results of first Buzz Marketing Campaign

            The reason why Kayem Foods, Inc. decided to go with the buzz marketing campaign was the lack of substantial marketing dollars, which were necessary for the use of traditional methods. The budget for this period was only $90,000, which included $47,000 for the 12-week campaign for buzz marketing and $43,000 for coupons. Although traditional techniques were considered more appropriate and supposedly more effective for increasing the brand awareness for a relatively new product, Kayem Foods, Inc. decided to utilize BzzAgent company to spread the word about their new Al Fresco Chicken sausage. The benefits of buzz marketing are rather obvious. They include the credibility of the conveyed messages about the product because people tend to believe more to other people’s feedbacks. Plus, this company utilized friends and family as the closest source for targeting. Second benefit lies in the human nature to share good experiences with the outside world. The company assigned 2000 agents to spread the word about the new product to their friends and family through various activities from cooking the product at home to bringing food to the workplace. We could see that the results of the campaign were clearly positive. The 77% of those agents were the preferred target market of females. The percentage of people, who have never heard of the new brand of Al Fresco, consisted of 91%. So this campaign alone educated minimum of 2000 from the start about the new offering on the market.

The challenge of such advertising method was the fact that the product’s distribution was limited and not every supermarket carried the brand. A lot of the agents experienced difficulty finding the product in the first place. In fact, 23% of the agents could not find the product at all and thus could not fully participate in the campaign. It was also very difficult to analyze and single out the success of only this campaign. In other words it was merely impossible to track down the success of each of the buzz hit and what it generated in terms of new sales or new accounts because the sales team decided to incorporate additional efforts, which helped the company strengthen the campaign. The table shows the increase in sales for the period before, during, and after the campaign was run (June 1, 2004 – August 31, 2004).

Date	Sales in $(000)
February, 2004	257
March, 2004	262
April, 2004	366
May, 2004	323
June, 2004	368
July, 2004	500
August,, 2004	399
September, 2004	453
October 2004	575

The highlighted months show the obvious increase in sales for the period of the buzz marketing campaign. After the campaign was completed it is clearly seen that the sales continued to grow. It is unclear whether it was only due to the campaign or the 10% off the regular price that the sales team offered during the same period for the product to their wholesalers and supermarket buyers.

Second Buzz Marketing Campaign – descriptions/details + detail cost estimate

            For the next fiscal year the marketing budget for the product was increased to $185,000 because it was necessary to keep the product’s buzz in the air through additional marketing efforts. Therefore, the director of marketing, Matt Monkiewicz, thought it would make sense to implement the buzz marketing campaign again. Although this time the geographic area should be different. It was estimated that the buzz marketing would cost $60,000 in addition to estimated $12,000 - $15,000 reimbursement budget for the various coupons that consumers redeemed. So the total cost for this campaign would be around $75,000. The director believed in the success of the buzz marketing and thought that for traditional advertising to bring success, a much bigger budget has to be assigned. Unfortunately, recent studies show there was an ethical problem with buzz marketing, that people who are approached about a new product, have no idea the company was targeting them indirectly through the use of their personal relationships. The skepticism around this campaign grew within the Kayem Foods company and other retail executives, who did not see how such campaign could really affect the sales in the long run. In addition, there was no guarantee that in the new selected geographical area, the participating agents could easily find the product in the supermarkets because the new regions were not simply familiar with the product.

Traditional Magazine campaign – description/details + detail cost estimate

            The traditional magazine campaign was considered the appropriate standard to advertise such products for consumers. The competition spent millions of dollars each year to attract the potential customers. However, Kayem Foods, Inc. did not have enough money yet to advertise on the same level. The director of marketing, however, knew that such methods could definitely help expand the brand awareness through specialty magazines that targeted approximately the same consumer as the company for this product. The costs for magazine ads are quite high. The table below shows the estimated costs for the ad placements in 3 food magazines.

	Circulation	Cost of a Single Insertion Full Page, 4Color Ad	Half-page 4Color Ad (60%)	One-Quarter page 4Color Ad (30%)
Better Homes and Gardens	7.6 million	$359,000	$215,400	$107,700
Food and Wine	0.9 million	$66,275	$39,765	$19,882.50
Cooking Light	1.7 million	$96,400	$57,840	$28,920

Since Better Homes and Gardens charged too much for even a one-quarter page 4 color ad, it was out of the budget’s limits. Therefore, Monkiewicz knew that in order for the ad to be effective in one of the two other magazines with considerably lower circulation, it has to run at least 2 or 3 ads to attract desirable attention from potential customers.

Rationale and plans

            With $185,000 budget on hand it is possible to try a traditional marketing campaign for the next period so the company will have some basis for future decisions.  Below is the table with the associated costs for the second marketing campaign:

Type of Advertisement	Cost	Totals
Cooking Light Magazine One-quarter-page 4 Color Ad	$28,920 per ad, Total of 3 ads	$86,760
Ad creation (in house)	$1,500	$1,500
Consumer price-off coupons	$90,000	$90,000
		$178,260

Better Homes and Gardens magazine publication offers wide exposure and is considered one of the best sources for ad placement. But advertising in it is out of the picture because it goes over the budget dramatically. Therefore, I suggest running 3 one-quarter-page ads in Cooking Light magazine, which offers circulation of 1.7 million copies. The total for three ads would be $86,760 in addition to the $1500 creative part of putting the ad together. This could be done in house to save money. This magazine could mean a start for the traditional way of advertising of such a product and therefore retail executives will see the efforts the company is putting towards increasing brand awareness and consequently the sales. The retail executives saw a direct link between advertisements in those specialty food magazines and having the merchandise in the store. One definite benefit of printed ad in a magazine is that such magazines have longer shelf lives and could be passed well beyond the marketing campaign dates. In addition to the print ads in the magazine the sales team thinks that adding some price off coupons to the overall marketing picture can help increase the sales even more. The estimated budget for this effort is $90,000. The second marketing campaign is scheduled for the whole year and it would be more efficient to incorporate those coupons and magazine ads together, especially during the holiday season, when sales are generally higher overall. Coupons and ads can work seamlessly together and dictate a better shelf place and retail advertising location. Plus, coupons encourage extra spending and can even attract new customers to try the product. Buzz marketing campaign may wear off at some point and there is no 100% guarantee or control over the results of such campaign. In addition, buzz marketing was suggested in the new geographic area, and therefore there is no guarantee that all the buzz agents will be able to find the products in their area like it happened in the first campaign. What’s even worse, a word of mouth is a strong channel, and the new area may not have the same positive feedback due to certain characteristics. The selected agents may not like chicken sausage or sausage products at all. This can distract from the already achieved positive results. So the total budget for this period for the marketing campaign is $178,260. The extra dollars could be spent for unforeseen circumstances like the extra coupon reimbursement fees or putting together a new ad.

All things considered, the product is already a number selling chicken sausage on the product. It is important not to lose the position through constantly reminding the consumers about its benefits. Limited marketing budget if spent wisely and cost-efficiently will guarantee a great return on investment in the future and lay grounds for expanding the marketing campaign further.

Please Note! All of the work posted in my blog is my personal insight into problem solving and answering questions. It is subjective opinions based on scholarly readings. The information may have some errors. I am not a professor.

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