So how many Tim Tams are in a pack? How big is a block of chocolate? What exactly is colour 150d or food acid 338? And what does bread have to do with how much bread these companies make? Welcome to Food Marketing 2013. You’ve already experienced the practical, but let’s get to some of the marketing theory behind food marketing in 2013.
War is hell – even in marketing
Firstly a bit of background. The market war between Coles and Woolworths shows no signs of slowing down. Any war though has casualties. From suppliers being forced to operate on incredibly tight margins to get contracts, to loss of competition in shopping centres and markets in general, to decreasing choice of products as retailers look to maximise margins on economies of scale, especially in generic or home branded products.
These products are now approaching the mid-high twenties in terms of market share, up dramatically from the teens only a few years ago. This is mainly due to the price war, but other factors have also played their part, such as low cost independent retailers like Aldi and Costco.
And it is the impact of the increase of the number and scale of these generic products that is causing another casualty. Taste. So why is this happening? In marketing a theory called difference threshold, or more commonly the JND - Just Noticeable Difference – which basically means there is a threshold point where you can change the actual product without the customer noticing anything different.
If you pass that point though - in other words, the consumer notices - then hello trouble for your brand and your sales. This is usually because companies change the components of the actual product to something cheaper, hence your anger and vowing never to buy that cheap stuff again! Alas of course with that lack of choice that usually doesn’t happen.
With the JND though the most important thing is that the consumer does not notice. So organisations and brands will ensure that their marketing focuses your attention on what they do want you to notice, so anything you don’t is where they can make changes – for example the number of Tim Tams in a packet.
The JND in practice can take many forms – the size or type of packaging (the Cadbury and Vegemite examples are some examples but I often get people telling me about the amount of air in chip packets), place or type of manufacture such as country of origin (Many premium brands are actually made in low cost countries, such as Bangladesh, but still sold to us as high end), and of course components.
Components will vary from product to product but remember if we don’t or won’t notice it this is where corners will be cut in order to increase margins. Or, how bread and your organic water makes you more bread.
Okay, to the hot topic of conversation. Yes, I’m allowed to make the odd bad pun. Bread and the now very noticeable difference. The Australian Competition and Consumer Commission (ACCC) has commenced proceedings against Coles in the Federal Court for:
“The ACCC is alleging false, misleading and deceptive conduct in the supply of bread that was partially baked and frozen off site, transported to Coles stores and ‘finished’ in-store. The products were then promoted as ‘Baked Today, Sold Today’ and/or ‘Freshly Baked In-Store’ at Coles stores with in-house bakeries.” ACCC, 2013
So in other words somewhere along the line someone has noticed a difference in their bread. The ACCC has been very closely monitoring the market war because of the consequences on many areas, some of which I’ve noted above. Here is what the ACCC Chairman said:
“The ACCC is concerned that Coles’ lack of distinction in its promotional representations between bread products that are freshly prepared from scratch and par baked products is misleading to consumers and places competing bakeries that do freshly bake from scratch at a competitive disadvantage.” ACCC, 2013
Had Coles used any other words in their promotion other than the ones they have I think they would have escaped any ACCC attention. It goes to show just how important the JND is to food brands at the moment in turning your bread into more bread, or money.
And now to “organic” water. Water organic you say? Well you weren’t the only one. The ACCC also had similar concerns. As ACCC Deputy Chair Della Rickard said:
“Credence claims such as "organic” can be used to justify higher prices and create a competitive advantage for the user. As such it is essential that they are only used correctly". ACCC, 2013.
According to the ACCC and many scientific researchers, water can’t be organic as it is not an agriculture product. Perhaps in some parts of the world it resembles one, but here no. Hence several brands have been ordered to rename and repackage their products.
Again, being water, how would you know how one water brand tastes from another? Exactly! You probably won’t – the JND here is very high, so hence the need to differentiate the product in other ways, namely packaging and labelling.
So, will we see an end to this? Will we get our food innocence and taste back? Unless you know what you’re buying is fresh and made the way it is stated, sadly no. ACCC penalties do not match the sometimes significant financial gain.
After all companies need to survive. To make profits. To pay staff and shareholders. Super funds don’t like hearing about single digit returns as we don’t like seeing that on our statements. So no. But I already know you won’t be able to tell the difference anyway. Now where’s my bread and organic water?