Category: Marketing

The Perfect Business Model

I have a great idea for a business!  Let me give you some of the details and then tell me if you will be willing to invest! My idea is to have a grocery store with about 70% less square footage than all my competitors.  We are going to do no advertising in the community; no newspaper advertising, no radio or TV, no mailers to local households. Our selection will be limited with no nationally known brands like Campbell’s Soup or General Mills, in fact we will only have our personal brand or brands you most likely have never heard of or seen before. Oh! And by the way, we will have only 1/10th the inventory available at a full-size supermarket. Are you ready to line up and hand over your money?

I didn’t think so and neither would I, if I didn’t know “the rest of the story.”

The grocery chain I just described is Trader Joe’s. The chain was created almost by accident or fate! The original Joe was Joe Coulombe, a Stanford University graduate who went to work for Rexall Drug Store, a national chain. In the late 1950s Rexall came up with a novel idea, they would start a “convenience” type store that had small square footage and sold necessities (Yes, we are talking a 7-Eleven style convenience store). Their test market was a chain called Pronto Market and started with half a dozen stores in the Los Angeles area. Joe was over the project and firmly believed it was a great idea.

Unfortunately (but fortunately for Joe!) Rexall gave up on the idea in 1958 and instructed Joe to shut down all the stores.  Instead he raised money and bought all the stores (Rexall was happy to get rid of all the locations).

Joe Coulombe grew Pronto Markets to 17 stores before Dallas-based Southland Corporation (creator of the 7-Eleven brand) expanded to Southern California, Joe knew he could never compete with the marketing muscle and economies of scale of 7-Eleven locations. Legend has it that Joe took a trip to Hawaii and came up with the idea of a new kind of grocery store that was laid back and sold specialty items that were organic, quality and well-priced.  He named his stores “Trader Joe’s.” The first store opened in 1967, about the time of the “surf movement” and a new generation of laid-back Americans (especially in California) came along. His timing could not have been better and over 20 years he opened one store per year, all with Hawaiian tropical themes. Yes, his employees wore Hawaiian shirts!

In 1979 Trader Joe’s was bought out by a German grocery magnate named Theo Albrecht. He persuaded Joe to remain and did not change the successful model. So how well has the “no marketing, no advertising, limited choices, off brand” concept worked?  Well, the average Trader Joe’s is twice as profitable per square foot of store space than the large national chains. To its many loyal customers, it is almost a cult. One customer in Kansas City who traveled to California would fill up a large suitcase on each visit. He even set up a Kansas City Facebook page to try and get a location started in Kansas City. By the way, he was successful!

Trader Joe’s management and ownership refuses to give interviews or release any information to anyone and refuses to do any media interviews. They are now up to over 470 locations in 44 states and growing. Here are a few facts about Trader Joe’s:

  • In February 2008, BusinessWeek reported that the company had the highest sales per square foot of any grocer in the United States.
  • The May 2009 issue of Consumer Reports ranked Trader Joe’s the second-best supermarket chain in the United States (after Wegmans)
  • In June 2009, MSN Money released its third annual Customer Service Hall of Fame survey results. Trader Joe’s ranked second in customer service among all companies, not just grocery stores.

A former employee who had owned an advertising agency sold it and, on a whim, went to work for Trader Joe’s with the intent of writing a book. Mark Gardiner became a “crew member” as employees are called but resigned before he published his book knowing the secretive company would fire him.  His book, “Build a Brand Like Trader Joe’s” reveals what Gardiner believes to be the success factors of this remarkable and loved company. (The drum roll please!) Here they are:

  • They only hire friendly people with relationship-oriented personalities (okay, that makes sense but why doesn’t everyone do it?)
  • When you ask for help you are not pointed without emotion to aisle seven, half way down on the right. The crew member, with a smile, walks you to the product, picks it up for you and even gives you details about the product. Before the crew member leaves, he/she offers further assistance.
  • If you don’t like what you bought you can return it at any time, no questions asked for a full “cash” refund.
  • They pay above average wages and offer solid benefits to employees (Yes, that’s right, employees are treated like customers!  Crazy idea!)
  • There are no automatic checkout lines (Yes, you have to talk with friendly people! Going to Trader Joe’s is like going to meet a friend).
  • They encourage interaction with customers.  If you are stocking a shelf you stop what you are doing to assist customers.

Okay, let’s simplify all of this to one thing, “The customer is treated like the most important person in the world while in the store.” I know, too simple, there must be more to it.

Actually…not!

Ken Blanchard, the famous business writer and consultant said it best, “Just having satisfied customers isn’t good enough anymore. If you really want a booming business, you have to create raving fans.”

In today’s world, happy customers are your best source of new business, are more powerful that any advertising campaign, and will allow you to grow your business with the greatest profit margin. Happy employees make all this happen! When Circuit City decided to cut staff to save money and cut salaries, they were bankrupt in two years. One of the most powerful brands in the world, Sears, followed the same path and they are on their last breath.

The simplest truths always prevail, put your customer first and the rest falls in place. There is no magic formula, only magical people who go the extra mile and truly care about others.  Look for these people and hire them! You won’t be sorry! (by the way, give these magical people the right to make decisions on the spot to help customers) Are you ready to invest? Me too!

Bootstrappers Guide to Business

Innovating our Operation

As ranchers and farmers we rely on our ability to Innovate.
Everyday we face challenges that require us to use our Brain
to come up with a solution.

So as innovators we are also consumers of information and Ideas.
These Ideas can come in the most unlikely sources.
One of these sources is SETH GODIN.

Seth has ideas and innovation that will open your Brain to an
innovative way of looking at the challenges we face.

Check his Bootstrappes GUIDE – It will come in handy when meeting those
Challenges.

 

Market cows and bulls rather than cull

Market, Don’t Cull
  • Updated 

Fall is the time for breeding cattle inventory reconciliation.

Factors such as the availability of feed, labor and desire will be part of the review. The outcomes of this review really set the future for the cow-calf enterprise and the degree of managerial pressure through cattle numbers a producer places on the land resources available.

This is a big deal. Individual animals will be scrutinized critically and selected for next year’s production herd. The decisions will set the future marketable production of the breeding herd but also will help capture maximum value for market cows and bulls. This an important facet of cow-calf operations, especially as inventories are adjusted to bring in younger cows.

BeefTalk: Market cows and bulls rather than cull

The marketing of cows and bulls no longer needed in the herd (often called culling) is similar to the annual sale of calves and yearlings. Once completed, the producer and herd settle in for another production year.

If one reviews cattle history, the term “cull” should be dropped from cattle vocabulary. But first, let’s take a closer look at market cows and bulls. I reviewed the executive summary of a publication titled the “National Beef 2016 Market Cow and Bull Quality Audit” that was published by the Cattlemen’s Beef Board and National Cattlemen’s Beef Association.

The previous (2007) audit encouraged producers who “recognize and optimize cattle value, monitor health, market cattle in a timely and appropriate manner, prevent quality defects and are proactive to ensure beef safety and integrity.” Within the industry, steps were taken to address the 2007 goals.

A review of the 2016 executive summary notes a successful outcome of the targeted goals for commercial beef producers when marketing cows and bulls. The implementation of the 2007 goals deserves a pat on the back because market cows and bulls are a significant part of a commercial cattle producer’s marketable pounds.

How much? Let’s look at the CHAPS (Cow Herd Appraisal Performance Software) benchmarks from those producers involved with the North Dakota Beef Cattle Improvement Association (NDBCIA). The CHAPS benchmark shows that for every 100 cows exposed to the bull, the producer would have 91 calves in the fall.

If the male-to-female ratio was 45 steers and 46 heifers, this producer would have approximately 25,785 pounds of steers (573 pounds per steer) to market and 24,932 pounds of heifers (542 pounds per heifer) available as potential replacements and/or to market at 193 days of age. The 15 replacement heifers (14.9 percent) would account for 8,130 pounds, leaving 16,802 pounds of market heifers.

Approximately 13.2 percent of the cow herd inventory also will be reduced, accounting for 18,057 pounds (1,389 average cow weight for 13 marketed cows). If a bull also is replaced, more than 2,000 pounds of market bull would be available for this assumed NDBCIA herd of 100 cows.

If a producer marketed calves at weaning, approximately 42,587 pounds of calf would be available to sell and 20,057 pounds of market cows and bull would be on the auction block. This is no small piece of change because 32 percent of the production weight is market cows and a bull.

So think positively. Market, not cull, animals.

Back to history: The word “cull” was probably an unfortunate term associated with fall herd reduction. A scan through some computer dictionaries or Webster’s Dictionary shows the definition of the word “cull” as rather offensive. Webster says that if we use the word “cull” as a noun, we are referring to “something rejected, especially as being inferior or worthless.” The word also can be used as an action verb meaning to “select from a group or to identify and remove the culls.”

When producers say they are culling, the statement is still true; however, the days of removing inferior and worthless animals should be historic, not current concepts of the process. More correctly, cattle removed today are market cattle, and the livestock markets actively sort and present excellent market cows and bulls. The culls, that is, those cattle that are so inferior as to be worthless, never should be marketed.

A managerial talking point certainly is created when nonmarketable cattle arrive in the sale pen. In terms of marketing alternatives, producers need to strive for zero tolerance by marketing all cattle in a timely manner. Holding some cattle through the grazing season when they should have been marketed the previous year is poor management with serious consequences.

When cattle arrive home from summer pasture, sort, resort and market bulls and cows without delay. The concept may seem simple, but understanding the roots of the process means changing a very deeply embedded concept that has been long established in the cattle industry. No herd should have any cull cows or bulls. Now go read the 2016 executive summary.

May you find all your ear tags. — Kris Ringwall

(Kris Ringwall is a North Dakota State University Extension beef specialist, director of the NDSU Dickinson Research Center and executive director of the North Dakota Beef Cattle Improvement Association. He can be contacted at 701-483-2045.)

More Buyers Wanting your Cattle

Mention the word “Marketing” to a group of ranchers/farmers – and watch their eyes roll and see them squirm in their seats. Marketing evokes fear and apprehension as it is the one subject that create the most uncomfortableness.

Imagine – what happens when you get 2 more bidders to the sale barn to bid on your cattle. How much more per POUND will you get.

  • 12c a pound on a truckload of 500 pound calves equals to just over $5000 for the load.

That is the power of getting 2 more bidders to your sale.

YOU ask? How –

  1. Simple website that can be be built for $500 ( plus $100 a year ) Find a friend that develops websites for ranchers. ( KitsList.com).
  2. A couple of 1/4 page ads in Regional Publications ( $1000 a year )
  3. Pictures of your operation as the calves grow ( on your cell phone )
  4. Patients/Consistency – this will take time for buyers to notice the difference that sets you cattle apart from everyone elses
  5. Wean and Pre Condition – It pays for the work put in. Feeders want weaned and vaccinated calves. Check this Article.

For an initial investment of $1500 – YOUR calves will be ” MARKETED “.