It’s happened again – one minute consumers are buying in a predictable way, at the usual times, and in the usual patterns. Then, boom! Everything changes.
But this time, instead of earlier toilet paper shortages, the product causing big problems is ketchup! Especially those small packets that are loved by fast-food customers everywhere.
The culprit, once again, causing this supply chain saga is Covid-19. Yes, the pandemic appears to have influenced every facet of consumer behavior. The main shift was caused by closed restaurants that drove consumers to the fast-food drive-in restaurants and home cooking, rather than dine-in restaurant options. It also turned many former dine-in restaurants into takeout places, making ketchup a commodity included in more food orders.
Ketchup packet prices have risen 13% since last January and the market share of packets (sachets) has eclipsed that of tabletop bottles. Ketchup is the most consumed sauce at U.S. restaurants, and even more is eaten at home. The pandemic has increased overall retail ketchup sales in the U.S. by 15% to more than $1 billion. Kraft Heinz leads the market with nearly 70% of the total U.S. market.
Kraft is responding to the shortage and plans to open two new manufacturing lines and increase production by about 25%. It has also innovated a no-touch ketchup dispenser to use at restaurants to help meet safety concerns caused by Covid.
Pass the ketchup please.
Group Activities and Discussion Questions:
Discuss the elements in the supply chain and marketing channel.
Diagram the supply chain and marketing channel for toilet paper.
The world’s first Earth Day events started in 1970; it was the 51st anniversary this year on April 22nd. Supporting environmental protection activities, Earth Day includes numerous events held around the globe. Last year more than 100 million people participated in what has been called one of the largest mass mobilizations ever! The climate demands our attention.
Many companies are using creative ways to get our focus on Mother Earth this year. Restaurant Panera is recognizing the growing use of biking during the pandemic and how Panera fits in by copying its signature bread bowl shape into a bicycle basket. The bike is olive green and the basket is bread-brown, making it easy to cart around foods and goods. Panera was the first chain to label its food to show carbon footprint as well as nutrition and calorie counts. According to the company “if every Panera customer ordered a Cool Food item on April 22 it would – compared to the average American diet – reduce greenhouse gas emissions equivalent to taking more than 1,100 passenger vehicles off the road for one year.”
Another Earth Day event was burger chain Carl’s Jr. teaming up with Beyond Meat at one of Carl’s Jr. Los Angeles restaurant. It gave away free plant-based burgers and offered faux meat sandwiches for $5 via an email promotion. Carl’s Jr. already carries a Beyond Meat burger patty and has sold more than 12 million Beyond Meat burgers. The event was intended to draw in younger, flexitarian-diet customers. According to a University of Michigan research study, Beyond Meats “products need 46% less energy, generate 90% less greenhouse gas emissions than a standard beef patty, and have 99% less impact on water scarcity and 93% less impact on land use.”
If a brand wants to get a customer’s attention, marketers know that there is no substitute for showing the customer how a product fits into real lives in the real world. And to show a lot of prospective consumers this at one time, brands need to show them the product on a large scale such as in a television show or a movie. This can be globally, not just in the U.S.
Take Subway’s experience in South Korea. South Korea prevents TV stations from inserting commercial breaks into programs. This limitation has caused many companies to get very creative in how they showcase their wares. As a result, Subway has placed its products, stores, and logos in at least 17 different shows. And, when the shows eventually get released on Netflix, millions more viewers will see Subway product placements.
A U.S. show, Cobra Kai, began on YouTube but moved to Netflix distribution last summer. The product placements in that show reached consumers who don’t usually watch network TV, but will stream shows, where advertising is either scarce or expensive. Top product placements on Cobra Kai were Coors, Mercedes Benz, and Dell.
Product placement has grown to more than $10 billion a year in the U.S. as brands search for new ways to reach consumers. Streaming is now estimated to account for nearly 25% of total TV viewing. While there are times that the product is very noticeable (such as BMW cars in James Bond movies), there are many times when products are used subtly (but still get our attention).Companies that are able to get their products shown on the big screen – or even a small screen – bring their products to the attention of millions of viewers, all of whom have opted-in to watching a show or movie.
What products catch your eye?
Group Activities and Discussion Questions:
Discuss product placement as a promotional tactic.