Savvy shoppers wait in anticipation, while Australian retailers are gearing up for the onslaught. Amazon’s arrival is imminent.
Tip Top’s marketing and innovation leader, Graeme Cutler, is the first to admit the bread business isn’t an easy one to be in.
For a start, the baking category from a volume perspective is pretty flat. Sliced bread, for example, is seeing just 0.3 per cent growth in volume, and it’s down in value. There’s also active competition and price deflation, a troubling combination. And social media’s impact on how consumers perceive products and services has only exacerbated some of the negative myths and misconceptions about what’s in bread and whether it’s good for you.
“The way through is what brands bring to the table that encourages people to make a change, and innovation that inspires our consumers and customers alike,” Cutler said.
Cutler joined George Weston Foods, Tip Top Bakeries’ parent company, in May 2012 as business development director across the cake and chilled, frozen and international breads categories, tasked with helping turn the business around. The company had experienced a period of turmoil that saw four managing directors come and go in quick succession.
“We needed to clarify our purpose, strategy and grow the business,” Cutler said. “We are now starting to see the rewards from a growth perspective.”
Before foraying into food, Cutler built his career in trade marketing and sales, largely with cleaning products giant, Clorox. Most recently, he was a regional marketing director, developing innovation and strategy across a diverse set of geographies including Australia, New Zealand, South Africa, South East Asia, China and the Middle East. Prior to that, he was the US marketing director for the Clorox laundry portfolio, a US$5 billion division. He’s also covered car care and cleaning utensils categories locally.
Cutler said he was attracted to Tip Top Bakeries because of the iconic brands it produces, such as Tip Top, Golden and Abbott’s Village Bakery. As marketing and innovation director, he also has a more hands-on role that allows him both to set the strategy and take charge of the P&L, as well as work with local teams to execute.
“Tip Top is unique – increasingly it’s not the case in FMCG – in that we are marketers of our own destiny,” he commented. “We don’t have a central head office or regional team guiding strategy, we do the whole gamut ourselves.”
Marketing wise, things are continually changing, Cutler said. “That’s the beauty and the challenge all in one,” he said. “I see the role of marketing as orchestrating the change that’s needed to adapt to the market environment and how that’s changing, to ultimately grow the business.
“Here, that required a refocus on brands and innovation, which had been let go to a certain degree, and addressing a core issue of the category, which is the issue of declining consumption.”
3-step marketing recipe
Cutler identified three core pillars to how his marketing team is looking to rise to the occasion and better engage end consumers. The first is creating a desire for Tip Top’s brands and gain mental availability.
“We need our brands to be top of mind on the shopping list on a daily basis in our category,” he said. “Insight and data helps us understand what needs to be done there.”
The team is now tapping the findings of a recent market mix analysis report and econometrics model from Foresight ROI to better understand the drivers of sales. “It’s about pulling that down to a level where we can discern which campaigns are more effective than others,” Cutler said.
Tip Top’s second marketing ambition is better influencing along the path to purchase. Cutler described this as getting a decision out of shoppers, and shifting from awareness of the brand to putting the product in their basket or trolley. These efforts are being helped by insights from penetration data, sales data from its retail partners, and shopper research.
The third and arguably most marketing emphasis is delighting the customer through experience. “If you’re not delighting the end user, and the experience of eating our food isn’t good, then the rest of the effort is for nought,” Cutler said.
Again, data from panels, usage experience and sensory work are all critical to achieving success, and he said these are increasingly fed back into Tip Top’s marketing programs and communications.
“We want to grow our business and these three elements are the way we see ourselves doing it,” he said. “We have to create a desire, influence the decision, then ensure the experience is one people want to come back for.”
Media and channel experimentation
Baking is the ultimate FMCG mass market, and Cutler noted there’s not much else that’s fresher, that’s delivered on a day-to-day basis and has a 96 per cent penetration rate. So when it comes to the rise of digital, Tip Top’s strategy is to maintain a focus on reach through media spend and extending campaigns by using digital channels.
Cutler said Tip Top will spend 40 per cent of its media dollars on digital in 2016, increasing in the last four years from a base of between 5 and 10 per cent.
“Digital is driving efficiency for us,” he said. “We’ve found some work we have done on market mix analysis or econometrics is by far highest in terms of ROI in our marketing mix. TV is really important for mass market, but digital is driving efficiency. When it’s a tight market with limited dollars to spend, you’ve got to keep your eye on ROI.”
But Cutler also believed no brand has cracked the optimal media mix yet, and said his team has had its share of successes and failures. What’s minimising risk is test-and-learn.
“It’s complex, there are lots of things changing, and you’ve got to constantly be experimenting with new technology,” he claimed. “We’re constantly learning – it’s a cycle of experimenting with something, learning, and if it’s good, then adapting it to the core. If it’s not, we let it go and move on to something else.
“We allocate 10 per cent of our budget to what we can try that’s different and that provides us with an advantage in the market, or helps us engage and target consumers better to drive better insights. It’s about constantly looking for new ways of communicating with consumers.”
While mobile apps and Instagram haven’t been successful, Cutler said areas it’s seeing great results in are crowdsourcing content and pre-roll in digital video. Tip Top launched its own online community 12 months ago, with the help of digital vendor, Vision Critical, and now has 1500 consumers nationally it talks to about a range of subjects.
“We can test products, concepts, assess attitudes, and get feedback on what’s going on in the marketplace,” Cutler said. “That’s been a flexible, agile, cost-effective tool for us.”
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