How a Complete Breakfast Will Make You Re-Think How You Market Yourself

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Grocery Aisle

Imagine walking down the aisle of your grocery store and coming across 1000 different brands of breakfast cereal. What does a new cereal need to do in order to get noticed? Better yet, what does it need to do just to get on to a shelf that crowded?

 

The new cereal may be “unique” but there is only so much space. The grocery chain hasn’t heard of you, the consumer hasn’t heard of you, and the big incumbents will do whatever it takes to keep their cereal sitting at eye level as consumers walk past.

 

So what would you do?

 

Here is what the cereal industry does…It competes.

 

And price is about the last thing it competes on. Instead, it finds all sorts of other ways to differentiate. It inspires. Have you ever seen a Wheaties commercial that referenced its taste? No – they associate with high caliber athletes and proclaim themselves as the “Breakfast of CHAMPIONS!!!”

 

“Performance matters. Now…what else have you got?”

 

It is creative and it innovates – manufacturing sales out of thin air. Melt in some marshmallows and… Bam! Rice Krispie Treats. Kellogg just got beyond the breakfast table and took a slice out of cookie sales in the process. And then General Mills realized it could do it too and took another swipe with Cookie Crisp.

 

These guys have figured out the value of stretching a kid’s imagination. Who doesn’t want to eat breakfast across from a six foot gangly-armed, hyperactive rabbit or a bandana wearing tiger?

 

Bottom-line, not only do they differentiate, they scratch and claw and spend a boatload of money promoting themselves.

 

How is this relevant?

Whether they realize it or not, investment managers face a much more challenging situation than the cereal industry. Rather than a few hundred competitors, hedge fund managers have 10,000! And not only is the audience for breakfast products about 30x the size, it is also a whole lot easier to access than the audience for the alternatives community.

 

As sophisticated as the hedge fund industry considers itself, when it comes to getting noticed – not only is the cereal industry more sophisticated, it is exponentially more innovative.

 

To be clear – I am not suggesting that we need more cartoon mascots or protein-rich, gluten-free, acai berry-flavored cereals. But we also don’t need more fundamentally-driven long / short equity funds or global macro CTAs running unique proprietary algorithms either.

 

As Andrew Gitlin, co-founder of Prime Allocation and a pioneer in the multi-manager seeding business says, “Performance matters. Now…what else have you got?”

 

He makes the point that, “in an industry teaming with competitors, you can’t expect to be successful if you aren’t willing to scrap and fight – and to stick with it for a considerable period of time. The bare minimum even for Kellogg, General Mills and Post involves producing Saturday morning commercials and paying slotting fees to the grocer just to stay on the shelf.”
“You have to find a way to be perceived as different. Within the alternatives community, numbers and pedigree are no longer enough to get an allocation…let alone just get into a room with an allocator.”

 

By JD David

 

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