Join Rita's Mailing List!


Food as a differentiator and vice versa

I was recently asked to comment on the use of food as a differentiator for other products and on alliances between food businesses and other kinds of businesses. Exactly the kind of thing we call a parallel differentiator in MarketBusters.

We feature a number of plays on the food and other-services-pairings. They fall into a category we call ?parallel differentiators? in which the point that differentiates the experience is not the supposed main service, but the add-ons that go with it.For instance, when MacDonald?s ran its hugely successful teeney beanie baby campaign, people were literally coming in, buying the kids meals and tossing the food. This led one wag to describe McD?s as a toy company that incidentally provides meals.

The opportunity to use food as a differentiator is only increasing, as the whole food consumption experience moves out of the kitchen and goes to ? well, just about everywhere.

Many beauty salons now offer cocktails and bar snacks to their higher-end clientele, changing the traditional experience into one that is more hip and interesting (and incidentally giving people a nice place to hang out).

In a lot of companies, the quality of the free food is boasted about as a major employee perk. At Bloomberg?s world headquarters, for example, the range of items available, from high quality granola bars to muffins and donuts, and snacks throughout the day is just amazing.

Any retail establishment that caters to large numbers of families is intensely aware of food issues. There?s nothing to spoil a sale faster than a hungry, cranky toddler who steals your customer away from your premises to go somewhere where food is available. That?s why they sell meatballs at Ikea, hot dogs at Target and goodness knows what at Wal-Mart. Come to think of it, the behavior isn?t all that different from the somewhat older hungry, cranky types filling the permanently packed caf? at Saks.

Ordinary small businesses use food to show appreciation for customers? business ? as in a car dealership that offers coffee and bagels while you wait for service, or my favorite appliance store that has a barbecue every summer weekend.

Business class hotels use food to make the experience a little more human ? the Doubletree and other business-focused chains may not send a ?boy this is going to be fun? signal to their typical harried guest, but the warm chocolate cookie at check-in often brings a smile. And the happy hours and hot breakfasts are amenities clients actually come to look forward to.

Synergies go the other way too as food purveyors find that adding additional items spices up their margins. Starbucks is a great example ? from forays into kitchen goodies and CD?s, I see that they are now looking to add video distribution in their stores.

And of course, the consumption of food on the move here in the US has totally changed the competitive dynamics of many industries, including automobiles and airlines. Some people buy cars for the quality of their cup holders because that Big Gulp eases the commute. This even goes to a second-order development, as food manufacturers make cereal, snacks and other products specifically designed for cup holders.

The point about food and business synergies is that by working together, they can create a better, nicer, friendlier or more convenient customer experience. Customers that have good experiences are likely to be more loyal customers. Companies with more loyal customers do better than companies whose customers are indifferent.

Pass me a doughnut?

Filed In:

No Comments