Tobacco Documents Online

KEEP' YOUR EYE ON. TI$E BALL Introduction; You heard a little about the grocery market yesterday. Today you're going to hear A lot about it. 206 1 One of the greatest thrills in selling Is to discover a sleeping market, work out a plan to capture it, and then pro- ceed.to successfully complete the job. That's a thrill that all of us can share in respect to the Voluntary Chain market. As Mr.Z4-DeO =1~1 y(106x)' learned from his friend from N,ars, the voluntary wholesaler groups are an important part of' the huge grocery aiarket. N!ot more important than any other part of the market, the corporate chain stores or the independent., but more important to us because we have discovered a key to this market that makes it reasonably easy to capture It if'we handle it right. That key is our advertising in the magazines published by the groupp headquarters. Let me say right here that this advertising is in no sense a payment for any service's on the part of the wholesaler. The thing,we buy inithe advertising is a chance to:tell an intelligent story to a group of wholesalers,, wholesaler's sal!esmen, retailers,, and retail clerks, plus a certain amount of voluntary cooperation from the group headquarters in their bulletins, in the magazine itself, and initheir meetings. Please realize that all of this extra cooperation is voluntary

206. 2 and while we hope to~get it, andiexpect to get it, andiin a sense count on getting it, it is.still an added plus that goes with our advertising contract. However, letls look at the record and see Mow,much of it we did get. In Boston, for example, Irving Wise got cooperation from one N.R.O,G. group that does not even sell cigarettes. In. Philadelphia, I was present when Oliver Stout, President of Quaker City Wholesale Co., saidito,300 members at their annual meeting, "Philip Morris is the only Company cooperating with us, and we certainly should cooperate with them."' In Minnesota, Jordan Stevens, the Cooter house, sent our busletins to all their~stores urging them to promote cigar- ettes and feature Philip Morris. They put us in their newspaper aide and when C. E. Lloyd and B31l Liebetrau got through, they even stocked Spud's and rania drive on them - and's that ''s some- thing. In Coo3Tand, Ni. Y. , the NRO(3 man called in his 14, employees and said, "Let"'s all smoke Philip Morris. Later 9 out of' 14 were found smoking our brand. How do~you get action of this kind? First: Make the calls. Seoiond4 Call on the top man. Third: Sell hard -- and, the only way yowcan selll hard Is to master the story, to know it inside

206 3 out, to!believe in it yourself, and' not to give up when somebody doesn't agree with you. Niow herels a scene that could take place in any one of'650 of the wholesale houses in our group progrm Or, for that matter in,any wholesaiie grocery house. A scene like it could take place in any grocery chain or retail store. This little playlet will never win us the Pulitzer prize, but it can sure help sell cigarettes. The scene is the office of the head of a wholesalee grocery h~ se. The Philip Morris salesman has just come in. Note the WWwelcome he gets. 8be Eook' Philip~ M+orris: "'I'm Jt2=2=w, the Philip Morris man." Grocer: "'Philip Morris eh? What's on y0ur mind'?"' Philip Morris: "Cigarettes -- my favorite brand." Grocer:: "Doni''t talk cigarettes to me -- they're a nuisance. Can't make money on 'em. In fact we cut gem out for a while. Now we just have them for a convenfience." Philip Morris: "You mean the~percentage of'profit iso too low?" Grocer: "It sure is. We make less money on cigarettes than our cost of'doing busi.ness. Costs us 4% to do:business, and can't make it on cigarettes. Cost of handling, goods is too high these days." Philip Morris: "Mr. Grocer,, that depends on how you look at it. Your costs of doing business are based on your expenses and cigarettes are one of the

206 iF P.M. (cont.) least expensive things'you can handle. Take trucking for examples you load a truck with canned goods at $3 a case: You get about $6,000 in a truck.. Youiload cigarettes. You get $64,000 in the same truck. And, with ten t3.mes the value, it still weighs 60% less. "Look at the economy you get in warehouse space. That case of cigarettes gives you over $40.00 per cubic foot of space. Cannedi goods yield only $3.00 per cubic foot. That means if you fignre in percentagea, cigarettes come in at T-r;N 1,14 one aer..W the cost. "Mr. Grocer, let me tell you a little story. Itt's about the time Charlie Schwab was riding on altrain and he said toithe porter, "George, whatts the average tip?" George thought fast and said, "$5.00." Whereupon to his amazement Schwab gave him $5.00. George thankedihim and said, "Gosh Mister, youlse the first person that ever came up to the-average."' "A~ctually, there's no~ more perilous 3n, business than trying to figure on average costs. Cigarettes do make money. And, with handling costs as high as they are, it's a good thing you have an item like cigarettes that handle

206 5 ( P.M. (oont.) so cheaply. "But, there's another reason why you shouSdlpush cigarettes." Crocer: "Whatts that?" Philip Mcrris: "Let me show you a chart. (tCha:rt 50 Years)' See that curve. Thattscigarette volume over 50 years. Wp, ZUp, Up! -- and still rising. 'And; 4-va ) the trend is toward the grocery store. "Mr. Wholesaler, cigarettes are!rea!lly hot in the •grocery field' -- andi,, getting hotter. The question is, do your retailers know it -- and are they getting their share? "Consider this -- let's picture a little re- taller out on ATleghany Road -- your retailer. He may not even be!buying his cigarettes from you -- which probably pleases you if you don1t make money on cigarettes. "Anyway,, you still have a big stake in making him "cigarette strong" inithat ne.ighborhood, because ifyou don''t, and he loses his cigarette IV play to another store -- what happens? You lose other business. Ifthe lady buys cigarettes in the Q& P. ahe's sure going to buy something, else. That means you lose your private brandi

206 r f' P.M. (cont.) Pea.s or Coffee. Even if she bu,ys in the drug store, you can lose candy, or toilet tissue, or twenty other things. "Mr. Grocer, ev=if' y=have never sold another cigarette it would be smart to keep this store of yours strong in cigarettes -- they're a terrific traffic puller." Grocer: "Yes, but they don1t want to push cigarettes. Johnson of'the Great Super chain iis in our group -- seven big markets -- and he won't push cigarettes." Philip Morris: "Then let's talk to~hdm together and change his mind. Y=can''t afford to lose all the coffee and canned gooftthat''s going elsewhere when hi& customers buy cigarettes somewhere else." Grocer: "How can~ you convince him?" Philip Morris: "Zook, he,re's a survey that Winston and Newell, the big wholesaler in Minneapolis, made on profit per square foot of floor space in:a retail store. They found cigarettes yield $16.40 per square foot. Much higher than any category imthe store. "Then in Detroit, the Big Bear markets with 16 stores clear $800.00 per.week In cigarette profits and they say that that's the cleanest

206 7 P.M. (cont.), money they make in their whole operation. "In Chicago the National Tea Stores figure out that although canned goods take about 180 linear feet of shelf space, the cigarettes take about lg feet. "Sure they sell more canned goods, but how much more., About three times as much, but it takes 1'1 times as much shelf space to do it. "We can change Mr. Johnson's mind'and I'd like to talk to his managers too. They work on e.: bonus basis and cigarettes all add in their volume. Firsti we want to get the boss sold and get him started on a program."' t3rocer: "What kind of' prograzn?"' Philip Morris: "'Pushing cigarettes:-, five things 1. Be sold on the ideahimself. 2. Have plenty of'cigarettes on hand including lots of Philip~Morrls because we are the fastest growing cigarette~ in the fiel~d today. Display prominently...Un the floor and in~ the windpws. Advertise in handbills and newspaper ads. Talk cigarettes at the check-out stands. Ask every customer, "Did you forget cigarettes?"

206 8 P.M. (cont.) "Here's a bro.adside (show) telling of all thee material Philip Morris can give a grocer to help him really shoot the works to establish~ himself as cigarette headquarters."' Grocer: "Sounds good, but Z'll tell you'one t'hsng."(Pause, Philip Morris: (Turns to audience and says, "Here it comes".)i "Whh a't''s that?" Grocer: "I'wdoing nothing till you put me on direct." Philip Morris: "We've been through that before, and you know that I've tried, as I''il try again, but I'm not very hopeful."' Grocer: "I'm not going to try to compete without a full markup. Philip Morris: "Mr. arocer, I don't know what you're paying for~cigarettes, and I don't want to know. But, just let's assume the difference is X%. If you were on direct, the most you could gain is that Xg6A. "But the program we're talking about today has nolim,it to what you can gain. Conservatively, we can boost your cigarette volume 20% to 30% .~ -- and, just think What that extra store traf- ~ fic means in selling other items. $ "So let's get startedinow. When's ~ your next. CA CA meeting?" ~' W

206 9 ( Grocer: "Monday night." Phil'ip Morris: "'If you'll give me just ten minutes on Monday,, I think I can do us both a lot ofgood -- if' you back me.up with the right kind of intro- dv:ction. You tell them,what the market is, how itls growing. Let me show lemthey really make money with a fifty-time turnover- no~ shelf space -- hardly -- no spoilage -- no wrapping -- no weight. And -- I'll show tem this big poster . for their windows." (show) Grocer: "Okay„ the meeting is at 8:00. We have about 100.11 Philip Morris: "'Ifll be there." Grocer: "'©hsay:" Philip Morris: "Yes." Grocer: "Bring some samples." aentliemen: that"s a pi'cture that could take place in any one of 600!voluntary offices. Natlarally, we couldh't bring into one sketch all the situations that come up. But,substantially, that's the picture. There's lot's more to it, of course. Every situation ~S is different. The big thing iss "Aon't be afraid of'it." And, d don1t let one failure get you sour on the field,. As our home CA offici people get around the country, they find many of these houses not even called on. Why? You say, "busy". You are,

206. 10 but,,thatts not the reason. we fYnd you called on one or two -- struck out -- so you quit. Don't quit. Many of those that were negative Pix short months ago have been warmed up by now. Many things could be the reason. First, they have heard a lot about th+ls program from their own headqwarters through meetings, through our ads in their magazines, through the publicity in their magazines, • through our publicity in their ma$azlnes and through their headquarters fiel'd'men. Second, they have seen competition go to town. Third, they have read about it in the grocery trade papers that cigarettes are hot. So, let's hit this group hard in 1950, and!letls keepp in mind that the same story inislightly different form applies to every type of chain, wholesaler, or independent in the grocery field. The!chains, particularly when a big chain like Colonial Stores in Norfolk, uses our all brand poster and im- prints the price themselves initheir own printing shop, we know the chains are really waking up to the cigarette potential. One good way to open a chain eonveraation is to ask, "What percent of'your dry grocery volume are youdoing in, cigarettes?" Not total• volume -- but dry grocery volume. You'll find they run around 4 to 5% -- should be 8 or 9y64