Leveraging Checkoff Dollars

The dollar-for-dollar example represents the funds that retail marketing partners and packers/processors contributed to match your checkoff investment in the National Pork Board's retail promotions last year. The six-to-one ratio is an estimate of the $2.8 million the National Pork Board invested in public relations, generating nearly $17 million in what they call earned media. Perhaps the most misunderstood

The dollar-for-dollar example represents the funds that retail marketing partners and packers/processors contributed to match your checkoff investment in the National Pork Board's retail promotions last year.

The six-to-one ratio is an estimate of the $2.8 million the National Pork Board invested in public relations, generating nearly $17 million in what they call “earned media.”

Perhaps the most misunderstood area of National Pork Board funding is entered in the “promotions” column of the organization's ledger. These funds are vital to maintaining and growing per capita consumption of pork, asserts Dallas Hockman, vice president of demand enhancement programs.

The marching orders for Hockman's division are straightforward — improve the acceptability of pork by consumers, and increase the availability of pork at retail and foodservice outlets, domestically and worldwide.

With $25 to $27 million annually targeted for Demand Enhancement/Trade initiatives, roughly two-thirds of the Pork Board's total annual budget, the dollars are divvied up in three key areas:

  1. Consumer Communications — approximately $8 million slotted for advertising (radio, print, TV, outdoor, etc.) and $2.8 million for public relations activities with consumers and food and health professionals, handled through the Pork Information Bureau (PIB);

  2. Retail and Foodservice Marketing — $8.7 million total, with $5.2 million in retail and $3.5 million in foodservice promotions;

  3. Foreign Market Development — Approximately $5 million for communications, promotions, research and all fixed costs.

“Demand Enhancement is broken down into two primary categories — those that affect consumers' perceptions about pork (consumer communications, public relations, consumer advertising/research) and those we refer to as ‘go-to-market’ (retail and foodservice marketing),” explains Hockman.

Retail Marketing

The opportunity to leverage checkoff dollars is very effective through retail marketing efforts, says Hockman. “Retail is our front-line defense. When we need to move volume of product, that's where we go.”

Major pork promotions often have multiple partners, so it's often difficult to pin down the exact contribution of each, and they may not be equal. Each partner is invited to participate because they bring a vital component to the overall promotion.

For example, a recent grilling promotion with a metropolitan supermarket included a brand name pork supplier, a barbecue sauce and a brand name wine, each kicking in $5,000. In that case, the $5,000 checkoff investment was leveraged into a $20,000-pork promotion.

Building Platforms

A key strategy for demand enhancement promotions is the building of what Hockman calls “platforms” such as “Bacon Makes It Better,” “Sausage Sizzles” and the popular “Other Tailgate Party.” Specific promotions target specific times of the year.

“Retail promotions allow us to effectively leverage our dollars, mainly because that's also the area where we serve as a catalyst for a promotion,” he says.

“The ‘Bacon Makes It Better’ platform was launched in April because April is National Tomato Month. It's also a time when bacon consumption is lower,” he continues.

Logical partners included a sandwich spread, a cheese manufacturer and a lettuce supplier for BLT sandwiches. The legislative checkoff Act & Order does not allow the Pork Board to approach a specific packer, so the retailer selects the bacon supplier to partner with.

“Our goal is to give the retailer a reason to feature pork,” says Hockman. “We create the idea and offer signage, meat case and display case materials and radio spots to drive consumers to the retail promotion.” Total cost might run $15,000. With a goal to leverage checkoff dollars as much as possible, the Pork Board would put in $5,000 and look for co-marketing partners to match or exceed their contribution. The platform serves as the catalyst.

Hockman estimates the investment in a major platform launch is $100,000, impacted by whether it is regional or national. Costs include creative input and design of the theme and packaging, plus the dissemination of materials to retailers.

“Development costs are front-end loaded,” he explains. “But, we want to own these marketing platforms so no one can take them and use them for promoting chicken or beef or something else. They are trademarked pieces.

“I want producers to feel good about the time and effort that goes into these platforms. That way we don't have to incur new development costs (each year),” he says. The cost of successive promotions is then limited to duplication of materials.

Success is measured in “incremental volume” of pork sold. Retailers track sales for specific time periods — usually the featured week vs. the same week the previous year.

A 2001 year-end summary shows $2.5 million was spent on 202 account-specific pork promotion programs with targeted retailers. The National Pork Board allocated $1.33 million that was matched by $1.25 million in co-marketing partners and packer/processor contributions. “We are getting matched nearly dollar for dollar,” Hockman points out.

“The $2.5 million represents the actual cost of the promotions advertising, in-store materials, consumer incentives, etc.,” he explains. “The rest of the $5.2 million (budgeted for retail and foodservice marketing) is made up of fixed costs, research tracking, category management, creative design, agency fees, industry meetings, training programs, initial development costs of platforms, etc.”

Total pork tonnage moved through those checkoff-supported programs was 183.2 million lb. Of that, 70.2 million lb. was incremental volume, or 38.3% more pork sold.

Foodservice Allocations

Foodservice promotions are more visible but much more difficult to track. Sales measures are not standardized and foodservice providers do not like to share their data because it's an extremely competitive market. Unlike retail, there is no scanner data or USDA tracking.

Taco Bell's recent chalupa promotion serves as a good example. To begin with, Taco Bell doesn't want anyone to know when they will introduce a new menu item. “We worked hard to get them to incorporate a pork item,” says Hockman. “In this case, the ‘Bacon Makes It Better’ campaign fit their product.”

Taco Bell spent roughly $14 million on advertising the new chalupa, plus another million dollars on in-store merchandising. The Pork Board provided research and invested approximately $30,000 in the promotion. Projected sales volume growth is about 600,000 lb. — an all-new growth in bacon sales.

In 2001, the Pork Board foodservice department allocated roughly $750,000 on an estimated 120 promotional programs — 53% spent with commercial foodservice chains (such as McDonalds and Taco Bell); 28% allocated to non-commercial foodservice entities (hotels, schools); and about 17% supported distributors (i.e., Schwan's, SYSCO).

Pork Information Bureau

The return on investment of the $2.8 million budgeted for the Pork Information Bureau is measured in earned media and partnerships with influencer groups.

Much of the budget is spent on developing new recipes, Web sites, work with dieticians, photography, press kits and the costs of getting stories about pork printed. A clipping service tracks print exposure that serves to estimate earned media. Their $2.8 million investment in 2001 generated $16,776,081 worth of comparable space in the print media alone.

“This is a message that oftentimes is lost on pork producers,” says Hockman. “Although retail and foodservice promotions are important, it is also very important to affect consumer attitudes through media and influencers such as doctors, dieticians, food editors, chefs and other professionals.”

“When a cookbook author or a syndicated food writer knows us and can call us for ideas, the only cost to the checkoff is staff time and some materials costs,” states Ceci Snyder, director of nutrition communications. “I know $16 million is a big number, but you can't buy that kind of coverage and higher level of consumer acceptance.”

Defending Category Marketing

Hockman is quick to point out that if checkoff dollars were not available, these cost-sharing initiatives would vanish. “This budget wouldn't exist, and most of the promotional dollars and our ability to communicate the positive message about pork would just go away. You would migrate to specific branding. There's nothing wrong with branded product marketing, but it only promotes the brand — it doesn't raise the stature of the whole category. We're creating opportunities for all players.

“What got consumers feeling better about pork?” he asks. “It wasn't all one brand. It didn't just happen through the gratitude of retailers. It was a combined effort of producers doing a better job of producing a quality product, but it was also getting our story told in the marketplace.”