July 2, 2007

Working with Food Brokers

A Whole Foods supplier and friend sent me an email regarding a call from a Food Broker,

"He wants to broker my product. I need some advice before I do anything. I respect your opinion. Thanks Dick "

The food broker can be a great tool used in your market planning and growth of your product and company with the opportunity for substantial financial returns. This requires you 'selling' the food broker on the merits of your product prior to making the sale to customers. The broker develops local relationships while you manage sales opportunities in multiple national markets.

What is a Food Broker
Food Brokers provide:
Personal contacts and established relationships with buyers
Specific expertise in select retailers or segments of food service
Market and Regional expertise with the ability to address local needs
Market Coverage with cost efficiency since they represent multiple manufacturers
Administrative support on forms and documentation required by accounts

How do Food Brokers Operate
The food broker does this generally with
an expert sales force
that is local representation
and costs as a % of sales; commission

At some point, you might consider hiring your own experienced sales representative when commissions far exceed the cost of the brokerage firm. But, you need to consider carefully this option since the broker can provide many valuable services that may not be available to your hired salesperson. Brokers can provide significant value for your company.

Do you have a written Marketing Plan?
First, you should consider your Market Plan and where you want to go and have the ability to move forward with your company. What is your potential production volumes for the coming three years and where do plan to offer these cases of product? Do you have enough product to service all of the brokers market coverage area? Where does the broker plan to take your product and how will this impact your Whole Foods distribution.

What are his plans and ask to receive a Market Introduction plan? It can be very simple. Just a simple list of accounts and what action he plans to take with each account and by what date. You can draw this up prior to meeting and then ask him during the meeting questions and jot down the answers for creation of the market plan. As a follow-up to the conversation, you type the list up and send with your letter on what was discussed. This letter will become your managment tool working with him going forward for at least the next year. Every month you should visit with him in person or by phone and discuss progress, success, and information from accounts. Visit his accounts and verify what actions he is taking on behalf of his listed clients - visually inspect for price promotions, signage, displays, and marketing activity prior to your hiring his firms services.

Send me a note if you desire an overall template to layout your product market planning.

Broker Services
Services that brokers often supply to their manufacturing principals:
Merchandising
Paperwork required to present and sell items for an account
Planning promotions and understanding costs
Computerized space management
Distribution warehousing and understanding
Buy-sell programs
Electronic Data Interchange (EDI) and other computer support systems

What is EDI
Electronic Data Interchange (EDI) allows retailers and suppliers to transmit orders and confirmations over the internet. It also provides speed for the supplier and gives the manufacturer a record of the order immediately in real-time and the ability of the system to track deliveries for the warehouses. Wholesale and retail pricing can be monitored and reports can be provided on unit movement electronically via the supplied database information exchanged via EDI.
If you would like to receive the rest of this article including the discussion of costs and marketing programs with retailers and broker dialogue worksheet send me a note at tim@timforrest.com and follow me on twitter.
Food Broker Specialization


Food Brokers often specialize in geographical regions and with segments of retail:

Supermarkets and Grocery Stores: Chain and Independent Specialty / Gourmet Stores Health / Natural Foods Stores Club Stores Mass Merchandisers: Drug / Department Stores Convenience Stores Food Service: Business and Institutional, Chain and Independent Restaurants Vending Military - Commissary and Troop Feeding Export Internet and Mail Order Niche Stores and Gift Baskets Event Marketing - Large Crowds, Home and Garden Show, Etc... that are considered best consumers for your product.

Generally, the food broker does not handle all of these areas and you would be wise to ask questions and seek to work with the appropriate multiple brokers. I have a Retail Store Census for reviewing opportunities for your product outside the traditional sources.



Brokers Relationships with Customers

What account list does he provide to you for market coverage?

Headquarters call or field store visits on a regular basis?

What is a regular basis?

Corporate Offices coverage

Product presentations are made to chains and wholesale groups to achieve computer listings and schedule promotions. More and more key buying decisions and centralized listings are being made at regional headquarters. Visits to the head office ensures direct feedback and co-ordination between the head office and retail accounts. Brokers can also assist when working with an accounts accounting department.

Retail coverage

Follow-up at the store level includes regularly scheduled calls which range from every four to eight weeks for rural locations, to once a week for major retail and wholesale accounts in cities.

Activities at the store include building special displays, making sure the product is on the shelf, adjusting shelf space, handling complaints, pulling damaged product, rushing through an unplanned order, helping to plan a special promotion for a local team, monitoring promotions and monitoring competitive activity.

In order to resolve problem situations, extra store visits may be necessary.



Working with your team at the Broker

You have to get into a position of managing and working the relationship with your broker. He will be informing you on competitive issues and marketing opportunities within the respective accounts. Attempt to organize all of these opportunities in front of the actual presentation to the retailer. You should understand the implications of selling into any major account prior to the initial approach and sales meeting. Along with the necessary forms and procedures, this is one of the valuable insights a broker can provide. This requires discussion and analysis of the marketing programs and costs associated with the retailer.

Promotions Available?

Mandatory Price Reductions?

Signage Costs?

Display Costs?

Advertising Costs?

Mandatory Advertising/Marketing Participation?

Slotting?

Mandatory Fees?

Shrinkage?

Reclamations?

Distribution Fees?

Other Fees?



Evaluate several brokers. The strengths of a broker may include excellent headquarters office contacts, retail market coverage, trade contacts, quality employees, market knowledge, professionalism, aggressiveness and good communication skills.

Strengths are also related to "comfort level" which is a subjective judgement on your part. Make sure the broker's market positioning is in line with your own planning needs.

Carefully consider the information you gather. Then, make your final decision and appoint your food broker.



Questions to ask

Who are the owners of the broker's firm and are there any immediate management plans, ownership changes expected or impending mergers?

Who are the major principals? By asking for a business and product portfolio, you will find out what products they are carrying now, and if you will become one of six main lines or one of sixty-six. You want to avoid a conflict of interest with existing products lines when possible.

Who are the five or largest retailers and/or foodservice accounts he works with?

Are there any items in the present product line that would be an advantage to our line or provide an experience base?

Are there people in your broker organization familiar with my product category? If so, what is their experience?

Who will handle your account and what is that person's background? What accounts does that person have now? What particular successes has he/she had in the last six months? This person is often called an AE or Account Executive in larger firms.

What has been your best selling and merchandising performance in the last 12 months?



Collateral Materials for the Broker

To get the results you expect, give the broker the tools needed to accomplish the job. The broker will require training and sales support materials. For example, a show and tell book will include product information, price lists and order forms. You have to provide the brokers with the bells and whistles for sales presentations. The broker can supply the forms for new item set-up.

Also, fact sheets can show photographs of the products and highlight the specifications. Personal product sales training and a farm visit should also be considered.

You will need to provide the broker with a quota for sales or a similar sales goal. Make sure you both agree on all targets.

Identify the criteria that will be used to measure performance. An annual review should contain no surprises. If performance is not satisfactory, you may give the broker notice for termination of services. It's likely that the broker will also have a similar clause in the contract for your termination as a client if the product does not perform according to plans.

Be realistic about your expectations. If your product will contribute 3 per cent of the broker's income, you can't expect the broker to put 100 per cent of his time into selling your product. Remember, the broker represents multiple principals. To get the results that you want, provide ample lead time. Allow the broker to plan ahead for market visits, new product launches, promotions, and meetings.
Click below for Broker Dialogue Worksheet:

http://docs.google.com/Doc?id=ddrhb5vw_19dzjfwb

The Broker Will Consider Your Product

The food broker will make a determination as to represent you or not after a quick review of your product and discussion with you. He will consider the potential volume and possible commissions. Also, he will consider how your product fits into his mix of companies and what future value you will have to his company. Also, he will consider his buyers needs and opinions of your companys product. He will also look at your marketing program and the financial resources you will apply to the introduction and growth of your products.

There is a tremendous amount of work and information for you to follow-up when deciding on using and choosing a broker. Good luck and let me know any needs going forward. I hope this helps with your process and this continues where our on-going conversation on success with your products.

Subscribe to Good Food Sales by Email

What actions are you taking to grow your business? Send a note or comments to tim at timforrest.com . also, follow me on Twitter I want to hear about your success.
© Tim Forrest 2010. All rights reserved
Related Posts Plugin for WordPress, Blogger...