What Industry Are You In? How You Answer Can Make A Difference.

Chief Marketing Outsider, Art Saxby, joined Imperial Sugar as Chief Marketing Officer (VP of Marketing) in 2002 as part of a new management team that was formed as the company came out of bankruptcy. After talking with customers and key employees in an effort to identify why the company had run into financial trouble, the problem became obvious. Imperial Sugar thought they were in the sugar business.

It was an understandable mistake. They sold $1 billion worth of sugar each year. They had been making and selling sugar from the same spot in Texas since before Texas was a state. There were third generation employees who had been born in company owned housing and whose parents had been born in company owned housing. At one time, Sugar Land was a company town where the company owned everything from the houses to the general store.

The problem was that after 160 years, Imperial Sugar had competitors. And because the base product was the same, the only thing left to compete on was price. With large budget customers like General Mills and Wal-Mart, price can be a deadly game.

Traditional marketing teaches that purchase decisions are made to satisfy the purchaser’s physical, functional, and emotional needs – an easy theory to apply if you are marketing items like luxury sports cars, expensive jewelry, even food. But can you expect to sway the professional buyers at General Mills and Wal-Mart with a marketing strategy targeted at addressing their emotional needs when talking about sugar?

Yes you can, if you take the time to understand the needs of the customer from the customer’s perspective. The thing that keeps a professional buyer at General Mills awake at night is the fear of a factory shutting down because it ran out of sugar. The larger buyers felt none of the sugar companies were sophisticated enough to integrate into large-scale supply chains and distribution systems.

Marketing-based business insights into the needs of our customers caused us to change the definition of our business. Going forward, Imperial Sugar would be in the supply chain business providing a very high volume commodity – sugar.

Once we started thinking like a supply chain company, the path forward was clear. We brought in a senior level supply chain director. Our sales people started talking to customers about distribution coordination and our distribution people learned sales. We installed an extranet where large customers could track shipments right down to the rail siding, without ever calling their purchasing manager.

By changing our position in the industry based on the needs our customers, we were able to set ourselves apart from the competition. By changing how we talked about the business, we allowed people throughout the organization to offer up ideas on how they could align with the new strategy. And because the entire company had one cohesive strategy, we were able to align the operational systems to cost effectively deliver on the promises that sales was making.

By changing our market, we became the preferred supplier that others had to significantly undercut in order to steal the business.

This business strategy helped us redefine our focus from being in the sugar business to being in the supply chain business distributing the high volume vital commodity – sugar. By targeting a new market of customers and investors, adding in strong financial management, selling off non-core assets and paying down debt, we were able to turn Imperial Sugar around. In a little over 4 years we were able to grow the stock price from a post bankruptcy low of $1.05 to over $35.