More Pop from Promotions

Kum & Go execs target foodservice,store customization for 2009

Samantha Oller, Senior Editor/Fuels, CSP

[Editor's Note: This is the second in a three-part series of stories featuring the strengths and strategies of CSP's 2008 Retail Leader of the Year, W.A. "Bill" Krause.]
WEST DES MOINES, IOWA -- All of W.A. "Bill" Krause's children began working for Kum & Go LC at an early age. For son Kevin Krause, that journey has come full circle, with his return to the retailer in January after a decade as owner and president of a minor league baseball team.

As Krause tells it, his new position as Kum & Go senior vice president of marketing was almost serendipitous. "[image-nocss] It wasn't necessarily something I had gone in with the context of doing," he told CSP Daily News. Kevin was closing on the sale of the baseball team when his brother, Kum & Go president and CEO Kyle Krause, asked him for help on a couple marketing projects that needed finishing.

"The opportunity came up for the marketing position that was open, and so Kyle and I had a conversation regarding that to see if I was the right fit for me and for him going forward," said Kevin. "I've always kind of operated outside the Bill Krause shadow."

But now, as a full-time member of senior management, Kevin Krause is seeking to make his own mark on the 430-store retailer. One of his first projects was Kum & Go's successful Pop vs. Soda promotion, which ran from May 15 to August 31. Customers were invited to buy a discounted 32-oz. fountain drink and choose between a "soda" or a "pop" cup for their beverage. Meanwhile, about 12,000 people participated in an online vote at a special website set up for the promotion, The final vote was close enough that both options were chosen as winners.

"Our Pop vs. Soda election we had was a fun, tongue-in-cheek way of trying to entice people to take a simple descriptive term for a carbonated beverage and use the geographical discrepancies and try to have some fun," said Kevin Krause. "We were very successful with the campaign and really counteracted what we read in the trades is taking place with inside sales and customer count."

Krause said that Kum & Go was able to maintain nearly 10% inside sales growth over the summer, momentum that he said can't all be credited to the promotion, but "it got awareness."

"It engaged our associates that kind of enjoyed the debate itself, and it also allowed the associates to interact more with the consumer," said Krause. "The more times we can touch our customer base in a friendly, cordial way, I think it builds that relationship and can allow them to come back time and time again."

It also taught Kum & Go some interesting things about customer behavior. "We learned a lot about drivers, about people coming into the store, why they're coming in," said Dennis Folden, COO. The retailer paired the promotion with a consumer survey, which it sent to about 40,000 customers to learn more about the driver behind their visits.

"We took that information and were able to come back and make sure we had right offer for them," said Folden, noting that the results were broken down by demographic and age group. "So younger people were coming in for bottled drinks, and perhaps the 34-49-year-olds were coming in for fountain drinks," said Folden.

"We were surprised because we didn't know exactly what the target was for those customers," he said. "And we're able to take that information, get it to our category managers, to the store level, and make good decisions about what kind of promotion we're going to run around this campaign."

It's this focus-drawing in more customers -that is Kevin Krause's main charge. "Our biggest task in the marketing department is to maintain customer-count growth inside and to build the inside store sales in a declining economy, in an environment where more and more people are just using their credit cards at the pumps, and trying to entice them to come inside the store and take advantage of the convenience we offer to the consumer, with the array of products we have," said Krause.

A couple ways Kum & Go is attempting to do this is by being the first c-store retailer on the street with new products, and by offering customers more choices. This fall, Kum & Go is expanding its hot-beverage mix with a recipe program that allows customers to customize their coffee and cappuccinos with syrups and flavorings. The retailer has also found success with limited-time-only flavors, such as pumpkin-spice cappuccino, which Krause likens to "our version of the McRib," referring to McDonald Corp.'s popular, limited-time-only rib sandwich.

Meanwhile, Kum & Go is trying to better customize its stores by customer demographic. "We're in the process of evaluating store sets and seeing in which geographic regions or in which parts of particular towns it would make more sense to have a particular store set so that we're reaching the consumers [in that area], so we can meet prospective customers with what they need," said Krause.

In the past, Kum & Go has categorized its stores by location-e.g., university store-a practice that is also under review. "We're looking to make sure those classifications still make sense for the existing stores. And are there other levels we should be looking at as we drill down on these stores?" said Krause. "Is there another descriptive, even though a store may be in a university area, that fits the motif of what our university stores are?"

Meanwhile, Kum & Go's new, larger-format stores will serve as the launching ground for an expanded foodservice offering. Krause acknowledged that foodservice has not been a core staple at the chain, but it's an obvious area of growth. The retailer is looking at ways to more conveniently deliver its current product lineup-represented by the Go Fresh Market sandwich line-and is testing three different programs, including breakfast pizzas and chicken wings, although none are made-to-order.

"We're learning as we go forward with this," said Krause, "but as we do so, in 2009, we'll really get our arms around it and be a very successful foodservice provider."Click hereto read Part I of the series.

To read more about Kum & Go, Bill Krause and the Retail Leader of the Year award ceremony, see the November issue of CSP magazine.