In this episode, we dive into how Trader Joe’s stays relevant with a zero-dollar marketing budget!
Welcome to Marketing Murder Mysteries. I’m your host, Michael Graham. Joining me as always is the gang from the Millennium Agency. Linda Fanaras is CEO and Chief Strategist. Hello Linda.
And our favorite bagger at the end of the shopping aisle is Robb Atkinson, who is also the managing director. Robb, paper not plastic.
Uh, paper, and happy to be here.
Advertising and marketing pros see it all the time: brands that get killed in the marketplace. Sometimes due to their own miscalculations, sometimes by events beyond their control, but sometimes because they just don’t advertise enough. Does that make sense? Every company needs to advertise. Right? Well, maybe not. Case in point, Trader Joe’s. Believe it or not, Joe’s doesn’t spend any money on traditional marketing or investing in things like big data. So how are they still in business? You’re gonna hear the case from our marketing detectives, and then you can hand down your own verdict. The mystery of Trader Joe’s. Why isn’t this brand getting murdered?
Walking into a Trader Joe’s is unlike walking into any other grocery store. From the Hawaiian shirt uniforms to the bright murals and welcoming store layout, Trader Joe’s is truly one of a kind, and nowhere more so than in its marketing. Robb, tell me why Trader Joe’s is different.
Robb Atkinson: 1
So Trader Joe’s is different on a lot of levels and just consider a few of these facts. So Trader Joe’s leads in customer satisfaction and employee engagement. Um, again, no marketing. Trader Joe’s unique approach to grocery shopping pays off with incredible loyalty with customers, which is amazing, and investing in employees happiness, uh, creates a happy atmosphere at Trader Joe’s, which they totally understand and translates into customer loyalty. And the store doesn’t even have coupons, sales or reward cards, but simply, um, it’s all about the customer experience. And so that’s why they’re really different and they understand their audience and their market and they do a great job at it.
Michael Graham: 1
So, Linda, come on. Trader Joe’s must spend something on advertising, right?
Linda Fanaras: 2
Actually, I don’t really think that they do. Um, they don’t run any standard digital ads or print ad campaigns. They have an in-house newsletter that they give out. Um, they really don’t do couponing, you know, they have these innovative products. They, they say that they have low prices. I don’t think they have low prices, but that’s what they say. And they say they have friendly staff, which I think we all, we all do know that. Their eclectic environment, I think is what the big draw is, but they always seem to find themselves next to like a Whole Foods, which they’re run, running off, you know, riding off the coattails of Whole Foods as a sort of alternative to, you know, sort of grocery shopping. I don’t know. I think eventually it’s gonna catch up with them. They’re at 13 billion now. They have 500 stores out there. I mean, eventually, unless they really step it up, somebody can come in and order, you know, and also establish a set of grocery stores that have a very similar style that can put some advertising dollars behind it.
Michael Graham: 2:57
But back specifically to the marketing part, Robb, they must do something for marketing. What do they do?
Robb Atkinson: 3:03
They do. To her point, they do this in-house newsletter, which doesn’t cost them anything, but where they spend a lot of their money and they categorize this as, uh, advertising is, um, doing sampling in the stores. So when you go into a Trader Joe’s, there’s always somebody trying to feed you something, whether it’s, you know, fresh produce or some new product, you’re constantly getting fed there, and that sampling is considered marketing and it drives store purchases through the roof.
Michael Graham: 3:31
And I, I’m also fascinated in this era of digital marketing has such a premium on it that they don’t do data collection other than just to get enough information to mail you that cheesy looking newspaper magazine. Is that right, Robb?
Robb Atkinson: 3:44
Yeah, it’s actually, uh, one of the only companies I can think of that actually is anti-data. And so they’re not collecting your data at the checkout, um at the checkout lane, except the fact that some of their chief executives often are baggers with me at the bagging. Uh, and they’re actually talking to their customers about what they like and what they don’t like, and they’re taking that information back and putting it into action. The other thing that’s really interesting is Trader Joe’s isn’t a top-heavy organization. It’s kind of from the bottom up. So every manager of the 500 stores has control over how they position their store within their community and, and what type of samples they offer and things like that. So it gives a lot of leeway for the individual managers to kind of run the business as if it was their own business.
Michael Graham: 4:36
So isn’t the lesson behind Trader Joe’s, Linda, that there are ways to market that people don’t think of traditionally as marketing, like, you know, turning your store into a sample shop, et cetera. Are they, are they offering a path for other businesses, or are they unique? What, what should we take away?
Linda Fanaras: 4
I mean, I, I definitely think they’re unique and they’re lucky. I mean, they, they have a certain atmosphere within Trader Joe’s that I think people like. It definitely appeals- they, the, Trader Joe’s appeals to the tech savvy, maybe the 20 to 45 year old person who’s, you know, likes something a little unique. You know, maybe just different types of foods, unusual offerings. But what I find actually fascinating, they don’t even have a social media page. They have social media pages that have been developed by other people who put together like, lists of my favorite Trader Joe’s, you know, grocery items, or recipes from Trader Joe’s, but not developed by Trader Joe’s. It’s actually by the consumers that are driving the actual brand for Trader Joe’s.
Robb Atkinson: 5:47
Yeah, no, that’s really interesting. And uh, I think, um, it, it, that’s hard to replicate that kind of customer loyalty, but I think that’s the whole, that’s the whole idea of the store is to generate that type of response, loyalty, engagement from your customer base. Uh, very hard to do.
Michael Graham: 6:05
So one of the lessons from political marketing that commercial people do not take nearly enough advantage of, in my opinion, is giving people something to do. People want to be involved and engaged. And so one of the things when I ran campaigns for a living, is I would always tell the candidate before you hire anyone (besides me, of course) let’s give people, let’s see what volunteers can do. Let’s see how much of the mail can they stuff and fold themselves? How many doors can they knock on themselves? Because the person who’s willing to do that, to spend an hour on a Saturday, they’re your, they’re a vote for you no matter what. You have got that vote. And the same thing in the commercial, if you can make people feel like Trader Joe’s is ours and I love the fact that it’s here. And I don’t want to… I’m gonna do a Facebook page and remind everyone, and I’m gonna get engaged and we’re gonna participate in what they do. I’m gonna, when I walk in and I see something’s wrong, I’m, I know the manager’s gonna ask because they always ask. It’s kind of the let’s, hey, kids, let’s put on a show mentality that is incredibly powerful and you don’t see it a lot in the commercial sphere.
Linda Fanaras: 7
One of the other things that I do, uh, that we should recognize about Trader Joe’s is that they appeal to the individual who is tech, technically highly educated. So even though they’re between the 20 and 45 year old range, they definitely are highly, you know, they tend to be highly educated and kind of, I don’t wanna say it’s a sort of a millennial type, style, cool place. Like I know my kids go there, right? And they’re in their twenties, so they love to shop at Trader Joe’s. They just think it’s like the place to go. So it’s small, it’s easy to, you know, go in and out of, but I think there’s gonna come a point in time where, you know, somebody will come in and just, you know, blow them out of the water, make it a little bit more cool, make it a little bit more unique, put some money into advertising, really build some sort of story or persona around who they are and make it seem like it’s better. Any grocery store can offer unique products. Aldi’s is another example. They offer unique products. I can get unique products at Whole Foods, you know, but where do I like to go shopping? Some people enjoy Trader Joe’s. Others like Whole Foods where they can have a bigger variety.
Robb Atkinson: 8:04
You know, the other interesting thing about Trader Joe’s is that when you finish the experience, you know it, it isn’t until recently that they introduced paper bags at the, at the checkout stand. Before it was just boxes from the bags of all the products, and you put your groceries into these product boxes and take it home in a, in a box, you know? Um, with no branding other than, you know, tomatoes or whatever was on the side of it, which is, which is brilliant though, because they’re so far ahead of the curve, because they’re so understanding that their customer doesn’t want plastics and all these things, even though there is plastic in the store, they do a great job at understanding the audience.
Michael Graham: 8:43
People who shop at Trader Joe’s vote for Pete Buttigieg and Liz Warren. That’s who their audience is, and that’s great. And knowing your audience segment is, and I disagree with, uh, with you, Linda, about the marketing. I think that as soon as you market, you’re “the man.” And we don’t want to be “the man.” So if you did traditional TV ads, Trader Joe’s, their audience would be put off by that. That’s not who they want. Other consumers who have a life and just want to go in and buy stuff and have it be cheap and they want in a plastic bag because they got a lot of stuff, they don’t wanna go, they, they go like normal people, like me, to Walmart or a regular grocery store or whatever. And so I don’t, I think this is a circumstance where if you understand your marketplace, you can use non-trad, not traditional marketing, the fact that you don’t do traditional marketing as a marketing tool. Just like Liz Warren says, “I don’t take money from certain kinds of people,” that sends a message to other people that makes them want to become her donors even more. It’s the anti-marketing marketing strategy.
Robb Atkinson: 9:40
You know, it, it’s interesting. The, the other company that comes to mind in this whole conversation is Tesla, of course. They spend zero dollars on traditional advertising. But they do embrace big data. So they understand their customer, they know exactly what their customer’s buying, and they understand it in a, in a very sophisticated way. But they have no CMO at Tesla. They have no ad agency, and it’s really remarkable. I mean, the stock is bouncing up around, you know, you know, close to a thousand now. And some people say could even go to $7,000 in the next couple of years. And that’s all done without any advertising. All word of mouth. And that’s the other important thing is Trader Joe’s understands the second most important way to market in this world is word of mouth. And they do an excellent job at that because, people like me go out and say, “Oh, I got this great dip the other day. You should try it.” And it, it gets people into the store. Never underestimate the power of word of mouth.
Michael Graham: 10:36
And never underestimate the power of the clock, and it tells us that it’s time to wrap up this part of the Marketing Murder Mystery podcast. Coming up next, your marketing 101 tip of the week.
And now it’s time for our Millennium Agency Marketing 101 Tip of the Week with us is Robb Atkinson. Robb, what do you have for us?
Robb Atkinson: 10:56
So for this week, I wanna talk about why explaining the value of a product is more important than listing the benefits of a product. So let me use an example of a client I have right now. So we have a client who loves to list on their webpage, uh, the product information. So it’ll be like a Model-X15 computer board with fan, but nobody is searching for a Model-X15 computer board with fan. Instead, they’re searching for the value that that generates. So whether it’s a point of display system or an outdoor kiosk, those are the kind of things that you have to make sure that you’re listing on the website and your advertising to understand how the audience is generating interest in your product. It’s not about listing the benefits, it’s about listing the value.
Michael Graham: 11:46
Instead of just simply listing this is what it does, or even this is what it does and how it could benefit you, it’s here is the payoff of that benefit that that benefit, you know, you can measure that benefit. It’s, you know, it’s whether you’re gonna live longer, you’re gonna be younger, you’re gonna save money. You know, you’re gonna do this to, to bring that to the consumer’s mind of what the real value of making this purchase is.
Robb Atkinson: 12:09
Right, because ultimately, some people don’t understand what they need to do to be successful, right? And that’s not the search terms that they’re gonna come up with. They don’t even understand at that level what it is, you know? I, I had a consultant once say to me, uh, after six months you become part of the problem and you start, you know, espousing the, the same stuff the company says, and you miss the point of what the consumer wants. And that’s really important to understand what the consumer wants. And that’s value.
Michael Graham: 12:35
And so, this consumer doesn’t want the XJ27 5-8, the consumer wants, oh my gosh, my, whatever is broken and I need to fix it.
Robb Atkinson: 12:42
Right. And, and listing out exactly step by step how that’s going to help solve my problem.
Michael Graham: 12:47
Robb Atkinson and Linda Fanaras are the stars of the Marketing Murder Mystery podcast from Millennium Agency. Get more information at mill.agency. I’m your host, Michael Graham.