Marketing makeover Featured

8:00pm EDT July 28, 2006
 When Julie Smolyansky joined her father’s company right out of college, she dreamed of one day - many years down the road - running it. She had no idea that just five years later, her father would suffer a sudden heart attack, and she would become CEO of Lifeway Foods Inc. at the ripe old age of 27.

“There was nobody there to hand it over and give me even two weeks of training,” says Smolyansky. “I truly learned everything on the job, and it was under intense, traumatic, painful times. I had lost my father and our president.”

Although Smolyansky had to learn how to run Lifeway, a developer of specialty functional dairy foods, as she went along, the company has prospered under her leadership. Sales increased from about $16 million in 2004 to about $20 million in 2005.

Smart Business spoke with Smolyansky about how she has expanded Lifeway’s market base and introduces new products.

How did you grow the company?
When my dad was running it, he had a certain image and a certain clientele. He was really focused on the Russian ethnic population, which were already big users of the product and already familiar with it.

I wasn’t going to concentrate on that market as much. They’re still my bread and butter ... but because the immigration stopped from the former Soviet Union, and Eastern Europe in general, I decided ... to focus on a different market. That was the natural and health food market.

I decided that we were going to change our packaging. That was critical because I thought the old packaging was kind of medicinal. The change in packaging opened up a huge market for us of mainstream people.

How do you approach the marketplace when introducing a new product?
There has to be a need for it. It is very hard to introduce new products, especially for a smaller company, because the larger companies just have so much money to do it.

For us, I think ProBug [a new product for children] is going to be a huge hit, because it is so unique and different and none of the large companies have been able to think about that, come to market with it. I think it might be too niche for larger companies. You have to be supermotivated and driven to get it into the marketplace.

What marketing strategies have worked for you?
I read “The Tipping Point” a few years ago and I absolutely loved the concept of it. It talks mainly about how trends are started and how epidemics are started.

It even uses things like diseases to discuss how an epidemic starts, and it translates into marketing terms ... how things become popular and successful. And that’s mainly through the use of certain groups of people.

I basically thought the same concept would work, and by using a grassroots type of concept that I would get the product into the hands of people who kind of make the trends or people who in their own circle or subcommunity can drive decisions and sales.

We are probably, once a week, at some kind of race, so I think runners have really picked up on the product. People who run marathons are considered semi-experts on food and nutrition, so if we’re able to convince them that kefir [A creamy drink made of fermented cow's milk] is a healthy option for a food choice, then they tell all their friends.

Or maybe it’s the soccer mom or the yoga mom. Certain groups of people, women especially, tend to have relationships and a strong network. Moms, if their kid likes something, they’ll tell all the moms they know.

That’s what we’ve done with all different groups of people. We just sponsored Bonnaroo, which is a large four-day music festival. The people who attend Bonnaroo are very loyal to the different companies that are there supporting the festival.

These are the type of people who influence and drive trends in the world. Putting an advertisement in a magazine isn’t necessarily what’s going to help our company. Getting in touch with people and getting a chance to talk to people is worth spending a little bit of money on grassroots to actually have a relationship with the customer.

How can other CEOs increase their company’s market penetration in the way you have?
Do a little bit at a time. We’ve been doing it consistently and strategically, so that we always have long leads and short leads and things that are down the pipeline.

You have to do it over time. The long term is a bigger picture than the short term. You might have a bad week or a bad month, but if you are focused on the big picture you will survive and succeed.

HOW TO REACH: Lifeway Foods Inc., www.lifeway.net