Monday Marketing Memo

Marketing Research: Doing Business in California

Comprehensive study provides demographic blueprint for natural & specialty foods marketers, brokers, retailers and others doing business in California

California is not only the largest state in the U.S in terms of total population and total food dollars spent annually; it also has the distinction of having the sixth-largest per-capita economy in the world.

California also is the largest market in the U.S. for the sales of natural and specialty foods. The diverse state, comprised of numerous ethnic groups, people of all ages, income levels and educational levels, offers natural and specialty foods marketers, brokers and retailers sales opportunities greater than any other state in the U.S.--and greater than most other countries in the world.

The state also is huge geographically--in many ways at least four "states within a state"--thus making it essential natural and specialty foods marketers, brokers, retailers and others gain an understanding of California's people, regions and demographics, if you are going to market, merchandise and sell your products there in the best way and maximize your marketing and sales budgets.

Those four "states within a state" can be broken down briefly as follows: Southern California, The Central Valley, The Foothill Region, The San Francisco Bay Area/South Coast, and California North Country. It's not a perfect breakdown but works well to describe the regional diversity of California.

Southern California, roughly from Los Angeles to San Diego (including the populated desert region), is the state's most populus area. It's diverse in it's peoples and economy. The region contains large Hispanic, Asian, African-American and Middle Eastern population groups, in addition to white. The Southern California economy is equally diverse economically as in it's ethnic composition.. Just to mention a few economic sectors it includes manufacturing, distribution, aerospace, entertainment (Hollywood), professional services, retailing, agriculture, tourism, and more.

The Central Valley, roughly from Sacramento in the north to Bakersfield in the south, covers a huge geographical area. This region also has a diverse ethnic make-up. White, Hispanic, Asian (especially Vietnamese and Hmong), African-American, and others make up the primary ethnic groups in the Central Valley. It's economy is still predominantly based on agriculture (farming, agribusiness and related industries) but has become very diverse--and is becoming more so. The northern valley--Stockton/Modesto region-- has become a place where many workers in the Bay Area have moved because Bay Area housing costs have gotten too high for them. This massive influx of Bay Area workers has changed these cities and the surrounding area significantly. For example, today manufacturing, services, health care and retailing are all nearly as big as agriculture in terms of this region's overall economic profile.

The Foothills Region, comprising the area below and into the Sierra Nevada mountain range, remains in many ways a very open-space area, with mountains, streams and lakes. However, the region also has a fairly large population base. The population is an interesting mix of people who were born and raised there, migrants from larger Bay Area and Southern California cities, retirees, and "back to the land" folks looking for a slower lifestyle. The region's economy is based primarily on services, some mining, some agriculture, tourism and related businesses.

The San Francisco Bay Area, roughly a nine county region in Northern California, is bordered by Gilroy to the south, Livermore to the East, and Sonoma County to the north. The Bay Area is in most ways diversity's first name. Hispanics (from many regions), African-Americans, Asians (Chinese, Japanese, Vietnamese, Pilipino and others), Eastern European immigrants, Middle Eastern peoples and many other ethnic groups, reside in this region together. There are large cities like San Francisco and San Jose, and small towns under 50,000. They are all pretty much interconnected though as the region has become a megopolis.

The Bay Area economy is centered on corporate/business headquarters and services, high-tech and dot.com industries (Silicon Valley), education and research (Stanford University and University of California as well as many others), health care (major research hospitals) and more. Cities like San Francisco and San Jose also have thousands of independent, small businesses in them.

The Coastal Region, which I include with the Bay Area for brevity, has many similarities to the the Bay Area in terms of lifestyle and such, but also is very distinctive. It tends to have less ethnic diversity and a more limited economic base. The Coast Region's economy is based primarily on tourism, agriculture and services. It still has a fairly large fisheries industry, although it has contracted considerably in recent years. Not too many years ago the fishery and agricultural industries made up almost all of the regions economy.

The North Country. an area that begins roughly above Sonoma Country and ends at the Oregon border, remains in the main a natural, unspoiled region. This rugged coastal region's population consists of a combination of logging and related industry workers, who have lived in the area most of their lives, former hippies or back to the land folks who fled the cities in the 1960's and stayed, and everyday working people who love living in the region's natural environment. The area's economy still depends primarily on the logging industry. However the logging industry today in the north country is just a shell of it's former self, and as such the region has had to diversify, which has been difficult. There is higher than average unemployment in the region and many people have had to move in order to find jobs.

Taken as a whole these regions comprise a state of close to 40 million people. These people come from all over the world, have varying income levels, and embrace many lifestyle choices. What most of them have in common is they choose to live in California despite the increasing cost of living in the state and other challenges.

The diverse "nation state" that is California offers an opportunity for natural and specialty foods marketers, brokers and retailers to strike gold. To do so however--and without busting the budget--it's important to have as much information as you can about the state's people, economy and demographics.

A new study by the California Center For Regional Leadership, a statewide organization, offers a comprehensive blueprint into the state of the state of California. This report is free and it can be found and downloaded here: http://www.calregions.org/regcivic/indicators.html

The study is a treasure-trove of information for any natural or specialty foods marketer, broker or retailer who wants to take the time to go through it. It also can be used as a resource guide to answer questions regarding California any time they come up. It's something you won't be able to digest the first time around but will find yourself coming back to time and time again.

For example, let's say you're looking for which California region has the highest per-capita income? The answer is the Bay Area. The worse: the Central Valley. If you're marketing a natural, organic, gourmet or specialty food product line and you want to know which region has the highest post-bachelors degree education level, the answer is in this report. It's the Bay Area. The lowest post bachelors level is in the Central Valley. Looking to market a diet supplement or food line? you will find that San Diego has the highest increase in obesity levels over the last four years, while the Monterey Bay area has the lowest. As such, you might want to target your product line in the former rather than the latter region.

Below are a few other statistics from the California Center For Regional Leadership study of interest to natural and specialty foods marketers, brokers and retailers:

Per-Capita Income Increase: The Sierra Foothills region has the highest per-capita income increase in California over the past 5 years. The Bay Area the lowest. This means wages are rising in the foothill region but staying relatively flat in the Bay Area. (Bay Area wages are considerably higher overall however.) This information is important when targeting a natural or specialty foods product launch or advertising campaign, for example.

Jobs Growth: New non-farm jobs produced over 8 years. The Sacramento area has the highest growth, the Bay Area the lowest, during this 8 year period. This is great information as it shows what an emerging area Sacramento is. As such it might be wise for a natural, specialty or gourmet foods marketer to spend a little more marketing funds in the region, for example. This is also good information for brokers to share with principals and retail buyers.

Rental Affordability: Percent of families with housing costs greater then 35% of their income. The Bay Area has the highest percentage of families who's rental costs exceed 35% of their income. Butte County, in the northern part of the state, has the least. This means even though Bay Area residents have household incomes much higher than Butte County residents, Bay Area families are still paying a higher percentage of that income in rent. This can be important information for a natural or specialty foods company looking to locate a plant or warehouse facility, or for a retailer looking for places to locate a store, especially when matched against other economic and demographic information.

These are just a tiny sample of the types of demographic and other information available in the report. Additionally the report provides detailed information and ranks the regions on a scale rather than just giving a best or worse. The report also identifies many similarities the regions in California have. These commonalities also provide good information for natural foods and specialty foods professionals doing business in California.

Used effectively this study can provide natural and specialty foods marketers, brokers, retailers and others in the industries with demographic information they can use to market and sell more effectively in the nation's largest market for natural and specialty foods. The study also can be used in designing and implementing marketing and advertising campaigns, for trade marketing and sales promotions purposes, retail store merchandising plannin and implementation, plant or retail store location studies, and a myriad of other uses. You are limited only by your imagination.