Ken Vargha has quite a marketing resume: In the past 15 years, he's helped
promote everything from Pantene shampoo and Maybelline makeup to hair-loss
treatment Rogaine and Invisalign braces.
In February, he joined Alacer Corp., the Foothill Ranch, Calif.-based maker of
Emergen-C dietary supplements. As VP-sales and marketing, Mr. Vargha
occupies the company's top marketing post. He reports to President-CEO Ron
Fugate and liaises with the marketer's lead creative agency of three years,
Karlen Williams Graybill Advertising, New York (yep, they're the ones
responsible for those zany Bollywood ads).
As most marketers have been concentrating on cutting ad dollars, Alacer has been
steadily increasing its marketing budget - to $8 million last year from $6
million in 2007, according to TNS Media Intelligence. Another increase of
20% is slated for 2009.
Emergen-C is known for its drink-mix nutritional supplements, but more recently
it launched a line of ready-to-drink beverages. The products sell in
health-food stores and supermarkets and have been a success story in a bad
economy in part because of a recession-friendly price point of as low as 49
cents a packet or $10.99 for a box of 30.
Mr. Vargha, who drinks a blend of pink-lemonade and berry-blue Emergen-C daily,
talked to Ad Age about his personal marketing style, working with a small agency
and more.
Ad Age: How have you altered Emergen-C's marketing strategy to better
connect with consumers during recession?
Mr. Vargha: We're sensitive to our consumers and what they are going
through, so we have been working with our retail partners to make sure that
everyone is getting a good value. We're scheduled to increase spending for
marketing support starting the fiscal year on July 1. Our business is up
20%; we are scheduled to increase media spending by 20%. As an overall
media mix, we're putting more into advertising. Sampling is also a key
driver of our business, and we give out eight to 10 million samples a year.
We feel that when people try our products, that's where the conversion process
really happens. Online we are still learning our way through exactly how
we do it.
Ad Age: Did the swine-flu scare help boost sales of Emergen-C?
Mr. Vargha: The [Food and Drug Administration] was really clear that
nobody was to go out and call attention to their products and how they could
help vis-a-vis swine flu. But consumers went out on their own [to make
purchases], and we saw huge spikes. When H1N1 was at its peak in the
media, consumers turned to our products and other natural products in the
marketplace. It's not the first time. Going back to the avian flu a
few years ago, the industry saw a surge in consumption at that time. At
the core, I think that people today would rather take something to improve
themselves naturally rather than turn to drugs.
Ad Age: The natural-remedy category has had its share of bad press, with
Airborne's false-advertising suit and the Zicam product recall. What are
the challenges of marketing to consumers in your sector?
Mr. Vargha: The biggest challenge that we face as an industry is a
perception that we are unregulated. However, we are, by the FDA's Dietary
Supplement Health and Education Act that has been around for more than 10 years.
As marketers we need to know where the line is when we make claims and stay on
the right side. I'm actually more concerned about the recent story I read
about Bayer's One A Day multivitamin with selenium having its claims
challenged...I'm concerned about household names crossing the line and calling
into question an entire category for consumers. While it's one thing when
a smaller company is called into question, it's an entirely other to have
mainstream companies being called to task - that has the potential to shake
consumer confidence more and, in turn, affect us and the entire industry.
Ad Age: Before you came to Alacer Corp., you worked for mega-marketers
such as Procter & Gamble, so you've probably worked with a lot of big agencies.
What are the advantages and disadvantages of working with a smaller shop like
you do now?
Mr. Vargha: Over the years, I've enjoyed interacting with many big
agencies, like Grey, [Leo] Burnett, TBWA/Chiat/Day and the Martin Agency.
Each comes with its own nuances, strengths and weaknesses...from
way-out-of-the-box creativity to the tried and true. One item that ties
the best relationships together, though, whether large or small, is passion.
What I like about working with a small agency like KWG is there is passion
across the team. There's also continual access to and involvement of the
partners and someone who really understands the needs of small to midsize
brands. As far as downsides, I don't really see many. If they don't
have it, they'll look for it, find it and get it.
Ad Age: How would you describe your personal marketing style?
Mr. Vargha: I'm heavily data-driven. I don't like the idea of just
saying, "Trust me, it works." I want to be able to go before our board of
directors to say that, "You gave me this much more money this year, and I'm
going to return on that investment for you." I'm very comfortable with
data and demand that from the people on my team instead of just going with the
gut. That said, I respect the creative side of the process. There is
a magic in working with highly creative, brilliant people, and you need to give
those people room.
|