Organized Units Increases Sales
McKeesport Candy Co., Demonstrates Flair for Modern Merchandising Methods
Written by Grover C.Gouker Jr.
Published by National Candy Wholesaler, Volume 16, Number 5, May 1964
Selling candy in "organized unit deals" on a "protected profit" has been a major factor in the success of the McKeesport Candy Co., of McKeesport,PA. which has grown from a modest beginning into one of the largest and most successful candy wholesale firms in the state.
Max Mullen, President of McKeesport candy Co., in his office. He spends no more than fifteen minutes a day behind his desk, finding it more profitable to keep in touch with what's going on in all departments.
Gerald Prince, Vice President of the McKeesport Candy Co., shares management of the firm with Max Mullen, President
Basically, the organized unit deal consists of a variety of seasonal candies that are selected to meet the needs of the retailer at a particular time. It provides him with enough varieties of candy and a sufficient range of prices to produce maximum sales without overloading him.
Max Mullen, President of McKeesport Candy Co., explains it this way:
"Instead of going out with candy samples and selling the retailer half a dozen of this, half a dozen of that and a quantity of something else, we sell him on the idea of buying a complete unit which we have created to meet all of his candy needs."
"We use our judgment based on long experience, in selecting the candies for the unit. It must fill the needs of the majority of our customers."
"Take Easter, for example. We know that the average customer can sell $.10 candies, some $.29 and $.39, some $.79 candies, some one pound fruit nut eggs and so forth. So we organize a unit containing such candies and sell it to the merchant as a single unit. It will normally contain around $30 worth of candy at retailer's cost."
The deals are sold to drug stores, independent grocery stores, restaurants, confectionary stores and most other outlets except supermarkets that require a different approach.
There are many advantages to this method of selling candy, according to Mr.Mullen.
"First of all, it saves our salesmen a lot of time. It doesn't take long to write up a candy order. Second, it also saves the retailer time while relieving him of having to make a decision of what candies to buy. Most of them don't know what they can sell, or in what quantity and a lot of them just don't want to be bothered with trying to decide. Because of our experience and knowledge of the candy business, we have a pretty accurate idea of each customer's potential sales and most of them rely on our judgment as to what candy they should carry.
"Third, our retailer knows that when he sells one of our pre packaged candy units, he is going to make a nice profit. If he buys one unit and begins to run low before the season is over, we continue re-stocking his supplies as long as necessary. In the case of larger candy stores, or store with high traffic, we may put in two or more of these units and keep them replenished as necessary."
The company follows the same pattern for all the major candy seasons. For example, during Valentine season, the organized unit would normally contain some inexpensive candy hearts, some $1 or $2 candy offerings and so forth. The entire unit would consist of around $40 worth of Valentine Candy.
As to "protected profits", the company makes an arrangement with the customer so that if any candy is left over after the season, the retailer puts them on sale at a discount price and the company gives him the difference between his cost and we he sells the candy for.
"The amount involved in this is very small, but it does enable the retailer to dispose of the merchandise, and nobody gets hurt," Mr. Mullen explains.
The McKeesport Candy Company's modern merchandising methods are a natural outgrowth of an exceptionally talented staff of executives and a vast amount of experience and know-how. So maybe it would help to know something about the makeup of this dynamic candy company.
McKeesport Candy Co.'s trucks line up. Signs on vehicles feature Todds Candies "Tempting to the Taste" slogan
McKeesport Candy Co.'s attractive reception area. The candy racks shown are provided for candy stores and retail customers.
Max Mullen and Ernest Prince founded McKeesport Candy Co., in 1927. Although this may not have been an ideal time to start a new venture, especially a candy company, that fact didn't dampen the spirits of the two founders, who were destined to "make a go of it" in the candy and tobacco distributing business. Each of them had the will, and each had certain talents in the area of salesmanship, and confidence in that talent.
While many candy and tobacco distributors carry a rather diversified line, this was not to be the case at the McKeesport firm. Candy was to be their forte, and their talents were aimed in that direction. While the company continues to carry cigarettes and other tobacco products, along with a few sundry items, there is no mistake about its concentration on candy.
Ernest Prince, original president of the company, became very active in the candy industry and served as president of the NCWA in 1954-55. Unfortunately, Providence stepped in on May 18, 1959, and Ernie was taken from our midst.
If you were to walk into the offices of the McKeesport Candy Co. today, you would find one wall proudly bearing the college diplomas of three of the young men involved in this success story. All of the diplomas come from the University of Pittsburgh. They bear the names of Gerald S. Prince, who is vice president; and Sidney F, Mullen, secretary and sales manager.
Max Mullen, father of Bob and Sid and president of the firm, displays no college diploma, but demonstrates much evidence of a real education in salesmanship and merchandising. And herein lies the background of the success of this quartet: Max, a dynamic salesman from the old school; Jerry, a chemistry major who served as a research chemist for the Army for two years; Sid, a physicist for the U.S. Navy; and Bob, a First Lieutenant in the U.S. Navy O.O.S. Put them all together and they spell success in the candy business.
As to the division of responsibility, Max and Jerry do all the buying, while Sid and Bob spearhead the sales force of ten. Virtually, it is as simple as that. It takes 35 employees to carry out the assignments successfully, and with the help of five trucks, the service is superb. The firm covers an area within a 40-mile radius of McKeesport.
Inside, they depend on 500 feet of power and gravity conveyors to lighten the load in handling the candy in their 20,000 square feet of space. The area is contained on two floors, and the maximum use of this space enables the firm to get full capacity out of it. The appearance of the warehouse gives one the impression that several people are employed whose primary function is to do nothing but keep things neat and orderly. While this certainly is not the case, you can see the pride the employees take in keeping a tidy house.
There wasn't always 20,000 square feet of space available, however, so some changes had to be made. In order to get the space they needed, it was necessary for them to by out two businesses separating the two buildings they used, which now gives them a continual frontage. The building has a handsome front, and now the city of McKeesport is rehabilitating the entire block to "get in step." It would be presumptuous to say that the city was forced into this because of the progressiveness of McKeesport Candy Co., but the thought has occurred. The entire warehouse is air-conditioned by a central system, so there is no problem with perishable stock.
While this statement might raise a few eyebrows in the trade, there is absolutely no "dead stock." After 60 days, "poor movers" are passed along to outlets happy to have them at a sacrifice in price.
With the advent of young men with new ideas came many changes. Now that more executive talent was available, the management began to think in terms of a more complete operation. So, approximately 10 years ago, the company went into the candy bagging business. This was the first big step that enabled it to develop its present "professional merchandising methods." Today the company packages 150 different varieties, and the stockroom is constantly being loaded, and unloaded, with fast-moving candy items. The second building, which was formerly a bar, is now a "candy bar" room, and the third building, which once housed a retail store, is now a storeroom for candy only.
So far, this operation hasn't differed from many others around the country, except for the fact that the number of college diplomas on the wall may be larger by comparison. Usually we don't think of chemists and physicists as super salesmen, but the candy business has been made exciting, and challenging, to these men, although they did much to create their own excitement. In talking to them about their attitude in business, I found a rather refreshing approach--and a frank approach, to say the least.
They took good equipment; obtained the space they needed, provided an incentive for each other, and parlayed the combination of know-how and merchandising into a top-flight company. The equipment, such as the dozens and dozens of aluminum dollies used to eliminate double handling; the conveyor system, which keeps things rolling constantly, and the other up-to-date equipment, such as tying machines and sorters, were purchased to increase efficiency and reduce costs. The acquisition of space was something that had to be done to operate economically. The know-how and the merchandising was something that had to be learned and practiced.
Their theory was quite simple. They had to know more about the candy business than their customers, and they set out to learn this. Today, there is no doubt in their minds about whether they are equipped to give expert advice and counsel. Many people talk about the necessity of being imaginative merchandisers, but the people at McKeesport Candy Co, do it while others are still talking about the need for it.
There is no secret about their motives. The men involved are anxious to make money in the candy business, and they have fun doing it. They aren't in the business for their health, but rather to prove that free enterprise business is good business. In talking with Max and Jerry, both said very freely, "We believe in selling ourselves and our abilities to the point where our customers place their confidence in us, and let us manage their candy departments." This is true of many of the supermarkets, department stores and discount stores, as well as the smaller candy stores.
Everything is sold on a "protected profit" basis, and no customer gets stuck with any of the company's merchandise at any time. The customer is always willing to keep unsold merchandise if the price is enticing enough, or if a deal can be worked out so that he can make additional money on the unsold merchandise.
Pre-assembled packaged candy travels by conveyor.
One of the four bulk candy storage warehouses used by the company. McKeesport Candy Co., was one of the first candy wholesalers in the nation to offer bulk candies.
The policy of the sales staff is that "time is a very valuable commodity." Each man carries a new-item list, a printed weekly list of special deals, and faith that his customer will allow him to make the decisions for him as to what he can handle. Accurate records are kept from previous years for holiday ordering, and these are used as guides.
Every Friday is "idea day" at McKeesport. The management people sit down together and prepare the specials for the week ahead. Much candy is sold in the form of organized unit deals, as described earlier. This requires less time and builds volume orders. In addition to the different candies for re-sale in the unit deal, it usually also contains a merchandising incentive for the retailer.
Orders are taken by unit number, saving a great deal of time, while at the same time selling dozens of boxes of candy per unit of effort.
The promotional ideas are born at McKeesport Candy Co. They supplement the incentive programs of manufacturers with more liberal bonus plans of their own. The fact that the company packages 150 items under its own labels gives it the latitude to work up its own deals with whatever items it chooses to select. The line is bagged under the name of Todd's Candies, and all the firm's trucks carry the name in large print as well as the "Tempting to the Taste" slogan.
Although holiday business is big business, the company does not depend on the holiday business for its boom times. As stated by Max Mullen, "Everyday is Christmas at McKeesport Candy Co." While many distributors consider summer to be a slack season, it isn't true here. Promotions, deals, and specials go on 52 weeks of the year. When they say that they do more for their customers, they do. But then, their customers are happy to invest this confidence in them because it means more money in their pockets--and with the minimum amount of time invested by both distributor and retailer.
To cite one example, the manufacturer of a certain candy item, which was relatively new, asked the company to launch it in their market. The firm accepted the challenge, ordered 3,000 boxes immediately, and sent six-box units to each of its customers with a personal recommendation. It merchandised the units for the retailers, and sold 100 percent of the 3,000 boxes! Everyone was happy. The reason, of course, was know-how.
"When it comes to candy, we believe we know more about what's good for our customers than they do," say Max and Jerry. I believe them--and so do their customers.
In summary, this company is unique. It has been willing to move with the times, promote its own ideas, build confidence, and satisfy customers. Every distributor in the country can do the same thing, in my opinion, but the attitude must be equal to the desire. Candy has been a "sweet business" to everyone at McKeesport Candy Co., but then the ingredients were there to help with the "sweetening" process.
The McKeesport Candy Co. is active in the Pennsylvania Association of Tobacco & Candy Distributors, and in other industry organizations, including the NCAW, which Max Mullen serves as a director. The firm was selected to receive the NCAW-PATCD "Candy Merchandiser Award of the Year" in 1961. By now, every reader will know that this award was well deserved.