How the power of premiums created an empire. Guess what the baking powder was used to sell?

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Dave Young:
Welcome to the Empire Builders Podcast, I’m Dave Young. Steve Semple, we’re going to talk about Wrigley’s again. That’s from early, early on in the podcast.

Stephen Semple:
That’s going back to episode number four. And episode four, we talked about how they went from being this regional company into a big national brand. And you may actually want to go back and listen to that. But on this one, we’re going to go back even further. We’re going to go back right to the beginning. But one of the things I want everybody to realize is really how large Wrigley’s grew.

Today they’re a subsidiary of Mars and Mars bought Wrigley’s back in 2008 for 23 billion dollars. And it had a revenue of 6.3 billion dollars, 16,000 employees, and almost a billion in net income. So, pretty big company. But we’re going to go back to day one in terms of how Wrigley’s got started. Because I think it’s a really interesting story, how Wrigley’s got going. So Wrigley’s was launched on April 1st, 1893 by William Wrigley, Jr. And this company went on to create not only a fortune later, but a fortune for the family. You can see pictures of the Wrigley mansion. They bought Catalina Island out in California, Wrigley’s Field in Chicago, that’s them. They own the Chicago Cubs. You know, one of the most famous big buildings on Millionaires Mile in Chicago is the Wrigley’s Building, right? So big influence, big business.

Dave Young:
On chewing gum.

Stephen Semple:
On chewing gum. And William Wrigley started as a soap salesman in Philadelphia. So he was a soap salesman in Philadelphia, and when he was 29 years old, he moved to Chicago, and he had 32 bucks in his pocket with this idea of starting a business. And so they started by selling Wrigley’s scouring soap. So it started as a soap. So many good names out there, isn’t there? Wrigley’s scouring soap.

Dave Young:
Rush right out in a buying frenzy.

Stephen Semple:
That’s it exactly. And it was selling so well that to better sell the soap, he decided to offer a premium to get people to buy it. So he had this premium that he offered. And one of the things that he offered was free cans of baking powder. So at that time baking powder was in cans and he decided to offer free cans of baking powder with every order. And he really quickly discovered that the baking powder was more popular than the soap.

Dave Young:
They’re buying the soap to get the baking powder.

Stephen Semple:
Right. So he decided, you know what, I’m going to sell baking powder. So he switched to baking powder.

Dave Young:
That’s called a pivot.

Stephen Semple:
And around this time, there was a major breakthrough in making gum using chicle. Remember Chiclet’s?

Dave Young:
Uh-huh (affirmative).

Stephen Semple:
Episode 33.

Dave Young:
It’s all connected.

Stephen Semple:
It’s all connected. So he then decided to offer gum as a premium for selling of the baking powder.

Dave Young:
So you buy the scouring soap and you get baking powder. You buy the baking powder, you get gum.

Stephen Semple:
You get gum. And guess what? The gum turned out to be super popular.

Dave Young:
What he really discovered was premiums are where it’s at.

Stephen Semple:
Premiums are where it’s at. So in 1893, he launches two new gums, Juicy Fruit and Wrigley Spearmint. But by this time, actually, the gum market was already fairly crowded. There were a lot of people getting into it. So he wanted to stand out. Now others were not advertising. There were lots of players, but they weren’t advertising. So he aggressively advertised.

Dave Young:
So you’d walk into the store, and at that point, you’d have to decide what kind of gum you wanted.

Stephen Semple:
Correct.

Dave Young:
With no advertising, other than someone’s experience of liking something. The customer’s walking in with a blank slate for preference.

Stephen Semple:
Hold that thought on the experience. So he did two things. He aggressively advertised, and you can learn more about some of the aggressive advertising he did by going back to episode four, because that’s a lot of what we spoke about. He did mass media as well as direct marketing. And so what he did is he mailed samples, a stick of the gum, to millions of Americans listed in the phone book. So to your point, they only had the experience. Well, what I’m going to do is I’m going to send you a free stick of gum. You try the gum, you like the gum. You walk in the store, you buy a pack of the gum.

Dave Young:
Mm-hmm (affirmative).

Stephen Semple:
So this is very much, you know, that push marketing idea. This is not much different than Burt’s Bees, where the whole idea with Burt’s Bees was if I can get somebody to walk into a store and ask for my lip balm, I’m going to sell a crap ton of my lip balm. The push marketing strategy, get the consumer to select your product. And he did this through awareness in mass media and sampling through direct mail. Brilliant, what he did.

Dave Young:
Especially for something like gum. I go walking into a store because I want some gum. And again, like I said earlier, I don’t have a preference. But if he’s mailed me a stick of gum and it was free and I chewed it and I liked it, now I have a preference. I’m not going to try something that I don’t even know if I like that brand of gum, but I know I like Wrigley’s because I had a stick. Once people decide on something like that, they kind of stick with it, don’t they?

Stephen Semple:
They do if they like it. Yes, absolutely. This is like when Godiva Chocolate, I don’t know if you remember when Godiva Chocolate came on the scene and they would be in the malls and they would have people standing outside the Godiva Chocolate, offering a piece of chocolate for sampling. And you try a piece, and you’d go, wow, this is really great chocolate, let’s go in and buy some. Wrigley was one of the first to do this in terms of this, sending out the sampling.

At one point, they even had a promotion where they would send a stick of gum to kids on their birthday. Happy birthday; here’s a stick of Wrigley’s gum, like fabulous. And this is how they managed to stand out in this crowded field. Look, he discovered that people liked the gum. The field was crowded. Here’s how he stood out. To me, the incredible lesson here is to look at how this guy pivoted. He was pivoting, but he was paying attention to the customer. But then, even when he landed on gum, he said, you know what, I still need to have a promotion strategy. So he still had a promotion strategy of mass media and sampling through direct mail to create that preference for his gum. And look, went on to build an unbelievable, massive empire.

Dave Young:
You send every kid a stick of gum, or you send everybody in the phone book a stick of gum, and if they walk into the local candy store or general store or wherever, they would buy things and they’d say, hey, I’d like some of that Wrigley’s Spearmint gum. By God, if they don’t have it, they’re going to have it next time you come in. Because if all these people come walking in asking for it, you know darn well they’re going to start carrying it. You could even do this mailing before you had it in retailers, if you wanted to.

Stephen Semple:
Oh, especially imagine, Dave, you’re the sixth person coming in going, hey, do you got any of that Wrigley Spearmint gum? And it’s like, Jesus, Murphy, everybody all day long’s coming in asking for this gum.

Dave Young:
Where are we going to get some?

Stephen Semple:
Yeah, where do I get some of this gum to sell? You know, we sometimes forget, especially when you are a manufacturer. So Wrigley’s was a manufacturer of gum. There’s a retailer sitting in the middle. We’re used to thinking about that retailer as our customer that we have to convince, and forgetting about the consumer at the end of the chain. But if I can convince the consumer at the end of the chain, they’ll convince the retailer for me. That’s your point. They’ll convince the retailer for me simply by going, do you have any of this?

Dave Young:
And if the retailer’s customers are demanding it, you don’t have to go in and fight near as hard for sales space. Like you said, that’s another form of advertising and marketing is channel kinds of plays like they at where it’s like, you want the shelf that’s at eye level or right near the cash registers. Well, if you’ve got a product that everybody’s asking for, the last thing a retailer wants to do is put it someplace that people have to go hunting for it.

Stephen Semple:
That’s a great point, Dave. And I didn’t even think about that. You are far more likely or certainly far easier for you to get that premium shelf space because your product is in demand and selling. Absolutely.

Dave Young:
We’re going to put this where people can see it. Because I don’t want to have to tell everybody that walks in the store where to go find the Wrigley’s Spearmint gum. I’m sure Mr. Wrigley had some point of sale materials as well.

Stephen Semple:
I’m sure. He struck me as somebody who did not miss too many tricks. There are often a number of things that we can learn from these companies. And he kept an eye on what was going on and where the consumer preferences were, and pivoted with that and ran with it and made a lot of money.

Dave Young:
Take that, Chiclets.

Stephen Semple:
Take that, that’s great. But you know what? Still, go back and listen to the Chiclets one. It’s interesting as well.

Dave Young:
It is. It is.

Stephen Semple:
Thanks, David.

Dave Young:
Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big fat juicy five-star rating and review. And if you have any questions about this or any other podcast episode, email to questions@theempirebuilderspodcast.com.

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