Righting a Sinking Ship
With an infusion from a former rival, Medford Foods tries to re-establish its reputation and presence
by Ken Krizner, senior editor
On April 12, 1994, Dwight Woelkers went home from his job as director of marketing at Hatfield Quality Meats. His intention, of course, was to return the following day. But fate intervened.
At 10 p.m. that evening, Woelkers received a call from his superiors telling him to report to Medford Foods Inc. the next day. Hatfield had just purchased Medford and was making Woelkers vice president of sales and marketing.
For Woelkers, it was time for an attitude adjustment. For Medford employees, who did not know from week-to-week whether they would have a job prior to the sale, it was the same thing.
Chester, Pa.-based Medford had sold its line of hot dogs, smoked sausages, hams and bologna in New Jersey, Delaware and eastern Pennsylvania since 1864. In recent years, however, sales declined as the company lost market share. Sales in fiscal year 1994 totaled $32.5 million, compared to $36 million in fiscal year 1993.
But Hatfield, which had been rivals with Medford in the Philadelphia area, saw a silver lining in an otherwise discouraging picture. And Hatfield, a slaughterer of hogs, was looking for new markets for its excess of raw products.
"We knew that [Medford] was still well-regarded in the Philadelphia marketplace," says Phil Clemens, president of Hatfield. "We also knew that Medford had a long history of making quality products. That is one of the main reasons we bought the company. We knew this would help us expand our market."
But Medford was suffering from a plethora of problems-both internally and externally-that needed to be overcome if it was going to be successful.
-- Employee morale was low. When sales began to lag, company executives laid off employees.
"Nobody knew what was going to happen, but everyone thought we would close," notes Bill Emanuel, assistant to the president and a 46-year Medford employee. "That's no way to work."
-- Production was on a downward slide. When sales began to lag, company executives raised prices. Medford's peak was 700,000 tons of product a week in the early 1980s. When Hatfield assumed control, production was between 250,000 pounds and 300,000 pounds a week.
-- Medford executives stopped putting money into the company. Another result of poor sales was that the company stopped marketing and advertising its products.
"It seemed that they did everything you do not want to do when sales begin to slip," Woelkers notes. "But money was tight, so they stopped spending it."
In search of a new attitude
Hatfield executives knew that if Medford was going to survive and thrive, there had to be readjustments in the attitudes of the company's 200 employees. On the first day, top Hatfield executives, along with Woelkers, held meetings with each department.
"We explained to them what the takeover meant, what the philosophy of Hatfield is, and what the future will hopefully hold," Woelkers remembers. "We gave the employees a challenge. We told them: 'We want to stay here. But this company has not turned a profit in years and that's what needs to be done.' We tried to reassure them that as long as the company showed improvement, their jobs were safe."
Woelkers says it was vital that employee input be added. "Without their help, we have no chance of success," he stresses.
A box was set up so employees could communicate with management without leaving their names. And another box was established for suggestions to save money. If an employee's idea is used, he or she is rewarded.
The sales staff was switched from salary to commission forcing it to be more aggressive in its approach.
Safety, employee assistance and health check programs were also instituted.
There are also little matters that may be lost on bystanders, but are important to employees, such as fixing pipes, replacing the floor in the sausage kitchen, adding an automated wash system for nighttime cleanup, and honoring employees when they retire.
"We told employees that we weren't going to turn the company around, they were going to turn it around," Woelkers points out. "It is a team effort and we need their help. If we don't get their help, this is not going to work."
At the beginning of this year, Medford established a sales goal of producing 400,000 pounds of product a week-20.8 million pounds for the year. Woelkers says that in most weeks, that goal is exceeded.
"It's nowhere near where the company once was, but it's a good start," Woelkers says. "The next goal is to make a profit. We are trying to rebuild what wasn't done in the past 10 years. It won't be done overnight.
"The profit margins are slim; the goal is to increase profit margins and sales tonnage by the end of the year," he adds.
The customer is always right
After reassuring employees, Medford went to work on its customers. Despite a good reputation, customers had lost confidence in Medford's products.
Woelkers immediately began contacting customers through focus groups and anonymous surveys asking them what they liked and disliked about the company.
"We were pleased to find out that Medford still had a good name," Woelkers says. "But our customers told us that the company had not come to the table with any new ideas in years."
What Woelkers found out was that Medford had to improve quality, improve service and build partnerships with customers.
In other words, Medford needed to re-establish its name in the marketplace, stresses Sales Manager Chet Dudzinski.
"Our main objective is to convince the marketplace that we are here as a long-term player," he stresses. "Then we will get the name recognition in the eyes of the customers."
The changes at Medford include new black-and-gold packaging, an aggressive program of radio, television and print advertisements, and free-standing product inserts.
Perhaps Woelkers' most important move was to reinforce Medford's association with the Philadelphia Phillies. For year's, Medford has been the official hot dog of Veteran's Stadium, home of the Phillies and NFL Eagles. The company also sells a line of Phillies Franks in retail outlets.
Medford had opportunities to promote the product but never followed through. One of Woelkers' first duties after taking over at Medford was to visit Phillies' executives.
"We believed there was a great opportunity with the Phillies," he says. "I wanted to strengthen our relationship and market Phillies Franks more aggressively. "Besides, I knew that if I lost the contract with the Phillies, I was in big trouble."
The aggressiveness paid off. Medford signed shortstop Kevin Stocker and put his picture on packages of Phillies brand hot dogs, smoked hot sausage and bacon. It also produced television, radio, billboard and point of sale advertisements. And consumers received a coupon good toward a ticket to a Phillies' game.
"It was a way to show people: 'Hey! We are back as a player in this marketplace,' " Woelkers notes.
But the strike by Major League players that ended the 1994 season and delayed the start of the 1995 season nearly ruined the plan. Medford could not use the Stocker ads and labels because of the strike.
Misfortune, however, was turned into a blessing thanks to the Phillie Phanatic, one of the great mascots in professional sports. Woelkers convinced the initially hesitant Phillies' officials to allow Medford to use the Phanatic to market a new hot dog, the Phanatic Frank.
Woelkers sold Phillies' officials on the idea that once the strike ended, the club was going to need public relations help. Plus, it helped Medford because it would get another product on the shelf.
To avoid cannibalization of the Phillies Frank, the Phanatic brand has less beef and comes 10 to a pound, as compared to eight to a pound for the Phillies brand. For children, each package comes with a coupon good for a Phanatic figurine.
The new product has exceeded expectations. Company officials had hoped to sell 250,000 pounds in 1995. But as of Aug. 11, Phanatic sales were at 325,000 pounds.
"The Phanatic crosses all barriers," Woelkers says. "He is hot with the children, and he can be used at all times of the year, not just with baseball. The Phanatic is fun and we want everyone to know that these hot dogs are fun."
But it has not been all fun for Woelkers. He admits that progress has been frustrating at times. Like his new employees, he too had a new challenge.
"I expected it would be easier to turn Medford around. I found out it was not an easy task," he points out. "I wanted it to happen now, not later. There is a lot more to it than I ever imagined."
Hatfield corporate officials want brands from each company to remain distinctive. It's the reason why the Medford name was kept after the acquisition. There is a lot of product duplication, but Hatfield also generates 25 products that Medford does not.
"There is always a little fear that you can cannibalize each other," Clemens says. "But Medford and Hatfield really serve two different markets within the same marketplace. Hatfield is involved in larger supermarkets and larger foodservice accounts, while Medford is in 'mom and pop' stores and specialty accounts."
Woelkers points out that part of Medford's attractiveness was it would give Hatfield a part of the African-American community, other ethnic communities, and the sports market.
But there are also advantages to the ownership. Sales people from both companies can use the Hatfield-Medford connection when dealing with their customers.
"We tell our customers they don't need six different vendors, they can get you six different lines under different brand names," Woelkers stresses.
The customer survey is an ongoing process with results coming quarterly giving Medford the opportunity to continually check itself. Results are shared with the sales and production staffs.
A recent survey revealed that 90 percent of customers said they were encouraged by the new attitude and policies of the company.
"Medford's renewed commitment geared toward growth will result in a win-win situation for both Super Fresh and Medford," stresses Frank Lavin, director of meat and deli at a Philadelphia-area Super Fresh supermarket.
Woelkers notes: "We've only scratched the surface. We've stopped the trend of declining production figures. We have a long way to go, but we are going in the right direction."
The Medford File
Employees: 200
Products: Gourmet deli and dinner hams, deli beef, franks, bacon, scrapple, dry beef and sausage.
Brand names: Medford, Old Philadelphia, Chesapeake Valley, as well as Phillie and Phanatic in association with the Philadelphia Phillies.
Big customers: Along with the Phillies, Medford is the exclusive supplier of hot dogs to Veterans Stadium and the Spectrum in Philadelphia, and Campbell Soup Co., which uses sliced hot dogs for its Spaghettios and sliced sausage for its Prego spaghetti sauce.
Distribution area: Medford meats are sold through inside sales representatives, route salesmen and distributors to supermarkets, delis and other retail venues throughout eastern Pennsylvania, Delaware and New Jersey.
History: Medford Foods Inc. was founded in 1864 when Charles B. Medford began delivering fresh meat from his farm by wagon to food merchants and residents in Frankford, Pa., outside of Philadelphia. In 1929, Medford took control of the Chester Packaging and Provision Co. Eventually, Medford moved its operations to Chester, Pa., where it remains. Hatfield Quality Meats Inc. purchased the company in April 1994.