The New Face of Guerrilla Marketing
By Chaille Brindley
Date Posted: 5/1/2009
The current scene in the pallet industry is somewhat reminiscent of two kids going at it in the school play ground. The children are fighting for all they’re worth and a third is accidentally punched in the eye by an errant fist. That’s about what has happened to the white wood pallet industry as the two major players in rental duke it out in the marketplace.
The two major companies in the U.S. pallet rental market are CHEP USA and Intelligent Global Pooling Systems (iGPS). Both companies have spent millions developing their pool and marketing their unique approach. These large poolers share some very similar pedigree at the same time they operate by different worldviews.
CHEP operates the largest private pool in the country with more than 80 million pallets, most of which are a 9-block wood pallets. By contrast, iGPS runs an all-plastic pool of approximately three million pallets. iGPS hopes to build its pool up to at least 20 million pallets over the next few years. iGPS has clearly put all of its focus on plastic whereas CHEP is more pro-wood by default. Wood remains the most cost effective material to develop a large pool given that plastic pallets tend to cost about three times the initial purchase price of wood. That fact alone has been the primary driver behind CHEP using primarily wood although the company claims to be “material agnostic.”
The presence of two major players touting different pallet materials is reigniting the age-old plastic vs. wood pallet debate. And it looks like white wood pallet companies may be caught in the middle. From sustainability to fire protection to sanitation to weight and freight savings, iGPS is pushing plastic as the best option for most situations. There are some scenarios where plastic may be better than wood, such as weight and transportation savings. But when it comes to fire and sustainability, wood is by far superior.
Both CHEP and iGPS conducted Life Cycle Analysis on the pallet industry. Surprise! Surprise! CHEP concluded its wood pallet pool is the most environmentally responsible option on the market. iGPS concluded the exact same thing about its all-plastic pool. How could this be true?
The answer is that sustainability and life cycle assessments have become nothing more than just another marketing ploy. Hidden beneath these environmental studies are assumptions that tend to paint white wood in a bad light while giving the sponsor’s pool advantages that may not reflect reality. Commissioning these studies cost big bucks – far beyond what white wood pallet companies can match.
When it comes to fire safety, iGPS has spent lots of money adding fire retardants to its new pallet design. This led the company to push the fire issue, trying to raise suspicion that composite blocks may cause a serious fire hazard. The Enterprise covered the fire issue in detail in the April issue on page 28. This fire fight between CHEP and iGPS almost spilled over into the general white wood industry.
These are just two fronts where the presence of iGPS has forced white wood companies to defend wood against plastic to customers and regulators. And this is probably only the beginning.
There is certainly no love lost between CHEP and iGPS. Many of the top leaders at iGPS are former CHEP executives who were shown the door over the past ten years. Whenever two companies compete this strongly in the market, there will be some splash over into third parties that are hoping to stay clear of the feud altogether.
Guerrilla marketing warfare strategies are a type of marketing warfare strategy designed to wear-down the enemy by a long series of minor attacks, using principles of surprise and hit-and-run tactics. That is a pretty good description of what iGPS and CHEP have been doing since iGPS first entered the market in 2006. Guerrilla marketing is an unconventional system of promotions that relies on unexpected and unconventional actions. The term was coined and defined by Jay Conrad Levinson in his 1983 book Guerrilla Marketing.
Guerilla Marketing involves unusual approaches such as intercept encounters in public places, street giveaways of products, PR stunts, any unconventional marketing intended to get maximum results from minimal resources.
There is a second type of gorilla marketing that simply involves two industry giants smashing each other in hopes of landing a knockout punch. Some of what CHEP/iGPS have engaged in resembles more this go-for-broke approach. Both companies have spent lots of money marketing big customers. All the money spent on sustainability is a perfect example. Those efforts hardly resemble the traditional understanding of guerilla marketing where competitors rely more on wits than big budgets to win market share. However, the subtle attacks under the table on issues such as fire hazard and phytosanitary concerns are classic guerilla marketing scenarios.
Pallet users should be aware of this competitive environment. Or else you could fall prey to much of the hype going on in the market right now. All colors and materials of pallets have a place in the market. There is no one-size fits all solution. You need to be aware of your needs and supply chain. Do what is right for your company. Pallet rental may not be the panacea some paint it out to be. For others, pallet rental makes sense and is a smart move. The key is not to be hit by an errant punches while the big gorillas go at it.
