There is nothing small fry about potato chips: $2.7 billion are sold in the United States every year, or almost 45% of total salty snack-food volume. Not surprisingly, competition among potato chips makers is fierce, and most rely heavily on advertising. But Cape Cod Potato Chip Co., a $5-million patato chip manufacturer based in Hyannis, Mass., has an unusually small advertising budget: zero. The company relies on world of mouth to promote its product.
When founder and chief executive officer Stephen Bernard talks about "word of mouth," however, he isn't leaving as much to chance as one might expect. The cornerstone of Cape Cod Potato Chip's strategy is the bustling tourist trade in Hyannis, a scenic port town on Massachusetts's Cape Cod. Every year, at least 25,000 tourists visit the company's retail shop, located at its Hyannis production facilities; some of those 25,000 go home and bring up the subject of Cape Cod Potato Chips with their local supermarkets.
To ensure that steady stream of visitors, the company recently relocated to a larger facility in Hyannis, complete with new glass partitions and walkways to enable large numbers of tourists to observe the entire chip-making process. "Visitors walk through and they're fascinated," says Bernard, who expects 325,000 tourists this year to visit the new plant and its large retail shop.
"Maybe if we got really big, we would be forced to advertise," he adds, "but I would like to avoid that as long as possible.If our consumers started seeing ads, they would think that success had spoiled us. We'd lose our mystique."