KANSAS CITY, Mo. -- Ambassador Cards here is taking greeting cards into the entire supermarket arena.
The manufacturer, which last year won Smith's Food & Drug vendor of the year honors for its fourth-quarter chainwide promotion themed "Magic Begins at Smith's," used the event to tie in greeting cards to other departments throughout the store. It was Ambassador's first attempt at what it refers to as integrated marketing, a relatively new concept that takes greeting cards beyond the borders of the card department and integrates them with other departments and products. It also ties into the chain's very image.
Armed with the knowledge gained from the Smith's experiment, this merchandising approach is quickly becoming the cornerstone not only for building Ambassador's greeting card sales, but for providing a critical competitive position for its supermarket customers, said Jim McDowell, brand marketing director for Ambassador.
Ambassador Cards, established in 1959 as a division of Hallmark Cards, is the largest supplier of greeting cards to supermarkets, with a dollar volume share in excess of 40% and growing, according to company executives.
The integrated marketing concept emerged as a by-product of information coming from retail focus teams that were formed two years ago to partner with retailers on all operational levels to maximize greeting card and store sales.
What exactly is integrated marketing? "It is not a thing. It's not a pallet load of stuff that is shrink wrapped and dumped off the end of a truck and then stuck in a seasonal aisle of the store," said McDowell.
"Integrated marketing is a process that leads to a [marketing] plan. It's a lot of hard work and basic gut-level knowledge of marketing and how things work together," he said.
Marketing plans are customized for each retail account and built around "drive periods" such as Valentine's Day, Easter, Mother's Day and Christmas. Drive periods such as back-to-school, Super Bowl or Memorial Day, which may be more important for a retail account than a card company, also are incorporated into the plan.
Other related components tied to the integrated marketing approach are: co-marketing alliances with other vendors, outposting greeting cards in high traffic areas such as the checkout stand and micromarketing the card selection to individual store demographics.
The main goal is to differentiate Ambassador's supermarkets from other food chains and retail formats.
Mark Schwab, vice president of product development, who is largely responsible for overseeing the creative input at Ambassador, said in today's competitive environment the first thing a food retailer wants is to be different from the competition. "They are saying 'Ambassador, you have the creative expertise. That's where I want your help. I have few opportunities in my store to really set a tone and be different,' " he explained.
Schwab said research indicates that 65% of the people who walk through the front door of a supermarket at anytime will need a greeting card in the next seven days. "Ambassador's focus is getting the right product and mix in the store and triggering the buy."
The good news for supermarkets, Schwab said, is that they have the highest number of shopper visits of any retail channel. Therefore, supermarkets have the biggest opportunity to intercept consumers with targeted products and promotions.
Another statistic card companies often cite is that the card department pulls only 15% of the shoppers, but of those shoppers who make it down the card aisle 85% will make a purchase.
Therefore, the integrated approach, which is expanding space for cards in other store departments, may capture more of those shoppers who don't go down the card aisle, or remind them to shop the card department.
Ambassador has made a push to get outpost space for greeting cards at the checkout stand. It accomplished this at Giant Food, Landover, Md., earlier this year by successfully merchandising greeting cards at the highly desirable checkout lane, where cards can be changed often and themed to a season. Ambassador's Checkstand Greeting program is being introduced at other chains.
The expanded exposure for greeting cards is warranted because of the category's profitability. said McDowell. Margins can be between 40% and 50% and sometimes higher.
"Greeting cards remain a very important profit category for our retailers, especially today where there is so much pressure and squeeze in so many other categories," stated Schwab.
In its co-marketing efforts Ambassador has worked with Hershey Chocolate, M&M Mars, Kodak and Binney & Smith, which is owned by parent Hallmark, in store-specific cross-promotional projects that have helped chains differentiate themselves.
Ambassador has even tied in with a supermarket's store branded product, such as cross-promoting greetings cards with private-label soda at Delchamps, Mobile, Ala.
"There is no reason why noncompeting categories in a store shouldn't work together and partner," said McDowell.
Pointing to the Smith's promotion, McDowell said, "We learned how Ambassador, Hershey and Kodak can fill each other's marketing voids and capitalize on our respective strengths."
For example, a company such
as Kodak can add the strength of a brand name through a favorable consumer franchise during a peak promotional drive period. Through film processing, it also can bring in repeat business.
Ambassador offers a co-marketing partner like Kodak attractive real estate, often having 100 linear-foot departments and endcaps. The card company also owns the seasons, said McDowell.
But the greatest strength Ambassador offers its promotional partners is what McDowell calls Ambassador's secret weapon. It is the company's ability to fulfill any promotional project, even one on the scale of Smith's, which involved special displays, banners, merchandise and tie-in promotions. There are about 7,000 retail merchandisers who work for Ambassador and are ready to execute such projects in a timely manner. Through its integrated marketing efforts Ambassador is using the card department as a catalyst to drive product sales throughout the whole store.
"Retailers are coming to us and saying 'you, more than any other category in the store, understand how consumers behave, how they shop, how they relate to each other, because you are in the personal communication business. You also understand seasonality. Help us position our stores and drive sales in other categories as well as greeting cards,' " said McDowell.
Through Ambassador's efforts to reach beyond its card borders, it is helping to build a brand image for the store.
"Everyone realizes that the retailer is king and not the manufacturer," said McDowell. "The branding is now taking place at retail. The retailer has become the brand. In that kind of environment the major manufacturers had better figure out a way to help retailers market other categories."
On a consumer level, future growth for the card companies will come from the aging population, said Schwab. Older consumers, he said, are heavy greeting card users with a wide-ranging taste in cards.
"As people get older, they become heavier users of greeting cards because of the need to keep in touch. They are also working across a couple of generations."
On a trade level, areas of continual growth for supermarkets will be in party-related goods and gift wrap accessories. "Party is a huge category. It's a hot topic in the food industry. Party has high margins for retailers and the consumer wants it and is looking for it," said Schwab.
Ambassador last month launched a new gift wrap program called Choices, which will be merchandised in more than 5,000 stores across the country. Describing the program, Schwab said, "It's a radically different approach to gift wraps. It's really establishing a tone in the store." More than 700 products are merchandised on the unit, including a large selection of rolled and flat gift wraps, bows, bags and accessories. Schwab said the smaller unit is designed to achieve productivity in smaller store formats.
Where is the greeting cards business headed? Schwab said it's a continual evolution. "Consumers, who are much more pressed for time, are demanding. They are looking not only for convenience, but want choice, selection and variety."