LANTANA, Fla. -- Aggressive moves into the in-store promotion business by the publisher of the National Enquirer and the Star signal the growing importance of retail service to the future of brand marketing.
The publisher, American Media here, is backing two innovative startups, the Paperless Coupon Network and Entertainment Central, both of which will rely on Distribution Services, the in-store service network originally developed for the Enquirer and Star.
The Paperless Coupon Network is an in-store, paperless electronic promotion medium that delivers news of incentives to consumers via shelf signs, then delivers the discounts at the checkout. Operated by Retail Marketing Network, Norwalk, Conn., a wholly owned subsidiary of American Media, PCN has completed a year of testing and is gearing for a rollout in the fourth quarter.
Jay Elliott, president and chief executive officer of PCN, said his company is launching the network with 2,300 grocery stores already committed. "I anticipate reaching 3,000 later this year," he told Brand Marketing.
"We now have 35 brands using our programs, from 21 different manufacturers," he added.
Entertainment Central is a separate in-store marketing and merchandising concept that is now entering its test phase, said Barry Greiff, president and CEO. Now preparing for its first major field tests, the service is designed to place semipermanent endcap fixtures in stores on which consumer videos, CDs and books on tape can be copromoted with grocery products, he said.
"We have just begun actively selling this into the market," Greiff said in a July interview. He added that he anticipates testing the program "within three
or four months" at stores in major chains in several geographically dispersed markets.
Entertainment Central is part-owned by American Media, in partnership with Promotional Concepts Group, New York, an affiliate of the Interpublic Group, the New York advertising agency.
Both the Paperless Coupon and Entertainment Central concepts depend heavily on in-store execution to work properly. For the paperless discounts, maintenance of shelf signs and in-stock position are the critical factors. For the entertainment copromotions, the fixtures must be designed, installed and then reset during each promotional cycle.
Both promotional programs also require follow through and evaluation in order to deliver full value to participating manufacturers and retailers. That's where Distribution Services figures into the picture. Both Elliott and Greiff said the pre-existing field force will be a critical factor in executing their programs in-store.
"Our people call on 20,000 high-volume accounts every week," said Mike Roscoe, president of DSI, a wholly-owned subsidiary of American Media, which is headquartered in West Palm Beach, Fla. His merchandising force consists of 150 full-time staffers who supervise another 800 field people. All are equipped with Telxon handheld computers with scanning wands.
Roscoe said that DSI's in-store service capabilities began with the need to keep all those copies of the National Enquirer properly stocked at supermarket checkouts. In the last five years or so, the company has broadened it's role.
"We started by taking on other publishers of checkout-distributed magazines as clients," said Roscoe. "We do marketing, distribution and promotions for them." He cited at least a dozen popular titles from Hearst Publishing, Hachette Fillipachi, Gruner & Jahr USA, Newsweek, Warner Media, Pillsbury Classic Cookbooks and Rodale Press.
"We were set up to call on all classes of trade that sell magazines," he added. "We design front-end checkout fixturing for retailers. We planogram them and physically put them in stores. It was a natural for us."
In the past year, DSI started to get involved as a third-party merchandising provider for nonmagazine clients. One early effort Roscoe described involved merchandising trial packs of Tylenol for McNeil on store checkouts. "We also tie-in with our [Enquirer's and Star's] advertisers to hang shelf talkers and point-of-sale cards," he said.
Roscoe has led DSI since before the Enquirer was acquired from long-time owner Generoso Pope about five years ago. He credits American Media Chairman Peter Callahan for having the insight to expand DSI's role and to authorize its investment in Telxon scanners. "That's Peter's insight. He sees the importance of the retailer as the power player in the triangle," Roscoe said.
The investment makes sense, because, like many third-party merchandising firms, DSI is getting into the information-gathering business, he said. "Our people report on things like in-stock/ out-of-stock conditions and pricing on competitive products." He added that DSI recently contracted with POS data provider Efficient Market Services to gather "causal data" -- such as pricing and in-store display execution, which EMS then uses for analysis of its POS data.
With the arrival of Retail Marketing Network, competition for consumer promotion dollars in-store may heat up.
Said Elliott, "We sat down and built from the ground up a new consumer promotion vehicle aimed at doing two things: influence the consumer at the point of decision; and provide cost-efficient incremental volume."
The Paperless Coupon Network operates similarly to a scan-down promotion, but only in how it is executed at the front end, he added. A primary difference is the ShelfAd, a sign located at the shelf that advertises the brand and provides complete details of the price-off promotion available at the checkout. "For us this is the best way to influence behavior at the shelf. We put the equity message there along with the promotional offer," Elliott added. "It's intrusive and easy for the consumer to use."
PCN aligns its two-week events with the start of the retailer's merchandising week, and creates, prints and installs the ShelfAds, he added. "DSI people put up ShelfAds in stores."