NEW YORK -- Andrew Jergens Co. here has eliminated off-invoice allowances on "non-key" stockkeeping units and rechanneled consumer and trade marketing monies into a flexible fund that is being used to orchestrate account-specific promotions.
"The objective as a trade marketing group is to move Jergens away from the classic price promotions which add no value to us," said Patrick Lynch, division manager of trade marketing for Jergens, Cincinnati, Ohio.
He said the company became very aggressive when creating its trade marketing budget, going so far as to eliminate off-invoice allowances on "non-key" sizes, such as tubes and 6-ounce containers of lotion as of Jan. 1.
"Off-invoice is one of those things that is an antiquated promotion vehicle," he said. "It got so bad that essentially we were selling 98% of our volume on promotion."
Lynch made his remarks at a conference titled "Account Specific Co-Marketing" here sponsored by International Business Communications.
He emphasized that the company did not increase its budget to be able to fund trade marketing activities. Rather, the trade marketing budget is made up of about 25% market development funds and 75% consumer promotion dollars that were gleaned from such activities as freestanding inserts.
The company determined it would demonstrate Jergens' points of difference two ways: by reinforcing brand equity benefits and translating brand strategies into consistent retail execution; and by strengthening the account's position through proprietary retail promotions.
Jergens began experimenting with account-specific programs about five years ago with consultation from The Grass Roots Agency, Westport, Conn. Three original projects created have been expanded and combined to create this year's national Summer Soap promotion.
While he declined to provide strategic details of the planned program, he described a "menu-based" program of seven different options from which retailers can choose. Each would involve an in-ad feature or some other discount centered around various high-margin areas of the store and participating Jergens products.
Lynch said that for Jergens, a soaps and lotions company with about $200 million in annual sales, a large-scale, multi-tiered promotion that is unique to each account is impossible. That is why a menu-based program works best.
"If you take TPRs [temporary price reductions] away from the mix and compare to other promotions we were running, this is the more productive use of our funds. The returns on it are getting better and better," he said.
Lynch discussed how Jergen's experience with several prior customized promotions has influenced its decisions on future trade promotions.
In the Event Marketing promotion, which ran in 1994, Jergens offered accounts a tie-in related to a local activity or sporting event. They ranged from the obvious -- skiing with a retailer in Denver in the "Jergens Hopes For The Slopes" promotion -- to the unusual -- gardening with Acme Markets in the Philadelphia area in the "Jergens Gardens Your Hands" promotion. The program was engineered by Exsportise, Annapolis, Md.
"It's equal, it's open to everybody. We don't go into a market and target a specific account," said Lynch. "When we try to create an event, everyone has the chance to have their own promotion. The consumer offer is basically always the same, we just try to modify it a little bit."
