CHICAGO -- Electronic marketing needs "structural improvements" to grow from its present modest use, said Lawrence Milligan, senior vice president of Procter & Gamble, Cincinnati.
He listed these three improvements:
· Keep the cost lower than any other existing system.
· Be more creative in building loyalty, market basket and market share.
· Meet the needs of consumers better because they want to be involved more. "We are still at the frontier, but I am confident electronic marketing will establish itself as a major -- if not primary -- system for providing proprietary consumer value at a cost that is attractive to both manufacturer and retailer alike," he said. He spoke here at the third-annual electronic marketing conference sponsored by Retail Systems Consulting, also based here.
According to Milligan, manufacturers are looking for ways to put more value into the hands of consumers. "But if the electronic front-end cost per transaction adds up to as much as 50% of the consumer offer, less than 50% of the promoted dollars pass through to the consumer.
"Where's the value?" he asked. "Better stick with the overhead devil you know rather than an equally large devil you don't."
He recommended reducing the cost per unit, and that the start-up cost should be the going cost. "Start there," he said, "and set reduction targets that are continual."
Milligan said electronic marketing has to be able to build brand loyalty, which is the primary objective of the manufacturer, and build the supermarket's market basket, which is a primary objective of the retailer. To work toward these goals, he suggested employing category management, which he described as "the emerging
process which manufacturer and retailer will use together to better meet consumer needs."
Milligan said that consumer expectations are greater than they have ever been regarding product performance, package size and value. "It's also true in their choice of where to shop and how much to buy from a store," he said. "This creates a huge opportunity for interactive media," he said. "The possibilities are limitless. Electronic marketing needs to expand beyond today's equivalent of a 10-cent-off price pack into the twilight zone of meeting consumer needs."