Grocers and brand marketers conduct database marketing programs in basically two different ways. They either do it by themselves, or they do it together. Manufacturers reach consumers themselves with direct mail using lists of people who redeem coupons, call 800 numbers and respond to other promotions. They can customize their literature with the name of the retailer located near the shoppers receiving the mailings. Procter & Gamble is the leading practitioner of customized co-op mailings. In the last year, P&G has launched programs that allow retailers to accrue credits based on case volume and apply them toward targeted direct mail. The database marketing activities of supermarket retailers stem from their frequent shopper clubs. About 20% of grocers offer these card-based programs, with more starting it all the time. Some retailers operate programs by themselves, such as the Vons Cos., while others have an outside agency operate it for them, such as PreVision Marketing for Safeway's Eastern Division.
Database marketing offers advantages for retailers and brand marketers running programs individually. They design the program themselves, call all the shots and get all the credit. But they can benefit more by working together. Supermarket retailers keep track of all the purchases of loyalty club shoppers through their membership cards that are scanned at checkout. But they often lack the time, systems and analytical skills needed to turn this information into action. They could also use funding.
Enter the brand marketer with all these things to offer retailers in a partnership. The only thing manufacturers don't have is the purchase data.
That's what the retailer brings to a partnership. Manufacturers really want this data because it's better than their own lists. Since scan data is based on purchase behavior, it brings brand marketers closer to the consumer than they could otherwise get. Of course, retailers don't give out the actual names of shoppers and what they bought. But they allow manufacturers to take part in their loyalty club mailings to members with special coupon offers and other promotional announcements. It's easy to imagine that loyalty to a store can extend to loyalty to brands that partner with the store. There have been several instances when the trading partners join forces in this way. Large chains such as Vons in Southern California have done it. So have smaller, creative operators such as Kings Super Markets in New Jersey. These partnerships typically involve one brand marketer. Database marketing continues to evolve in new and exciting ways. The highest level of sophistication is a retailer partnering with several brand marketers in designing and executing a targeted program. That's what Safeway's Eastern Division is doing with several major companies such Nabisco, Quaker, and Lever (See story on Page 1).
Everyone gains with database marketing. Grocers increase the store loyalty of their best customers. Marketers increase the equity of their brands. Consumers receive subtle encouragement about where to buy what products. Who knows what's next, partner?