CHICAGO (FNS) -- As retailers continue to choose from a myriad of marketing opportunities, most companies are seeking promotional vehicles that can be customized to provide a point of differentiation in their marketplace, according to a new study. Retailers want an individualized approach to promotions to help achieve their goals, according to the study, "The Promotion World According to Retail," conducted by Cornell University, Ithaca, N.Y. It was released during Promo Expo '98 here last month.
During the conference, marketing executives from Dominick's Finer Foods, Northlake, Ill.; Price Chopper Supermarkets, Schenectady, N.Y.; and Niemann Foods, Quincy, Ill., discussed how these findings fit in with their top promotional priorities.
Among ways that retailers use to bolster store sales and distinguish them from competitors are frequent-shopper programs, targeted direct mail and in-store demonstrations.
"Value, not price alone, is a part of our promotional messages," said Don Fitzgerald, vice president of grocery merchandising for Dominick's.
Cornell researchers examined the promotional world by surveying key executives in 48 companies across the retail channels of supermarkets, drug chains and mass merchandisers, which included 19,720 units in 50 states. Twenty-two promotional methods were ranked by retailers in an effort to determine the most beneficial retail practices and program effectiveness.
One way that retailers can strengthen their company image is through promotions generated by frequent-shopper programs. Supermarket respondents identified these programs as a clear-cut contributor to product movement.
"The success of a card program can best be measured by the percent of transactions and the percent of sales [it generates]," said Richard Niemann Sr., chairman and chief executive officer of Niemann Foods.
"We are above the national average with 80% transactions, and 90% of sales on our [loyalty] card," he said. "We're excited about it, it bodes well for us."
The study, which ranked promotions on a scale of one through five, with five being the highest score, reported frequent-shopper programs earned a 4.03 ranking for their effectiveness. The challenge is how to maintain excitement with such programs, which is where co-promotions come to play, Niemann said.
"While the program is self-driven, we don't ask manufacturers to fund it," Niemann explained. "We do ask for allowances, advertising and promotional dollars to help us deliver quality, variety and value."
The retail panelists agreed that co-marketing programs are one of the most sought after promotion styles. Co-promotions evaluated by Dominick's must fit into the retailer's total communications program. Dominick's channels these funds primarily into the chain's frequent-shopper program, direct mail and demonstrations, said Fitzgerald.
According to the study, co-marketing was a strong promotion, and panelists responded strongly that these efforts are supported by their companies.
Price Chopper is inclined to support charities through co-marketing programs, said Wayne Barton, director of category management for Price Chopper.
"I believe that the association with a charity does play into sales, and our customers do pay attention to which charity is tied into a promotion. We are really known for these partnerships."
Direct mail is another promotional tool that can separate a retailer from its competitors. Niemann Foods rewards the top percentage of its customers each month with offers, some for free items. Niemann said that these efforts net between 25% and 33% redemption. Direct mail was ranked by the Cornell study with a 4.13 effectiveness rating.
Retailers effectively using promotions look to more innovative solutions in an effort to "break the boredom cycle and make our customer's shopping experience enjoyable and exciting," Dominick's Fitzgerald said.
In-store events are one promotional method Dominick's uses to achieve this goal. Chain executives come to units to read children's books aloud in the store's cafe. Promoted sales, including a "72 cents for 72 hours" sale, and a 24-hour sale are launched. In addition, the chain promotes local farmers of produce items in an annual "Taste of Illinois" event.
"We promote quality and freshness. Promotional events take a lot of spectacular planning," Fitzgerald said during the panel discussion. "We would rather have mediocre promotions excellently executed than the best promotion with mediocre execution."
The main purpose of the Cornell study was to give marketers a definitive list of future programs for which retailers want to see promotional money earmarked, the researchers said.
Of all the promotions, target direct mail and in-store sampling and demonstration were identified most often by retailers -- 89% and 87%, respectively -- as activities for which they would negotiate to increase funding.
Supermarket executives in particular said that in-store demonstration and sampling is one method that should be strengthened, while drug-chain executives said that near-pack offers and premium giveaways needed additional attention, the researchers said.
