BELL ATLANTIC AIMS PREPAID PHONE CARDS AT RETAILERS

JAMES TENSER

LANDOVER, Md. -- Brand equity is no less a factor for prepaid telephone cards than it is for any other fast-moving consumer goods sold in retail stores.

That message is now being carried to supermarket, convenience store and other retail accounts in six Eastern states by representatives of Bell Atlantic's Public and Operator Services division here.

With a single-market test nearing completion in Washington, the company expects to be selling its branded prepaid phone cards to consumers in chain retail outlets "this spring," said Joe Purdy, manager of advertising and public relations for the division.

"We are rolling it out," he said, adding, "Our sales force is out as we speak, meeting with potential distributors."

For the unit of regional telephone company Bell Atlantic, Philadelphia, this market entry holds several challenges. It must convince retailers that there is a benefit in carrying the cards and create a merchandising approach for an unfamiliar category. It must also develop a go-to-market system that is oriented to consumer packaged goods, not oriented to business-to-business customers.

"We've been marketing to small, medium and large businesses for telecommunications products and services. We already had account executives assigned to every account in our territory," Purdy said. However, recognizing that the prepaid phone card thrust the company into the fast-moving consumer goods business, Bell Atlantic also hired some outside talent with retailer packaged goods experience.

"It certainly does put us into a packaged goods mode," he said.

Prepaid telephone cards, while already a hot commodity among collectors, have rarely received consistent attention from supermarkets and chain retailers. They appeal primarily to the young and mobile; college students,

travelers and members of the military are target markets, Purdy said.

"Bell Atlantic has been watching the marketplace, waiting for the time to be right," he said.

"Eighteen months ago, survey research showed very low awareness of the phone card concept. Now we are seeing awareness among certain segments rising very well, especially, for example, the youth market. They are buying and using them."

Bell Atlantic is in the final stages of a market test in the Washington, where its phone cards have been available in about 100 retail outlets, two-thirds of which are Texaco gasoline/convenience stores. The balance of the participating retailers are mostly independent stores.

The test started in December, and the product was launched there using radio advertising on English and Latino stations. The nature of the product requires an aggressive point-of-purchase program as well.

"At Texaco we developed pole signs with them which are 5 feet high, as well as pump toppers and decals for doors and windows if they desired them," he said.

Because the phone card concept is still new in the minds of a lot of people, Bell Atlantic also produced some take-one brochures in English and Spanish that explain the phone card concept, he added.

"Most stores that carry the card today are keeping it behind the counter," Purdy said. "That's why it is of key importance to provide the in-store signage."

For easy handling by store employees, the phone card packet is designed to be same size as dollar bill, so it can be stored in a cash-register drawer, he said. The card itself is packaged glued to a paper insert with product information and terms printed on it. The whole package is shrink-wrapped in clear plastic.

Purdy said he anticipated that supermarkets would either sell the phone cards at their customer service counters or directly from cash register drawers.

The company is also looking at vending machines similar to those now used by the U.S. Postal Service, which takes cash and then dispenses the cards.

Bell Atlantic's phone system covers the District of Columbia and six states: Delaware, New Jersey, Pennsylvania, West Virginia, Virginia and Maryland. It is currently working hardest to attract retailers in the Philadelphia, northern New Jersey, Baltimore and Pittsburgh areas.

Since the military represents a key group of target consumers, the Norfolk, Va., area is another market, he added.

In all those areas, the Bell Atlantic brand already carries considerable consumer equity, Purdy said.

"Our primary card is a Bell Atlantic branded card," Purdy said. "We think, however, it could make good sense to design store-specific versions. We would be willing to do a co-branded or private-label card if a major retailer required it.

"But we think consumers will see value in purchasing phone service from Bell Atlantic, which they know as the phone company," he added.

Purdy said he had seen research indicating that there are now about 500 companies marketing prepaid phone cards of one form or another. Most are trading purely in the collectible aspect of the category.

"In talking to some stores, we hear they are being approached by many others who want them to carry their phone cards. There are so many that retailers are becoming a little bit shy at this point. The point of entry for us is that we are Bell Atlantic; that we will be in a position to support their needs."

Purdy said the company's representatives are telling retailers about issues like consistency of supply and promotional support for the card. Some smaller competing companies could not promise this, or have not lived up to those promises.

"Our approach has been to sit down with the distributor and figure out what makes the best sense to put this product through their store. We will design a method to suit them."

He added, "We have brand equity that will increase the value of that promotion."