INSIDE CHOICE

FRED PFAFF

Many years ago, a retailer's biggest question was, 'Am I going to sell a sign on the front of the store?' " says Bob Southerland, vice president of marketing for K-VA-T Food Stores, Grundy, Va. "Now the entire promotion industry is moving totally in-store."

From shelf-bolted devices that dispense coupons in the aisles to blinking LCD screens directing shoppers throughout 40,000-square-foot megamarkets, the shopping experience is one big dazzle.

In the 1990s, catching the consumer in the most critical phase of the buying cycle is becoming a top marketing priority. And the marketers of in-store media are pushing their vehicles into greater and greater sophistication, often selling manufacturers a mix of programs to support a single promotion within a chain.

Already, Norwalk, Conn.-based ActMedia, which led the charge in the late 1980s with a "War in the Store" marketing campaign for shopping-cart ads, has come to offer manufacturers an entire portfolio of in-store programs as solutions to specific brand competitive situations -- from shopping-cart ads and ActRadio that expand awareness to the Instant Coupon Machine that offers specific category shoppers a chance for trial. Catalina Marketing, St. Petersburg, Fla., has dramatically increased the distribution of its checkout machines that automatically give a Tide consumer a coupon for Cheer, and several in-store vendors are partnering with other providers to offer in-store sampling.

For marketers, these are new moves in an old story of making a difference with advertising and promotional spending. In-store media offer the opportunity to bridge the gap between a positive attitude toward a brand -- the traditional job of advertising -- and actually buying the product. Understandably, many manufacturers are jumping in.

According to the Point-of-Purchase Advertising Institute, Washington, total investment in in-store promotion rose 8% to $12 billion in 1995, with the total investment in in-store media and signs (including production costs) accounting for 39%, or $4.7 billion, of that figure. And that figure is expected to keep growing. As freestanding insert couponing comes under greater attack for inefficiency and non-exclusivity, manufacturers are likely to shift more money into targeted, category-exclusive in-store campaigns that have immediate effect.

For most marketers, the key question isn't whether to do in-store media. It's how to do it effectively. With program options growing, it's getting more important to pick the right stores and the right media. Until now, many retailers haven't evaluated in-store media as keenly as their own promotional programs.

"We look at in-store media as a revenue source, and we do use any unpurchased media to communicate core messages to our customers," says Jay Abraham, vice president of marketing at Food Lion, Salisbury, N.C. "For instance, if there are unused Aislevision markers, we'll take the opportunity to sell a core position such as our commitment to quality and freshness."

As the marketing director for one major Southwestern chain put it, "In-store is one of those programs we have in place that makes money for us, and we've tended to treat it as a freebie. It's been up to the manufacturer to track and evaluate the results. As in-store becomes a more central part of manufacturers' sell-in, though, we're going to have to pay more attention to it."

To screen in-store media proposals requires an intimate understanding of the consumer. "We don't have the capability to start breaking apart a chain, except for sampling programs, and it'd be prohibitively expensive for many advertisers if we did," says Rob Kovalefsky, vice president of Eastern sales for ActMedia. "The key is knowing which chain a manufacturer needs to be in, which promotional vehicles will deliver the highest return, and why."

How do you determine that? Start with a precise definition of the consumer and the brand objective. "In-store media programs are only as strong as their foundation, which is an intimate knowledge of the intended consumer," says John Larkin, president of Spectra/Market Metrics, a Chicago-based firm that supplies more than 160 companies in the supermarket industry with integrated marketing information and customized local-marketing solutions. Spectra/Market Metrics integrates data on consumer lifestyles, life stages, purchase behavior and media habits, to arrive at a more complete profile for use in store management and marketing.

"The more money manufacturers pour into in-store media, the more critical it will be to evaluate the potential impact on sales for any program a manufacturer proposes," Larkin says. "The difference between an acceptable promotion and one that produces dramatic results is reaching the consumers who have the greatest propensity to buy when they're in the stores. The other key is knowing the category's potential as it applies to particular brands."

The first step is to create a profile specific to the brand promotional objective. If the manufacturer's objective is to load a loyal shopper's pantry during the promotion, he says, the households that consume the most need to be identified and the density of such households within the stores' trading areas needs to be established. If getting a competitor's consumers to try the brand is the objective, the households that are heaviest consumers of the competition's brand need to be identified, and there has to be a substantial overlap for the program to succeed.

To provide an example of how this works, SN asked Spectra/Market Metrics to examine the frozen breakfast sausage category as it applies to Jacksonville, Fla.-based Winn-Dixie stores. Spectra/Market Metrics picked three brands: Jimmy Dean, Private Label and Bob Evans.

By integrating consumer information into the Spectra/Market Metrics lifestyle/life stage grid, it's clear that the heaviest consumers of breakfast sausages within Winn-Dixie stores are downscale rural and downscale urban households with adults age 35 and older. Also strong are households with adults ages 35 to 54 and kids in midscale urban and suburban areas.

For Jimmy Dean, the additional likely prospects within Winn-Dixie are senior citizens in rural and suburban neighborhoods. For private label, the main additional targets are households with adults ages 18 to 34 with kids in more affluent rural and midscale suburban neighborhoods. For Bob Evans, additional loyalties are principally concentrated among households with adults 18 to 34 in midscale and downscale neighborhoods.

Now what about the link to stores? Winn-Dixie stores have their highest consumer penetration in midscale and downscale urban areas, across all life stages.

Using this as a barometer, the chain can make decisions about the relative potential of in-store media programs.

Fred Pfaff is a New York-based business writer and marketing consultant, who counts among his clients Spectra/Market Metrics.