TELECARDS CALL WITH VARIED PITCHES

DAN HARRISON

Telecard companies are vigorously targeting various retail segments to build brand identity, retail presence and market share.

Chief among the tactics being used are increasingly aggressive pricing, new products and marketing efforts aimed at specific retail segments.

In July, Sprint sharply lowered its prices per minute, in effect adding more value to its set denomination cards. "Retailers want to be sure the cards are good value," said Marlene Waltz, director of prepaid card sales and marketing for the Kansas City, Mo.-based phone company.

She said Sprint's $5, $10, $20 and $50 cards dropped from 46, 42, 37 and 34 cents per minute to 33, 33, 32 and 29 cents, respectively. "The price cuts also reflect manufacturer competition."

In a similar vein, ConQuest Telecommunications, Dublin, Ohio, has moved to aggressive pricing to build brand presence, said Adam Rubenstein, president of Convenience Products, the Boca Raton, Fla.-based division of ConQuest.

"Retailers can build margins from aggressive pricing, and we want the retailer to have pricing flexibility for his market and his goals," he stated.

One of the most vigorous tacks in phone-card marketing is currently under way at MCI. Heretofore, the company's major stand-alone branded effort was its Americana series of cards, with the MCI name in a distinctly subordinate position on the left of the card.

This summer, the Atlanta-based phone giant debuted what it calls a "general sales" card with the MCI name predominating, in 15, 30, 60 and 75 units (one unit is a domestic minute).

Stacy Borocz, senior manager of retail marketing for MCI Prepaid Markets, said the new card aims to boost MCI's brand presence at retail and is aimed at store sales rather than being designed as a premium.

What's more, the new card's point-of-purchase and related materials are being customized by line of trade.

"We're providing flexibility in display," Borocz notes. "For instance, a department store might not want danglers, stickers or wobblers. Conversely, a supermarket might be more receptive to a variety of fixturing options, depending on whether they want to hang cards in blister packs, or have floor displays or counter spinners."

MCI's retail philosophy, according to Borocz, is predicated on two main uses for phone cards: those that are purchased to make calls and those that are given as gifts or novelties and that therefore have themes. So, in addition to its general sales card, MCI will also kick off a new themed line this Christmas season, to be followed by such themes as Mother's Day, Father's Day and the Fourth of July.

"We want to expand the merchandise mix by giving people choices," Borocz said. "People will buy general sales cards all the time for budget reasons, but some people don't need these cards and want to give gifts."

The cards will feature theme displays, such as a Christmas tree light display with cards hanging from it, which Borocz calls "perfect for mass merchants." Packaging and images on the cards will differ by retail segment, such as "more sophisticated" scenes for more sophisticated outlets.

In addition, displays have been designed so a retailer can feature one or both types of card, with modular displays that can be taken in and out with ease. "We stress point-of-purchase activation so the cards can be displayed on modularized stands," Borocz said. "We want people to see and touch them, which can't be done through a service desk. We prefer an endcap or checkout."

MCI is also developing a Social Expressions line for an early 1997 launch. These will be nonholiday cards: Happy Birthday, Get Well, Congratulations, Thinking of You, etc. Since the Americana line is continuing for special occasions and certain accounts, and since MCI offers co-branding, the company will eventually have five card options for retailers.

Marketing by retail segment can also be heightened in nonfood stores. Richard Teich, executive vice president of SmarTalk TeleServices, based in Los Angeles, said the category first blossomed in nonfood chains because "many of them quite likely were already selling telephone products, as well as cameras and other high-ticket electronic devices, so phone cards weren't difficult to add to that mix."

As more telecard companies place strong emphasis on retail, they stress that phone cards can't be sold to retailers -- or consumers -- as a technological product. Rather, they have to be merchandised as any other packaged goods item. Accordingly, some have hired people from the packaged goods sector to aid in the effort.

Fred Hermann, vice president of alternate channels at Frontier Communications, Rochester, N.Y., said his company focuses heavily on its card as a reliable, functional and feature-rich product in terms of technology. He adds, "We stress that it's a packaged goods product. We've recruited people from both retail and packaged goods to boost marketing."

Aided by this imported expertise, Frontier's people work with retail chains to lay out a marketing plan for up to a year. It seeks to fuse promotional vehicles that have worked for the retailer with those Frontier has developed itself. For example, Hermann said, "Our prepackaged holiday promotion would be intertwined with the retailer's promotion."

Tim Carroll, business line manager for Dallas-based GTE Card Services, said the company's brand strategy is to "treat it like any other packaged goods item, having a standard look in packaging and the card itself to create identity for different denominations and making the brand very clear."

In recruiting from packaged goods companies, Carroll said, he's basically buying their consumer packaged goods expertise. "We have a great technological product, but if we can't get distribution with the retailer, it's worthless."

When GTE cracks a new chain, it offers a turnkey package. This includes a kickoff meeting that is both fun and aims to educate employees, sales contests with prizes, POP material and a co-op ad fund that starts with seed money and is augmented with a percentage of sales on an ongoing basis.