TOP-TO-TOP 1994-04-18

Robert Brown

There's no doubt about it. The key to successful local marketing is that the promotions must be relevant to the retailer, and properly executed. Recognizing differences in today's local marketplaces, manufacturers know that they must support local retail partnerships. The reality, however, is that true local support is the exception, not the rule. Manufacturers don't have the manpower to execute numerous local promotions at the store level. As a result, marketers still think nationally. Although a national campaign might have a local nuance, it is typically a cookie-cutter approach, and generally ineffective in its impact.

Despite the proof that retail-specific promotions work, manufacturers have not learned how to effectively use their local marketing funds. When local programs are sold to retailers, they often result in significant diverting and forward buying, rather than incremental consumer sales.

Manufacturers are primarily limited because manpower is at a premium. Even when a manufacturer is willing to have the sales organization execute local promotions, there are not enough people to execute and administer chain-level promotions at store level within the brief promotion time frame.

Let's remember that retailers are not competing against manufacturers; they are competing against other retailers. Therefore, in order for the retailers to accept the program, they must believe that acceptance of a promotion will either induce their current consumers to purchase more or induce consumers to switch chains. For example, we designed a successful promotion for Kraft General Foods where individual local retail stores in Texas were supplied with a compelling event that had true neighborhood relevance. Each manager was consulted at the inception of the program for his input, thereby giving each individual store manager the opportunity to make the program meaningful for his store's customers. Store and community relevance translates to better displays and merchandising and to increased volume at all participating retail outlets.

The program was centered around high school football. In addition to an account's existing merchandising activity, stores were able to support the high school football team that was meaningful to their particular neighborhood. Stadium seat cushions customized by high school team, by color and by mascot were made available to stores that participated in the Kraft event. More than 350 different high schools were within the geographic area and every store manager selected his own high school of choice. Consumers making qualified Kraft purchases received a free stadium seat cushion at checkout with their purchase. Local market spot radio promoted specific retailers and their free stadium cushion program, driving motivated consumers to retailers where the offer was available.

In this community-based event, promotion dollars were focused on local value, rewarding both the consumers and the retailers who supported Kraft products. The program was viable because the Kraft sales force was free to sell while we handled all the complicated logistics of developing, executing and merchandising the promotion at store level. Local retailers got the support they deserve, Kraft received the in-store merchandising it paid for with trade dollars and the consumer benefited by receiving the cushion . . . a win-win-win situation. Both the manufacturer and participating retailers enjoyed significant volume increases as the result of a well-chosen third-party resource.

They say you get what you inspect, not what you expect. It's no surprise that the more retail support you receive, specifically increased displays, the more profitable a manufacturer's promotion will be. Utilizing third-party merchandisers ensures that displays are up, merchandise is not out of stock and that the manufacturer's sales force is selling, not executing promotions. We conducted a study to determine the impact of checking displays. Our study concluded that display execution was increased by 90% when a consistent program of checking in-store conditions was instituted. That is, if your display execution is 40%, it should increase to 76%. That increase is equivalent to running a second promotion. Now that truly gives meaning to pay-for-performance.

In the future, with scanner data now available at the store level, increased market share will go to those manufacturers who can effectively execute promotions better than their competition.

Robert Brown is president of SPAR/Burgoyne, a merchandising, information services and research company based in Tarrytown, N.Y.