CHECK IT OUT 1994-09-05

JOHN KAROLEFSKI

The most amazing thing about Efficient Consumer Response is not the willingness to re-evaluate nonlevel playing fields, street money, forward buying, diverting and other such assault weapons of trade relations. Wal-Mart gave the supermarket industry no choice. No, the most amazing thing about ECR is how quickly it has been embraced. For clear-thinking marketers and distributors, it has simply become the way to conduct business in the 1990s. Those "doing" ECR will survive and prosper; those not doing it will suffer greatly and eventually go away. So what's the next big opportunity for industry cooperation? The answer is electronic marketing. It is hoped that the ECR spirit will carry over and lift this technology, which carries its own potential for dramatic change. Electronic marketing consists of in-store promotion programs that enhance or replace traditional marketing via electronic devices or systems. An important subset of electronic marketing -- using customer data to modify purchase behavior -- moves into the area of data base marketing. Retailers capture this data electronically at the front-end. In the big picture, retailers cannot make electronic marketing succeed by themselves. Neither can manufacturers. They need each other for this process to advance. That view was a recurring theme a few weeks ago in talks by several speakers at an electronic marketing conference sponsored by Retail Systems Consulting. (See Pages 1 and 11.) "There are a few industry leaders who have taken new technology and spirit of cooperation to a higher level," said Jim Keller, senior vice president of business development at DCI Cardmarketing. "Retailers are learning how to focus on customer needs and are making sure they hang on to their valuable customers. Manufacturers are learning that they must deliver greater value to consumers and that certain consumers will be more valuable in the long run. The bottom line is that progressive retailers find ways to work with manufacturers to reach their respective marketing objectives."

But there are problems. Another speaker at the conference, Glen Griffiths, vice president of sales promotion and communications at McNeil Consumer Products, said, "One reason that electronic marketing programs fall short of my needs is they have largely focused on retailer needs with some assumptions of what manufacturers want." Both partners have different objectives: manufacturers want to increase brand loyalty and retailers want to increase category and total store sales. Can electronic marketing do all of this at the same time? Some of the electronic platforms are better suited for the task than others. It will be up to the partners to figure out how to make it work together. Unless they do so, electronic marketing will not reach its full potential. Electronic marketing in the form of card-based programs that offer discounts needs enough penetration at retail to reach a critical mass. At that point, manufacturers will feel comfortable shifting brand dollars from mass marketing vehicles to in-store electronic programs. While there are no generally accepted statistics on this subject, knowledgeable people claim that electronic marketing is moving steadily toward critical mass. The most amazing thing is that we are moving toward such a dramatic change in brand marketing through the retail trade and Wal-Mart isn't even involved. At least not yet.