Pity the poor national brand marketer. Gone are the days when the simple formula of mass distribution plus big advertising budget equaled a winning product. Over the past 20 years or so, a slow shift has seen the retailer – buoyed by the increased clout of the Wal-Marts and the Home Depots of the world – take the lead in the retail dance. The issue? Retailers need to differentiate to shore up customers. So national brand marketers have been forced to get creative: upping the ante in innovation, and further sweetening the deal by sprucing up store space and offering exclusive licensing deals, products or promotions specific to the retail chain. But despite the newfound camaraderie, the two have only recently become chummy.
‘I would describe the last 10 years as being very much – if not adversarial, then not particularly friendly,’ says Joe Jackman, chairman and CEO of Perennial, a Toronto-based retail consulting firm whose clients include Loblaws and Canadian Tire. ‘Both sides have finally realized that it doesn’t make sense not to get together to build more excitement and value for the customers in-store. And by coming together, I think of it as the retailer that owns the stage and the national brand marketer that scripts the plays.’
Some rather novel partnerships have been the result. Jackman points to the Target chain in the U.S., where the relationship between the big players like Rubbermaid, Crayola and Sony is quite developed. ‘Target is an excellent example of a retailer who looks at a national brand and doesn’t say, ‘how much can I smash them down on price,’ but ‘what can I actually create with them?” For instance, he says, Sony and Target inked a deal recently in which the former created a line of home electronic products exclusive to the retailer. ‘The line comes with its own packaging which actually says ‘exclusively from Target.’ You won’t find that product, the packaging or anything else in any other retailer,’ he says. ‘Target is therefore more inclined to get behind [the collection] and market it, and Sony, of course, has invested dollars to have Target get behind a product of theirs. It’s a wonderful example of what can be done.’
‘It’s hard to tell where the retailer begins and the national brand ends. It’s very integrated.’
And increasingly creative. Pepsi QTG had tremendous success with its recent highly customized, retailer-friendly promotion that generated the kind of in-store buzz – and numbers – that retailers adore. Launched last summer, the ‘Keys to the Great Taste’ was a cross-country campaign that offered consumers a chance to win one of 11 Jeep Liberties, and pushed the soft drink manufacturer’s diet brands: Diet Pepsi, Diet Mug, Diet Mountain Dew and Diet 7-Up. Chris Hamilton, Pepsi’s director of marketing, says the sales force went to retailers on an exclusive basis offering to place the jeep in store, where possible, surrounded by high-impact displays. Loblaws in Quebec was one retailer who liked the sounds of it and signed on. It paid off: Pepsi saw an 11% increase over their targets.
Hamilton says the sales team also used the promotion as a way to force SKUs onto store shelves that weren’t part of a store’s permanent listings, something the chains wouldn’t have considered without the savvy promotion. This kind of promotion ‘helps the sales force get better positioning,’ he says, and creates the kind of in-store excitement retailers love. And, of course, the marketer also wins: If the new SKU does well ‘they keep it on their permanent listing,’ he says. And in the case of Sobey’s, which also signed on for the promotion, Pepsi gets better positioning in their flyers.
Dale Hooper, VP marketing at Mississauga-based Frito Lay Canada, says the company’s recent promotion with partners Esso gas stations, Pepsi and Gatorade surrounding the World Cup of Hockey and Team Canada last summer is another example of the great things that can happen when marketers and retailers get together.
The program, which ran for eight weeks across the country, offered consumers a free Canadian car flag with the purchase of any three of the brands’ products. Consumers could also enter a contest to win a chance to fly to Toronto to meet Wayne Gretzy, who incidentally, has deals with both Esso and Pepsi. No outside media were used, but 100 or so gas pumps broadcast 15-second commercials on Esso Pump TV pushing the promotion. In-store displays in all of Esso’s C-stores were also used. Hooper says the campaign was wildly successful and generated huge double-digit increases for all the players. ‘It was the best summer we’ve ever had at Esso.’
Part of the reason, he says, is that the big three brands shared a common platform – sponsorship of the World Cup of Hockey. The other reason: it was the marketing departments that started the conversation during a routine meeting called by World Cup of Hockey organizers months prior to the event. ‘This campaign was even more effective when it wasn’t just our sales people and their buyers. The Esso marketing people and the Frito Lay marketing people got together on it. We’d never done that before.’
Ravi Nookala, Sony of Canada’s VP marketing, consumer audio-visual and technology, credits innovation for changing – and increasing the frequency – of conversation between brand and retailer. He says retailers look to the entertainment giant for more involvement as to which products they put in stores.
‘At this stage [the retailer] asks us, ‘OK, what solution is best suited for next year and the year after?’ We say, ‘You should take this television out and put in an LCD TV, it’s the future.” Sony also has some say in where the equipment is placed in a store and, more and more, revamping the space surrounding those displays – abandoning traditional POP fare (danglers and wobblers) for more high-impact display formats like banners.
‘We’re moving toward more branding POP,’ says Nookala. ‘There is a shift towards showcasing our brand and the product rather than writing a list of 10 features about why [consumers] have to buy the product.’
With the new product in-store and prime positioning to boot, Sony then sends demonstrators to select retailers, namely tech-forward chains like Future Shop or Quebec’s Dumoulin or London Drugs out West, for two weekends of day-long seminars to explain all the capabilities of the new technology. ‘After two weekends we leave, but the salespeople know what to do with the product,’ Nookala says. ‘It’s on-the-job training for them, and at the same time we’re demonstrating the new products to the consumers.’
Another retailer-embraced initiative is Sony Style magazine. Published twice a year with an impressive one-million print run, the glossy 100-page magazine profiles the range of Sony products and features new technologies as well as consumer interviews. Just over two years old, what makes retailers particularly happy is that their copies are personalized with the store name and contact information featured prominently on the back page. Retailers are increasingly requesting these initiatives, Nookala adds, believing it adds value to their stores.
But many on both sides remain hush-hush about the long-term, exclusive deals they’re forging with each other. David Strickland, former VP marketing at Zellers (see Hires, p. 19), says that many of the promotions and deals inked for 2005 are confidential, but that the chain’s multi-faceted deal with squeaky-clean teen singer Hilary Duff is an example of the deeply integrated deal that is very much the future of the retailer-brand relationship.
‘Zellers launches her exclusive line, Zellers does events around her charity,’ he explains. ‘Zellers sponsors her concert tour and works directly with her record company [Buena Vista Records] in creating elements of promotion that extend from what is already being done around the product lines and the tour. So it’s more about synergy, and that two plus two can equal five.’
This win-win scenario, says Strickland, based on very strategic, customized marketing plans, is how more and more national brands are approaching retailers. He’s noticed ‘a focus on integrating the retailers with the licensors and with other media partners,’ he says. ‘Marketing plans are going to start at the very top of the pyramid and look down from a total marketing and brand perspective, not just one that focuses on what the licensor or manufacturer sees.’
‘The bottom line is that the consumer is going to create their perception of the quality, the value and their desire to purchase from all that they see, not just the TV commercials,’ he adds. ‘That’s where all this is going.’
Hence, as in most relationships, the recipe for a successful retailer-brand future is built on compromise and communication. And remembering that despite their ownership of stage and script, it’s ultimately the consumer that owns the spotlight. ‘If it’s going to be truly breakthrough, it’s going to be when a brand owner and a marketer from the retailer are in the same room talking about common objectives that start with the consumer,’ Hooper says. ‘Otherwise, you’ll just have one winning over the other – it’ll be the retailer’s program and we buy into it, or it’s going to be our program and they buy into it. The big win comes when you have common objectives,’ says Frito-Lay’s Hooper.
