INTELLIGENCE AGENTS

In the era of in-store and account-specific promotions, tracking competitors' numerous local market activities ranks among the great challenges facing brand marketers.On the face of things, moves toward leaner field organizations would seem to exacerbate this problem. With fewer salespeople visiting stores than ever, the odds of even detecting a competitor's shelf promotion drop off sharply.In the

In the era of in-store and account-specific promotions, tracking competitors' numerous local market activities ranks among the great challenges facing brand marketers.

On the face of things, moves toward leaner field organizations would seem to exacerbate this problem. With fewer salespeople visiting stores than ever, the odds of even detecting a competitor's shelf promotion drop off sharply.

In the past 18 months, third-party merchandising firms have stepped up to fill this information void by investing in technology. Some are arming their full-time field people by the hundreds with costly hardware like handheld computers or scanner guns. Many others are setting up elaborate interactive voice-response platforms at their headquarters, which allow thousands of workers to punch in store reports using any touch-tone telephone.

Suddenly, brand marketers have some tools they can use to get a grip on in-store reality -- not just competitive intelligence on promotions, but in-stock position, price points, shelf audits and display tracking. All this information, if required, can be routinely available overnight, even hourly on some systems.

Among the pioneering brand marketers who have made early use of these techniques, the benefits are regarded as so strategic that the marketers decline to address them for fear of clueing in their competitors. But companies within the third-party merchandising field, which are striving for greater stature in the go-to-market system, are crowing about their new capabilities.

Are cutting-edge brand marketers already making tactical use of overnight data? Even the merchandising firms don't have proof.

"All I know is they are asking for it, and we're giving it to them," says Gerard McLean, vice president of technology at Spar Marketing, Minneapolis. "I don't know if they are acting on it." Like nearly everyone interviewed for this report, his clients forbade him to name names.

Says Randy Douglas, vice president of account management at Field Marketing, Chicago, "Most client companies who understand this don't want to share it with others. They tell us, 'We don't want our competitors to know that we can access this information every day.' "

Spar and Field Marketing are among perhaps a dozen or more larger merchandising firms that have installed interactive voice-response technology in the past year. Essentially a souped-up, programmable voice-mail system, IVR allows numerous individuals to report store information using a touch-tone phone and an 800 number.

Client brand marketers may then receive the accumulated data in any of several ways: electronic mail, fax, "snail" mail (the post office) or downloading via computer modem. Some systems allow use of the telephone keypad and a security code to access voice-synthesized information directly over the phone.

Because they are already in wide use for sales force automation, handheld scanners or computers are probably more familiar to many brand marketers and brokers than IVR. Specialized units manufactured by Telxon, Fujitsu and Norand, with or without bar-code scanning capabilities, allow for intensive data collection in the stores for later upload to the central computer server.

"It is not really new technology," says John Hendricks, president of In Store Services, Charlotte, N.C. "These apparatuses have been around for maybe eight years. The difference is that the manufacturer is choosing to outsource the process."

Leading third-party merchandising firms are stepping up to meet the new demand, Hendricks says. "There are roughly 80 third-party merchandising firms out there, excluding those operated by manufacturer rep firms. About 25 of them are serious, technically motivated competitors."

Like nearly everything else in the computer world, the prices of handheld devices have declined steadily, making them accessible to more companies, he adds. In some instances, manufacturers who have downsized are providing the handhelds -- excess or older units they already own.

Because handheld devices still cost hundreds of dollars apiece and require a fair amount of training to operate properly, merchandising firms tend to use them only for their full-time field people.

Among the firms that have invested most heavily in "fieldware" for their people is PIA, Irvine, Calif., possibly the largest in the business with 4,000 mostly full-time employees. Despite the expense, Clint Owens, chairman and chief executive officer, calls his company's commitment to the technology "critical."

PIA has equipped every one of its field employees with portable computers and software to help them manage their business, he says. The system is set up to allow major clients to establish on-line links to the resultant data flow, Owens says. At least one major household products marketer is close to taking this step.

Little Rock, Ark.-based Alpha One has two distinct sales forces, says John Owens, president. The first consists of 1,300 part-time reps. "We can't give them something that could break. We gave them an IVR system with touch-tone phone access to our computer."

The other part of Alpha One's sales force, roughly 100 full-time, salaried reps, has been furnished with laptop computers and the training to use them, he says.

"They use them to report on the status of each stockkeeping unit, voids, out-of-stocks, whether any corrective action was taken. They can report whether they make a shelf tag or fill in a shelf." Data gathered is SKU-specific, and the software employs an open architecture, which makes reports from the resultant data base usable by most brand marketers.

Impact Merchandising Services, Exton, Pa., has also brought both handhelds and the IVR system on-line this year, says Vince Willis, president.

"We have a team of field people who do audits equipped with Telxon guns," Willis says. Each one has a dedicated home phone line with an attached Telxon docking station at home. Impact's central computer polls them each night to retrieve the information.

"We use it for maintaining a data base of products for clients we represent," Willis says. Among the types of data his people can gather are space management, perception mapping, number of feet of shelf space, number of shelves, the height of the shelves, etc. "They basically scan in the planogram from top to bottom," he says.

Such impressive capabilities are most useful when the brand marketer's needs include detailed store audits in support of category management activity. But most third-party merchandise firms are providers of "arms and legs" to brand marketers needing physical merchandising chores completed. Equipping legions of part-time, hourly-wage employees with expensive hardware would be overkill, even if the cost of ongoing training could be avoided.

That's why many third-party firms are developing voice-response technology, either exclusively or in tandem with handhelds. They see IVR as a user-friendly way to turn "arms and legs" into "eyes and ears" while retaining cost advantages for the brand marketer.

"IVR is a quick response tool without the cost of handhelds," says Douglas of Field Marketing, who enumerates what he believes are "distinct advantages" of IVR in comparison with handhelds.

"The most obvious is that a majority of our people are employed part-time. Those $1,000 units get very expensive. That limits your numbers, and you have the problem of getting it back," he says.

Voice-response systems are also much simpler to use. Field merchandisers may use any touch-tone telephone to dial a toll-free number, Douglas says. When prompted, the caller enters his ID number, a unique client number and a unique store number.

"Then, depending on what the client wants, you can go through a series of prompts. Were there out-of-stocks? Yes or no? If yes, enter the Universal Product Code of the item. Did you correct the problem? Yes or no? Were there competitive promotions?" he says.

"The real advantage is that it is in real time. The information is instantly available to the client. They can call in, punch in their ID, then access various levels of their report, on a national, regional or local basis. They can have a speakback feature, or download the data base report. Then they can quickly address their out-of-stocks."

Douglas says the feedback also helps everyone involved evaluate the third-party merchandising activity. By comparing against daily scanner data, the reports reveal on a daily basis the benefit of correcting out-of-stocks across the country. "This allows companies to analyze and say, 'Is what we are spending justified?' "

Don Berry, president of Spar Marketing, says his company is finding that IVR can sometimes allow brand marketers to make midcourse corrections. "On a new planogram you may find out about a distribution lack on a key SKU. It helps with inventory adjustments, or missing point-of-purchase materials."

In short, the technology allows "quick response" to any issues that take place at retail, he says. "It lets you fix it quicker."

Berry says a particular application is in following up a retailer's promotion or reset execution, still a sore issue for many brand marketers. When execution was left solely to retailers, he says, "coverage in 50% of a chain's stores was once an acceptable number."

That is no longer true. "Our clients are not accepting that from us," says Spar's McLean, who notes that simply feeding store information back to retailers might push completion rates up. Spar's performance on resets is generally about 90% today. "It has to be," he says.

When the nonfood division of Dial Corp., Phoenix, gained new distribution for three SKUs at Target Stores this summer, it sought out Pimms, a Minneapolis-based merchandising firm with access to the chain, to help ensure a smooth rollout.

"This was our first experience with Pimms at Target," said Maggie Stanton, account business manager. Working with her supervisor, Matt Gulling, director of nonfood sales for Dial's regional group in Minneapolis, she hired the firm to cover 80 Target stores for one hour each during the critical rollout week.

Although the agreement with Target called for forced distribution, she said the field audit revealed that just 42% of the stores had cut the items in on their own. Pimms was able to boost that significantly. "They basically doubled the penetration to 85%," she said.

Says Dial's Gulling, "We have used some third-party retail focus on the grocery side for some time. But it was new for us to use it at Target."

Ralph Bartolotta, vice president of sales and marketing at Pimms, adds, "We found that just by working with the retailer and going to the back rooms and finding the product and putting it on the shelves, we were able to double distribution."

Pimms' field reporting also showed that the product was initially tagged on the shelf only 39% of the time, he says. Pimms field people were able to boost that figure to 71%. "If the store reorders from the shelf, you are not going to be able to hold the space.

"We think this is great news for sales organizations," says Bartolotta of Pimms. "It shows how just securing distribution can increase share."

When it comes to field reports, says Owens of Alpha One, third- party merchandisers have traditionally faced two dilemmas. The first is data entry. The second is the time element.

"Our clients have asked for faster data," he says. "The great advantage [of IVR] is that there is no delay. Our people enter the information in real time from a phone, usually in the store lobby."

He adds, "Our clients can pull up 30-minute-old information, if needed." Using weekly or monthly field reports, he says, "is like reading a newspaper that is a week old."

Alpha One's data base system allows brand marketers to log on and use Lotus Notes (a widely used software) to make reports available, Owens says. "It lets clients pull reports on demand."

As an alternative, the reports can be sent by E-mail with the files attached, or downloaded by the client from an electronic bulletin board.

Among leading third-party merchandising firms, investment in these field-reporting technologies is regarded not as a competitive edge but as a competitive necessity.

"Most new technology very quickly becomes baseline, not strategic," says Willis of Impact Merchandising Services.

"We try to stay on the leading edge of innovation. It challenges our people to always make sure of the next step. Right now we feel we are very competitive in our ability to use technology in support of our clients."

If, as he suggests, the mere presence of the new reporting systems is a "baseline" capability for competitive third-party merchandising firms, then the real strategic advantage is derived from how the tool is used as part of the field management system.

"Nothing I've seen done with technology is not do-able with paper, but we can do it on a much more timely basis," Willis says. "It allows us to execute much better than before."

Impact Merchandising brought the IVR system it uses on-line this year, Willis says. "It has helped us get clients. It can speed up the ordering process for direct store delivery."

As a class, third-party merchandising firms generally lag behind food brokers in the use of field force technology. Several brand marketers say similar kinds of in-store reporting are routinely handled by their broker forces, who increasingly are equipped with notebook computers and highly trained in category management techniques.

Borden Inc., Columbus, Ohio, is fairly typical of this experience, says Ric Ellis, vice president of trade marketing. His company has done some limited testing with a handful of merchandising firms, including PIA, but it has found little advantage over services available from its brokers.

"When you are dealing with warehouse-delivered goods, and if you find Wednesday there is not a display there, even though most stores get a truck every day or other day, your ability to quickly affect that is limited," Ellis says.

"Direct-store-delivery companies, on the other hand, may be able to respond more quickly," he adds.

When a Borden broker elects to supplement its retail organization by using a third party, that may be OK, he adds. "We still hold the broker accountable for execution at retail. But we regard the broker as part of our company, so we still may have an opinion on where they do that.

"Any category has specific drive periods. For example, in a highly seasonal item like charcoal, brokers may need to supplement their people since there is such a narrow window."

He continued, "As I recall, in the drink-mix business, you have to be completely ready by Memorial Day. There is a big time crunch. For situations like that, having supplemental help in the stores makes a whole lot of sense."