PANELISTS UNRAVEL TIE-IN KNOTS

UNIVERSAL CITY, Calif. -- Video cross-promotions are at their best when they provide a significant competitive advantage for the retail, studio and tie-in partners. That was the consensus of participants in a panel of industry experts during the first Supermarket Video '95 conference, held here July 20 and 21.The conference, "Cross-Promoting Video Titles in Supermarkets," was sponsored by Supermarket

UNIVERSAL CITY, Calif. -- Video cross-promotions are at their best when they provide a significant competitive advantage for the retail, studio and tie-in partners. That was the consensus of participants in a panel of industry experts during the first Supermarket Video '95 conference, held here July 20 and 21.

The conference, "Cross-Promoting Video Titles in Supermarkets," was sponsored by Supermarket News and Brand Marketing, a monthly supplement to SN, in conjunction with Aim Promotions, Astoria, N.Y. About 100 executives from retail chains, movie studios, video distributors, brand manufacturers and related companies attended. The panel featured an active give-and-take among the moderator, participants and the audience. It included three leading retailers, two home video executives from top movie studios and a representative from a packaged goods company. The participants were: · Max Goldberg, vice president of promotions for Buena Vista Home Video, Burbank, Calif. Goldberg moderated the panel. · Alan Perper, senior vice president of marketing at Paramount Home Video, Hollywood. · Jay Abraham, vice president of marketing at Food Lion, Salisbury, N.C. · Glen Fischer, general merchandise-video buyer for D&W Food Centers, Grand Rapids, Mich. · Kirk Mueldener, director of video operations at Hy-Vee Food Stores, West Des Moines, Iowa. · Dan O'Neal, director of promotional services for Ralston Foods, St. Louis. During the discussion, each panelist stressed how important video cross-promotions have been in helping his company stand out from the competition.

For example, from the retailer's perspective, "We are looking for something that is going to drive people into our stores vs. any other mass merchant or grocer that also carries the video," said Abraham of Food Lion. Expressing the studio viewpoint, Perper of Paramount said, "We are looking to add value to our products, to differentiate them in some fashion." The goals for packaged goods companies are similar. "We are constantly trying to break out of the clutter, not only to reach the retailer, but also the consumer," said O'Neal of Ralston. Panel members talked about the need for account-specific programs at length, notably how retailers and Paramount promoted "Forrest Gump," a title that had no national tie-in partner.

Hy-Vee did especially well with the title, featuring a park bench giveaway and many other enhancements, said Mueldener. "It was just a big snowball effect once we were able to get information and the necessary marketing tools out there, and get that excitement built up at store level. The sales of this title showed what happens when we are able to do that," he said. The panel also discussed what each of the partners look for in evaluating cross-promotions, territorial issues among supermarket departments, what has and hasn't worked in video cross-promotions, and the importance of lead time and communication in creating major in-store events. "If you can get a good tie-in partner, and really make an event with it, that just entices the customer to jump in and make the purchase," said Fischer of D&W Food Centers. Following are excerpts from the discussion:

GOLDBERG: To start with Paramount, Alan, what do you want from a video promotion that is executed on an account-specific basis? What are your goals? PERPER: From Paramount's perspective, two things are really important to us. We are looking to add value to our products, to differentiate them in some fashion, so that when we look at our product on the shelf, there is a reason for the consumer to pick it up vs. somebody else's.

The second thing that is very important to us is incremental exposure. GOLDBERG: Food Lion is relatively new to the video area, having started with "Snow White" last fall. Jay, what do you look for? ABRAHAM: For background, the last video that Food Lion sold before "Snow White" was "ET." That should give you a sense of the kind of gap we've had with our video experience. We don't carry videos in our stores on a day-in and day-out basis. So when we look at these video promotions, we are most interested in two things. One is the ability to build traffic with high-visibility, big-name releases. We are looking for something that is going to drive people into our stores vs. any other mass merchant or grocer that also carries the video.

Also, a platform to build some merchandising excitement around is very critical for us. We want to make the shopping experience exciting for the consumer, something that they can remember so they will hopefully come back to the store. GOLDBERG: Dan, from the point of view of a manufacturer that sells product in supermarkets, what are you looking for when you partner with a home video company? O'NEAL: We compete in the ready-to-eat cereal category, which is probably one of the more competitive categories in the grocery trade. So we are constantly trying to break out of the clutter, to reach not only the retailer, but also the consumer. We are trying to capitalize on the hype of the video release date and some of the fun and excitement that is involved in a video tie-in. GOLDBERG: I presume that you are trying to get incremental displays and incremental advertising. O'NEAL: We are looking for additional quality merchandising, which is really what moves our business. We define quality merchandising as feature ad support and also some display activity. GOLDBERG: Kirk, when you are looking at a national promotion being offered by a studio, do you automatically ask, "How do I make this fit in my stores?" MUELDENER: We are always looking for something that is going to offset the other competitors in our operating area. We try to position ourselves as offering something unique, different and of value to our customers. GOLDBERG: So besides coming up with something unique and different, how do you strategically think about executing it in your stores? MUELDENER: It depends on the title, the timing and the tie-in partner. We try to get our stores to position it up front, to tie it in with endcap displays. If possible, we try to come up with an entire theme around it. GOLDBERG: So your stores allocate the space necessary to put these promotions together? MUELDENER: Again, it's a big timing issue. A lot of the stores have got pre-orders of thousands of units and have endcaps set aside well in advance. It's a fight for space, so the better the timing, the better the opportunity we will have to get the stores to devote endcaps to it. GOLDBERG: Glen, what are the parameters that you have set up for deciding what to do with promotions? FISCHER: You try to create an event. On the big titles, if you can get a good tie-in partner, and really make an event with it, that just entices the customer to jump in and make the purchase. GOLDBERG: Then the key is to look at something and ask, "Can it be an event?" and then how can you capitalize on it and add some value? ABRAHAM: It's important to realize that every retailer has their own strategies, programs, plans and ways they like to merchandise. As a result, a program that worked at Hy-Vee probably isn't going to work for Food Lion because we have different merchandising strategies.

PERPER: We saw something first-hand, Jay, with "Forrest Gump." It was a title that did well, particularly in grocery. It was a situation where there wasn't a specific national partner tied in, for a variety of reasons, mostly because of talent. But grocers literally created entire environments built around other products, other promotions that they developed. They were regionalized and localized promotions. It was incredibly successful. GOLDBERG: Whose responsibility is it to come up with individual strategies? Do you expect to participate in that, to share your insights in creating that? Or do you expect companies like Ralston and Paramount that, when they get together, come to you and already know what it is that you need? ABRAHAM: It's ultimately our responsibility to develop the strategy, but it gets down to communication and working together as true partners. I think everyone in this room has had experience in working with people who say they want to partner with you, but they are very self-serving in that partnership.

For a long-term relationship to develop, you really have to be able to lay out your strategies and what you are trying to accomplish to your partners. Then it would be their responsibility to come back with a program, with a specific tactic that fits our strategies. We can't be developing every promotional tactic for every single category for every single event. We have to rely on our partners to come to us. Unless they really know what our objectives and strategies are, it's not fair to expect them to come to us with good programs. GOLDBERG: Let's move now from the theoretical to the actual. What can you point to and say, "That really worked"? The follow-up to that is, what have you done that really hasn't worked as well as you thought it could? FISCHER: The tie-ins that worked the best for us occurred when we got the information on a timely basis, when we had the POP to support it and when we had a tie-in product that was easy to display with the video.

Because we got the information on a timely basis, I was able to get together with the category manager for the specific product and get the display space. There's not a lot of display space, and video typically and sadly doesn't get respect in the supermarket industry that it deserves.

Fortunately, the grocery category managers are real interested in the incremental sales that they can get from these tie-ins, and we are starting to get a lot of respect from them. ABRAHAM: Our objective was to build traffic through merchandising events. The one we had the best success with was "Snow White," which was our first one. We worked with Pillsbury and built a continuity event. We merchandised throughout our entire store with a "Snow White" theme. We had a lot of POP throughout the store. We merchandised around a "Snow White" video display, and then we had a continuity event where we gave away and sold "Snow White" pins each of the seven weeks. We got a lot of traffic out of that. What worked the least for us

was the same promotion. We did a very good job getting the "Snow White" message out to the consumer -- we put seven weeks of advertising behind the program. But unfortunately, we found the pins were very hard to merchandise. We didn't do a good enough job communicating to the stores how to merchandise them and how to get the consumers involved once they got into the store. Most customers, when they come into a store looking for something and can't find it, aren't going to search for it. They aren't going to ask for it. As a result, we got a lot of traffic, but we also had a lot of consumer complaints because they couldn't find the pins.

The pins were in the cashiers' drawers. Although we had signage all over the stores, we didn't get the cashiers involved telling customers that they had the pins or asking them if they would like a pin. Operationally, that was probably the least successful, because we were stuck with ill-will from the stores, and a lot of "Snow White and the Seven Dwarfs" pins. AUDIENCE QUESTION: To the retailers, are territorial rights between the various supermarket departments and video a problem? If so, how have you overcome them? ABRAHAM: When I joined the company a year and a half ago, Food Lion was structured in such a way that that was exactly the case. We didn't have store managers, per se. We had merchandising people for every department in the store that reported up through the organ-ization and it didn't come together until you got to the CEO. That has been the culture of the company and, as a result, even today there is still a lot of territorialism that goes on when we are looking to be doing an integrated display in the produce department or in the deli. The people who are responsible for merchandising in those areas now report to the store manager, but they are still concerned that it is going to take away from their ability to meet their goals, even though it is for the betterment of the entire store. It's just a matter now of getting together with some of the key people at the store director and merchandising director-level and saying, "Here's what we are trying to accomplish. Here's how it is going to help in your department, because that is the territory we want to use." It's been a struggle, but we have been able to get over it. FISCHER: We have weekly meetings where all product directors come to discuss our promotional activity and what is coming up. I feel we have done a pretty good job of looking at the big picture. GOLDBERG: Is the purpose of the meetings to form a consensus? FISCHER: In a way, yes. At each meeting, we bring forward what's available, what we think it is going to do. We look at projections. It is a win-win for all sides. If you can convince the other product directors that it is going to give them incremental sales, most of the time they will jump on it. AUDIENCE QUESTION: If you are a Ralston or some other packaged goods company, what risks do you want to avoid taking on these promotions? O'NEAL: First of all, we try to make sure that we are tying-in with something that has been extremely successful, i.e., a top two or three performer. That is part of the reason why we have chosen video vs. theatrical releases. That helps us to minimize some of that risk.

Additionally, we need to make sure that it is perfectly situated for our target audience so that we don't misplace some of our strategies.

GOLDBERG: How do you go about evaluating a video property? O'NEAL: We try to build on the availability of information that we have on the success of the sales. On some of them, you can get a pretty good idea from the theatrical release on whether a property has been successful, whether there's a lot of excitement and fun that goes with it.

Typically there are a lot of fast-food and other types of promotional events and, through news about them, we come to understand which have been successful or not successful. We also use focus group testing periodically to evaluate programs and to fine-tune promotional elements. AUDIENCE QUESTION: To the retailers, how do you market videos under the strategies of everyday-low-price or high-low? ABRAHAM: Food Lion is an EDLP operator, so first and foremost, we have to make sure that we have the lowest price. For instance, on the Disney releases where they have a minimum advertised pricing policy, we will make sure that we really hit bottom with the pricing. One of the things we have done to help reinforce that low-price image is our frequent shopper program, which allows customers to receive up to 20% off on selected grocery items.

FISCHER: We don't get involved in the low-pricing issue at all. D&W has very strict merchandising standards. We don't use cardboard shippers very often. I've got to do a great sell job to be able to use one. We look at video more as a convenience to one-stop shopping. GOLDBERG: So the idea is, video will be an event in your store, and people will not only buy the video, but will buy other things while they are in the store? FISCHER: Right. MUELDENER: We are going to try to get the product to the customer as inexpensively as we can. In the event that we don't want to expose too much risk and sell below cost to compete with Wal-Mart and Target, we try to look for a fair price and stick with that. Then we look for other opportunities to make it a tie-in item, perhaps with a free item, cents-off an additional purchase, or something else that will add value for the customer. AUDIENCE QUESTION: How much lead time do the retailers need to put together a major cross-promotional event? MUELDENER: Eight weeks. ABRAHAM: I agree. At least eight weeks. To do it right, probably four months. FISCHER: If we have four months, that gives us that much more opportunity to involve the other category managers.