Retailers need to make several sets of strategic decisions before choosing which promotions to feature in their stores. The most important choice may be whether to go with an account-specific program or to engage in a co-marketing promotion.
Account-specific marketing is usually presented to retailers by the supplier, as a list of options to be tailored to the retailer's marketing needs. Such programs are often tied to a short-term sales goal.
A co-marketing promotion, on the other hand, involves the sharing of information between the retailer and manufacturer. Both parties combine their resources and expertise to attract new and current customers.
Both promotion methods provide the opportunity to do more targeted marketing, especially when the manufacturer and the retailer can find and target an overlap of common customers through their promotional efforts.
The starting point for either choice begins with finding the right mix of a product and a promotional theme between a retailer and a manufacturer. At the same time, both parties need to reach an understanding of what each expects through the partnership.
"It is like putting a puzzle together," said Debbie Ellis, spokeswoman for Minyard Food Stores, Coppell, Texas. "The [manufacturer] partner has to be a good match for the chain and the customer. In addition, the theme of the promotion, as well as deploying the correct advertising choice, also needs to complement this."
A large Wisconsin chain goes one step further, explaining that both parties also need to be aware of what each is trying to achieve through the partnership.
"When both parties begin negotiations, manufacturers usually want prime display space and display activity, while the retailer expects a few more details," said a company spokesman who asked not to be identified. "The retailer is looking for a variety of things, such as increased marketing dollars, a lower case cost and increased media advertising."
Account-specific marketing enables retailers to promote specific brands and categories, while competitively spurring short-term sales. Minyard is one retailer that relies on the flexibility of account-specific marketing. "The manufacturers present a list of different options that we can build our promotions around," said Ellis.
"We pick and choose different sweepstakes and contests, and decide which advertising methods will fit well with our ideas," she added. "This option helps us to create a promotion
that is unique to Minyard, while reaching the needs and demographics of our customers and markets."
In contrast, Lund Food Holdings, Edina, Minn., parent company of Lunds and Byerly's, is an advocate of co-marketing strategies.
"Whenever we partner exclusively with a manufacturer, we need to know that promotion is exclusive for us," said Tracy Wiese, director of communications for Lunds and Byerly's.
"We cannot afford to be in a promotion where a manufacturer will endorse a five-week promotion that will appear in a new chain each week," she added. "That will not differentiate us from other retailers. Instead we partner with manufacturers to try to, for example, introduce new products or support a charitable event."
Two popular joint-marketing methods, used in both co-marketing or account-specific marketing, are the use of sweepstakes and publicizing a charity or event to promote a product. These promotional events are usually linked to additional marketing vehicles to increase store traffic.
Both Minyard and Lunds are planning to launch event promotions, each using different marketing strategies. For example, to coincide with the grand opening of Dallas-Fort Worth's new Texas Motor Speedway, Minyard has developed an account-specific promotion with Coca-Cola Co., Atlanta, for the chain's Super Speedway Sweepstakes.
According to Ellis, customers enter the sweepstakes to win a 1998 Chevy Camaro, tickets to the racing events and an opportunity to meet the drivers in the hospitality tent.
"Coke, which is the official sponsor of the speedway, is an attractive sponsor to customers. The support gained in our stores is five weeks of guaranteed high-profile display space, and a good ad and price to attract customers to the stores," she explained.
"The end result is we are providing another reason for customers to shop our stores. We are driving traffic by offering something other chains don't have," she added.
Lund Food Holdings will launch its own co-marketing promotion later this month when it partners with the March of Dimes, the Florida Department of Citrus and Land O' Lakes, Arden Hills, Minn., to promote the Walk America walk-a-thon, presented by the March Of Dimes, White Plains, N.Y. "We will have displays set up in our frozen and dairy sections for Florida orange juice, as well as signage asking customers to 'Join us at Walk America,' " Wiese said.
"The manufacturer is interested in how much they invest in the promotion and what they are getting for it," said Chris Hoyt, president of the consulting firm Hoyt & Co., Stamford, Conn. "What is significant to both is that a retailer wants to see a return on his assets and a manufacturer wants a return on his investment."
"A brand can help a chain bring new customers, while strengthening sales and the customer base. It becomes a mutual spinoff," he added.