SAFEWAY, VENDORS JOIN IN DIRECT MAIL EVENT

LANHAM, Md. -- Eight major packaged goods companies participated in the first segment of a unique quarterly direct mail program. It was part of Safeway's Savings Club, the card-based electronic marketing program operated by Safeway's Eastern division here. The Families With Children Bonus Package is the retailer's first structured multibrand program developed after partnering with several marketers.

LANHAM, Md. -- Eight major packaged goods companies participated in the first segment of a unique quarterly direct mail program. It was part of Safeway's Savings Club, the card-based electronic marketing program operated by Safeway's Eastern division here. The Families With Children Bonus Package is the retailer's first structured multibrand program developed after partnering with several marketers. It is believed to be the first time such a targeted program resulted from this kind of collaborative effort. The companies that included cents-off coupons in the mailing with a newsletter last month were Quaker Oats, Stouffer's, Lever, McNeil Consumer Products, Welch's, Nabisco, Ralston Purina and Carvel Ice Cream. Other scheduled mailings in the series are set for next month, February 1996 and May 1996.

Safeway's package mails to 250,000 shoppers in the Baltimore/Washington market. Shoppers were selected from the UPC-level customer database, which aggregates a one-year history of actual buying behavior for each customer.

The Safeway Savings Club is a card-based loyalty program that offers shoppers hundreds of automatic, electronic discounts each week when they scan their cards. Brand marketers will soon be able to target users of "light, low-fat and no-fat" products in the retailer's marketplace by tapping into its consumer database. The "Light & Healthy" packages will mail as a two-part series, scheduled for January and April 1996. Sponsors can design their offers to segments within the targeted audience. For example, they might give a high-value trial offer to heavy competitive users and stock-up offers to their own, loyal users, according to a booklet describing the program.

Sponsorship will include redemption and retention reports, which demonstrate short- and long-term effects by audience segment. Participation in each series is limited to seven brand marketers, and is offered with category exclusivity.

The Families With Children program is the first time that Safeway has conducted direct mail solely based on targeting specific audiences, according to Diedre Girard, a partner with PreVision Marketing. The Lincoln, Mass.-based firm is a database marketing agency that is putting together both targeted programs. It has worked with Safeway over the last three years in developing the Safeway Savings Club. "Safeway has had an ongoing frequent shopper program with monthly mailing offers that went to different individuals based on what they bought in the store," said Girard. "It was broad-based. "But this is the first time Safeway has taken target audiences like Families With Children as a demographic purchasing group, developed programs specifically targeted to that audience and gotten manufacturers to support it," she said. "The same thing with the Light & Healthy. It's targeted toward part of their audience rather than all their customers."

Both packages will mail to 250,000 households in Safeway's database of 1.2 million. "We have two targeted communications series, Families With Children, and people who buy light and low-fat products," said Girard. "Those are targeted in and of themselves. Within it, manufacturers can sub-segment, too. Each manufacturer can segment their offers, up to four segments. Within, say, Families With Children, you can say that anybody who buys a competitive product gets Offer A. People who buy my product get Offer B. So you can segment under the initial targeting."

Each manufacturer taking part has category exclusivity, according to Girard. Seven companies per series is the target for participation, but more can be accommodated. Many of the manufacturers in first mailing have signed up for all four segments, but they have to sign up for at least two, she explained. "The whole package is a Safeway Savings Club package," she said. "It's an established series, and has huge read rates. The manufacturer gets to tie into an existing relationship. That's one of the advantages. People are used to opening this mail. It's not like putting out a Lever coupon, for example, on its own. There's no existing relationship there. [Customers] all open their Savings Club mail."

According to Girard, the targeted programs were developed by Safeway after meeting with manufacturers to fill their needs, as well as Safeway's. "What they've done is [develop a program] specifically designed to work in conjunction with manufacturers," she said. "Most manufacturers had requested Families With Children as the first target audience. The second [audience] most requested was consumers buying light/low-fat type products."

The four themes of the Families With Children series are: back to school, holidays, winter/ spring and spring/summer. In the program, sponsors buy one targeted coupon for two or four mailings. Coupon packages mail to selected Safeway customer households identified as having the presence of children. Coupons can be targeted or customized up to four versions per mailing. Safeway Savings Club is printed on each coupon, which are redeemable only at Safeway stores for a period of one to two months, depending on the coupon. In the Light & Healthy program, the audience selection is customers with a history of buying low-fat/no-fat products who are regular and recent Safeway shoppers and show a propensity to use manufacturer or Savings Club coupons. The purchase behavior will be based on UPC-level data captured at the point of sale over the course of one year. Girard said some of the benefits to sponsoring brands include the ability to send offers to competitive users, and retention reports that show whether the loyalty of "switchers" has sustained over time. Other benefits include the development of a data-base marketing alliance with Safeway's Eastern Division; the delivery of targeted direct mail at a fraction of the cost of stand-alone mail; the ability to test the value of retailer data bases at a time when technological advances have made such data bases within the reach of most grocers and retailer-specific marketing is proliferating. Girard stressed that Safeway never releases the names of customers to manufacturers. PreVision, on behalf of Safeway, does the analysis for the manufacturers. Other database marketing products now available from the Safeway's Eastern Division through PreVision Marketing include:

Targeted Product Sampling -- Provides highly-targeted sampling based on UPC-level data combined with comprehensive reporting. Brand marketers can measure not only who redeemed a coupon, but who continued to use the product over time.

Ad Hoc Analysis, Modeling and Data Extracts -- Includes custom reporting, analysis and modeling based on the needs of individual manufacturers.