VENDOR INCENTIVES URGED FOR ELECTRONIC SYSTEMS

CHICAGO -- Brand marketers can spur the growth of new electronic marketing systems if these programs meet their needs.That's the view of Glen Griffiths of McNeil Consumer Products Co., Fort Washington, Pa., who said manufacturers would play their traditional role in the process."That is, being experts in new product development," he said. "Manufacturers could bring creative, research and analytical

CHICAGO -- Brand marketers can spur the growth of new electronic marketing systems if these programs meet their needs.

That's the view of Glen Griffiths of McNeil Consumer Products Co., Fort Washington, Pa., who said manufacturers would play their traditional role in the process.

"That is, being experts in new product development," he said. "Manufacturers could bring creative, research and analytical skills to bear on new electronic promotion product development."

Griffiths, director of sales promotion and communications, spoke here at the third annual electronic marketing conference sponsored by Retail Systems Consulting, also based here. "One reason electronic marketing programs fall short of my needs is they have largely focused on retailer needs with some assumptions about what manufactures want," he said. Griffiths said that retailer and manufacturer needs are different, but not conflicting. "The only distinction I see is retailer needs tend to be macro level. Retailers need to grow sales at the category, department and outlet level," he said. "Manufacturers' needs tend to be more micro focused on growing individual brands."

As an example of what manufacturers can do creatively, Griffiths listed adding value to the shopping trip without adding cost to the retailer. "Manufacturers, especially those competing in several categories, can create promotions that cross brands and categories to build retailer and brand sales," he said. "Creative promotions that are account specific can also distinguish a retailer from its competition."

In consumer research, Griffiths said, manufacturers can help figure out if shoppers will use the incentives and the actual electronic marketing system at first, and especially after the novelty is gone. Analysis, another skill that manufacturers can offer, involves an opportunity for software development, according to Griffiths. "The volume of electronic promotion data will require expert systems that recognize exceptions and even recommend actions," he said. "Without these systems, the growth of electronic promotion will be stunted."

In explaining what electronic promotions "should be," Griffiths listed two classifications by the types of incentives offered: fixed price/period reductions and variable price reductions. The electronic version of a fixed price promotion, he said, is called a scan down or pay for performance. "The concept is simple," he explained. "You pay retailers allowances for units they sell to consumers, instead of paying for units purchased from the factory.

"The strategy behind pay for performance is equally simple," he continued. "You reward selling instead of buying. The simplicity of pay for performance is the most difficult thing to understand for an industry that has focused all its energies on efficient buying. It is an about-face -- one that gets both retailers and manufacturers headed in the same direction," he said. Griffiths said that pay for performance hasn't taken off because retailers' software is geared toward supporting traditional shipment allowances.

"Pay for performance will explode when systems make it a no-brainer for buyers," he said. "The marketplace rewards simplicity. The ultimate challenge for software developers should be to create applications that make retail price reduction promotions totally paperless."

The other type of electronic promotion, called variable value, is "based on a matrix of incentive values and consumer purchase profiles," said Griffiths. He divides variable value programs into technical platforms: in-lane, coupon printers, card programs, kiosks, electronic shelf tags and prescription drug systems. "Variable value promotions are only made possible by technology," he said. "There is no firm applications knowledge base."

While these programs are unproven, he added, they are promising if done right.