The hook is free phone time. It can lure shoppers into stores and get them to spend more on their grocery bill, say retailers.
As prepaid phone cards have gained broad appeal, supermarkets have begun to look at the calling card as a customer reward or a way to add value to commodity purchases. Chains are tying them into their frequent-shopper programs, using them as giveaways to pull in traffic or as incentives and prizes in customer drawings.
Grand Union Co., Wayne, N.J., has chosen a 30-minute MCI prepaid phone card to award to its Grand Savings Plus club-card customers for every $500 they spend at its 15 Long Island, N.Y., stores.
According to Don Vaillancourt, the chain's corporate secretary and vice president of consumer affairs, the program, which has been running for six months, is demonstrating that it can "win customer loyalty and build traffic."
Whenever club-card customers' purchases total the designated amount, it triggers a letter from the retailer notifying them that they, as preferred shoppers, have qualified to receive the free phone time.
The program "has been working out quite satisfactorily as an incentive to shop at our stores," Vaillancourt said, adding it will be evaluated for possible chainwide expansion.
Independent retailers offering the Western Family controlled-label prepaid phone card from MCI are considering possible promotional approaches for the cards.
Western Family retailers "have indicated an interest in linking them to a minimum purchase, or giving away the five-minute cards as a promotion," said Chris Duley, vice president and general manager at McKenzie Buying Co., a wholly owned subsidiary of Western Family, Tigard, Ore.
"There have been discussions on how do we cross merchandise these [phone cards] with different products, and there is an acknowledgement at the retail level it is a viable item to use in that form," Duley added.
Frequent shoppers at Carr Gottstein Foods, Anchorage, Alaska, also are being rewarded with a discount on the purchase of the retailer's private-label prepaid phone cards.
The price of the cards is discounted for customers with a Carr's frequent-shopper club card. They pay $9 for a 30-minute card that retails for $10. Shoppers also save money when buying a 60-minute card, which normally retails for $19 and is discounted to $17. A 90-minute card retailing for $28 is lowered to $25.
As the prepaid-card market grows, more of the chain's customers are taking advantage of the savings realized in its frequent-shopper program. "Sales are going strong," said Gary Schloss, vice president of general merchandise.
In addition to its prepaid phone cards featuring Alaskan wildlife scenes, Carr Gottstein will introduce this month a new 140-minute limited-edition collector's card featuring Norman Vaughan, an Alaskan who gained fame climbing mountains in Antarctica.
"Even grade-school parents are now buying prepaid cards for their kids, who can dial up an 800 number," noted Schloss. "This has opened a whole new area for phone cards." Kristin Briggs, corporate project marketing manager at Associated Food Stores, Salt Lake City, agreed that "phone cards are a hot commodity and highly appealing to those who travel and commute."
Last year, Associated retailers had success boosting store traffic by tying in to the release of the "Jurassic Park" sequel, "Lost World," with 10-minute prepaid phone cards. Some independents sold the cards outright, while others used them as promotional giveaways.
The dinosaur-themed cards even became collector's items, Briggs said. Graphics featured 3-D dinosaur artwork on the front and a toll-free number to call for dinosaur facts.
Associated is considering a similar event in May to coincide with the release of the new "Star Wars" movie. "We're considering a prepaid-card promotion as a free item to give away that week, or use in a customer drawing. The card would have some special feature on it [related to the movie's theme]," Briggs said. Such a tie-in "uses the title's appeal to boost the growing interest in phone cards."
As a promotional item, "a five-minute card is very cheap, as low as 10 cents a minute at wholesale. Yet it's a very powerful promotion that appeals to practically everyone," she said.
"Phone cards now, as opposed to a few years ago, carry high visibility at retail, and people actually associate a dollar value with a five- or 10-minute phone card. They think a $3.50 phone card is a premium compared to a few years ago, when they had a harder time perceiving this value," said Matt Martino, director of promotional sales at SmarTalk, Dublin, Ohio.
But not all retailers are convinced of the effectiveness of on-pack incentives. A Konica film-pack promotion, featuring a free on-pack 15-minute phone card, offered last spring at J.C. Groub, Seymour, Ind., "did only fair, and we still have some [product] left," reported Larry Miller, a nonfood buyer.
Miller said combining film and a prepaid card had seemed a perfect warm-weather link. "I thought this was a good deal. At vacation time people buy extra film, and the phone card could be used to call home. But [the free phone card] didn't really seem to make a whole lot of difference."
Miller said he wasn't certain what products could best be used to tie in with phone cards. "I'm sure there are some opportunities," he said. "Customers usually notice products with free on-pack phone cards when they come upon them."
While Grand Union has carried products like soft drinks with on-pack five- or 10-minute prepaid phone cards, "we haven't gotten too much consumer reaction," said Vaillancourt. "We get more reaction to our Coca-Cola or Pepsi [pricing] specials, which drive sales, and the prepaid phone card is really secondary," he said.
However, Mark Lajoie, general-merchandise category buyer at Imperial Distributors, Auburn, Mass., said he believed such promotions offer retailers the opportunity for increased sales.
A Kodak single-use camera cross merchandised with a Bell Atlantic prepaid phone card was relatively successful last Christmas for retailers supplied by Imperial, he said.
Rod Boni, grocery merchandiser at Pay Less Supermarkets, Anderson, Ind., agreed that prepaid cards promoted with other products offer shoppers an in-store incentive and can have a positive effect on traffic.
"Greeting-card companies sometimes offer a five- or 10-minute phone card with the purchase of a few cards at major holidays like Mother's Day and Valentine's Day, and a local dairy ran a prepaid card when it launched a new milk container," he said.
The dairy, Dean's Milk Co., kicked off its new plastic pint- and quart-size Chug containers in the fall "with free 20-minute cards with a multiple purchase. The campaign also supported the idea of milk as a choice in place of high-sugar-content juice products and soft drinks," said Boni.
This summer, Fuji Photo Film, Elmsford, N.Y., used 10-minute prepaid telephone cards tied to its sponsorship of Major League Soccer on a four-pack of 24-exposure, 200-speed film. The value-added incentive resulted in an increase in film sales of one and a half times the normal movement, said Brian Hammock, brand manager. Fuji also promoted its Quick Snap single-use camera with a 10-minute phone card.
"Promoting film with a phone card was very effective, especially in the summer, when it's vacation time and consumers will pick up film and a single-use camera," said Hammock.