1997 P-O-P Trends Report: Marketer Survey

Product marketers and their P-O-P vendors are weathering heavy retail storms these days. Stores in some categories are consolidating, most have tightened their staffing and many are becoming stricter about what in-store merchandising they'll allow in the aisle. Those trends have product marketers taking a closer look at what they do and how they do it.That is resulting in an evolving market for P-O-P but not a smaller one, most agree. "Marketers know the war is going to be won in the retail store," where studies show more and more people are making their final buying decisions, says Joseph Ricci, promotional services director for Duracell International Inc., Bethel, Conn. "You can have the best research and development in the world, but if you can't explain your product to consumers and get them to take it with them, it doesn't matter."For a variety of products, marketers are putting more emphasis on permanent displays, allowing them to manage their category or gain more control of the space. Retail evolutions are also leading to more displays that are customized to each account, more targeted to the specific audience, more information driven and easier to assemble."It's a very budget-conscious environment today," says Howard Annenberg, president of Shannen Promotions, New York. "Major companies are extremely concerned about shareholder equity at the same time that they're looking for greater market share. When they use marketing funds, they want the impact to be better targeted so it gets a bigger bang for their buck."Permanent Fixtures GrowMany categories are evolving, forcing marketers to evaluate how they achieve success. That's true for such diverse products as fragrances, videotapes, watches, computer equipment and even some packaged goods. "Mass merchants have become our major outlet, and more permanent fixturing is the trend for us," says Randy Erickson, vice president of marketing services at Buena Vista Home Video, Burbank, Calif. "The stores think corrugated makes the aisles look 'junky,' so they're trying to clean up their act. Permanent fixtures ensure we have on-going space, but it represents a change in our approach."Marketers at Swatch USA in Weehawken, N.J., are finding the same trend at department stores, which are shrinking in several ways: in number, in space allotted for watches and in staffing to explain products. "We want to control our environment so we don't have to compromise our approach so much," explains Jose Raul Padron, visual merchandise manager at Swatch. "That means using more permanent spaces and shop-in-shops [vendor-controlled departments], as well as extending our approach into boutiques."A variation of that theme is taking place for Keebler Inc., Elmhurst, Ill. "Supermarkets are looking to us to help them minimize clutter and make it easier to shop the stores," says Susan Bell, director of marketing services. "It's more difficult to sell corrugated into certain accounts, no matter how great the graphics are. So we're looking at more semipermanent and permanent fixtures. It's a natural progression, and stores are open to new design solutions that help them solve their problems."Rebecca Kotch, merchandising manager at Microsoft Corp. in Redmond, Wash., sums it up this way: "We're going to be spending more on permanent fixtures in 1997, because our goal is to find permanent real estate in stores. That in the long run will make us more successful."Some marketers say they'll supplement those permanent fixtures with smaller, low-cost pieces such as shelf talkers to give them flexibility.Customization Takes OffTo get in the door, most marketers say they're creating more customized displays than ever before. "Account-specific business is growing like crazy," says Thomas Verrangia, director of merchandising at Cosmair Inc., New York. "It's expensive, but you save money in the long run if the displays all get up." Microsoft's Kotch agrees. "Low-production runs are costly, but we do it because we want to increase our installation rates."In some cases, the customizing consists of adding a store logo or changing to the chain's signature color, and these can be picked up at the end of longer production runs. Other times, the retailer wants its own customized approach, says Buena Vista's Erickson. "It's a challenge, because we have to ensure each version is effective while being distinctive."Although shorter production runs always cut into profitability to some extent, the real killer comes in the second year of a program, when the retailer that took 200 fixtures to start now has 30 new stores -- and 17 more in year three. "We encourage the retailers to give us an 18-month projection of needs [for new store openings]," says Duracell's Ricci. "That ensures they have fixtures available if their timetable speeds up."Often the retailer will inventory those displays, to ensure speedy delivery, but sometimes calls on the vendor to supply the warehousing. The same trend occurs with temporary or semipermanent displays, notes Shannen's Annenberg. "It's definitely better if we can do a bulk run and phase shipping over a longer period," he says. "We're finding more clients are willing to give us a full year's requirement rather than producing one quarter's worth at a time."Targeted MessagesSuch customizing also ties into marketers' desire to provide more targeted approaches. "We're being more selective with what we do and putting more effort into fewer promotions," says Kristen L. Penta, vice president of marketing for Edison, N.J.-based Pentech International's Fun cosmetic line. "The category is so competitive that each product has to be unique and the display has to be unique as well."Adds Cosmair's Verrangia, "There are only so many ends of aisles and so many people are vying for them, that we're focusing on fewer programs and adding more excitement to each for the retailer and customer." In cosmetics, that trend is leading to more open-selling plans; in software, it's leading to more control. Shrinkage has become such a problem for some of Microsoft's retailers, says Kotch, that the company is experimenting with ways to avoid displaying live stock and showing only packages.At Keebler, the focus is on projecting one image among all media, says Bell. "We want to maximize our impact, and that means using every opportunity to project one integrated, consistent message in our packaging, displays, newspaper ads and commercials."Some marketers are looking for new space in existing stores. "We're examining ways to get into checkout lanes, end aisles and other spaces that are not traditional for our products," says Steve Bartolucci, senior buyer with the Santa Monica, Calif.-based Gillette Stationery Products Group, which focuses primarily on Paper Mate pens. "Our goal is to create a display that hits the sweet spot between including enough product to keep the cost per item low while not overloading so it sits for a long time," he says. "We see our displays becoming a more critical link in our incremental sales opportunities."At Cosmair, Verrangia is experimenting with new types of displays, such as mini-wings, which hang off the sides of sidekicks. "We're getting creative in how we use our displays," he says. "There's real estate available if we can figure out how to use it."Retail Staffs ShrinkingConsumers are also demanding more information before buying, product marketers note, and that means the display has to work harder. That's especially true as more stores cut staff, notes Bill Lee, a partner at Trillium Ltd., a P-O-P company based in Mequon, Wis. "More clients want silent salespeople, and that means creating a display that tells the entire story without anyone being there. Pentech's Penta agrees. "We're adding more cubbyholes to include educational pamphlets, because we need to get the word out better," she says. "As more department store customers shop at mass merchants, we need to explain the product the way the department store's sales help would. But we also can't allow the information to take up product space."The cut in sales help affects other areas, too, says Duracell's Ricci. "We have simplified our display assembly to make it as simple as possible." Often units will be partially assembled so set-up takes minimal effort. Instructions are being printed with more graphics as well as in Spanish, Japanese, Chinese, Vietnamese and other languages to take advantage of niche markets, he adds."Very simple changes can make a huge difference," says Ricci. For instance, the odds of getting a display installed can triple if he slots the header so it pops up when the box opens instead of just packing the header in the box. Adds Pentech's Penta, "We're using more computerized graphics and diagrams in our instructions and also providing a lot of troubleshooting information on how to rest trays or reload displays when they're empty." They also work closely with field service companies, that often bear the responsibility of setting up and maintaining the displays.Communication ImprovesMany of these changes are occurring because communication has increased throughout the channel, marketers and vendors agree. "We talk to retailers more because the market is becoming more competitive," says Buena Vista's Erickson. "We need to market smarter and more effectively and spend money more wisely. There's nothing worse than creating an expensive piece of P-O-P and then finding out it doesn't get up in the store."Cosmair's Verrangia accompanies salespeople on visits to retailers throughout the year to learn how his company can better tailor its programs. "When we listen to what the retailer wants, we get 100 percent compliance. Communication is absolutely vital today." That support from top management pays off because major retailers can communicate a program's specifics to its individual stores, ensuring the message is distributed quickly, consistently and persuasively.Communication between marketers and vendors is also moving faster and better, notes Andy Freedman, president of Design Display Group, Carlstadt, N.J. "Faxes, cell phones, 8 a.m. deliveries and other technologies have put everyone into higher gear," he says. "Everyone wants instant communication. But what it does is let the marketers postpone their decision-making until very late in the process."Adds Trillium's Lee, "Faster turn-around is required today, no question. Everything seems to be in a crisis mode these days."One way some marketers have minimized the impact of this acceleration is by bringing the vendor into the process earlier, explains David Abbruzzese, executive vice president of sales at ImageWorks Display & Marketing Group, Winston-Salem, N.C. "Clients are asking for more of everything these days, which means we're becoming involved with promotion and marketing," he says. "But we're also being brought in a lot earlier to interact with the brand manager and help build the program. Better integration gives us a head start on achieving the turnaround they need, so it's a huge advantage for us. But it also means we're required to know more upfront about the company, the brands and the retailer mindset."Determining retailer needs isn't always difficult, notes Shannen's Annenberg. "Mass merchants will tell you exactly what they want and they can be very strict. They are dictating how things are done. There's growth in that market, but it's very controlled. That's why the market is changing and why things are more targeted."Prototype Use GrowsMany vendors and marketers are reporting a greater use of prototypes and a better understanding of the structural capabilities of a display, especially temporary ones. That derives both from CAD-driven designs that allow complex calculations, as well as for computerized cutting, which means prototypes can be produced quickly."Previously, a samplemaker couldn't create a design just to see if it was strong enough," says Steve Bartolucci at Gillette Stationery Products Group. "They had to do it right the first time because it took so long. Now we can design a prototype with 20 to 50 components in the morning and be ready to container-test it in the afternoon. That's a major change in the industry.""We're definitely making more prototypes today," says Pentech International's Kristen L. Penta. Often, the company will create a sample run of 10 or so units to test prior to a full run. "For a big mass retailer, we'd never send them a production run first, because we know they'll want changes. Their feedback is always very positive, and we learn a lot from working that way."Technology Aids ImageTechnology has made a greater impact on a display's final look in recent years than any revolutionary shift in materials, say marketers and P-O-P vendors. A few point to the use of environmentally friendly materials, and others say the move toward permanent fixtures could result in an increase in the use of metals and other upscale materials. But execution with existing materials has made the biggest impression."We're driving toward higher quality even for temporary displays," says Steve Bartolucci of Gillette Stationery Products Group, which focuses on Paper Mate products. "The print quality available today with computer-generated images has made a big difference. And enhancements through flexographic printing technology, such as photopolymer plates, are allowing us to do more in graphic presentations on a low-cost medium."Where complicated graphics previously were lithographed onto an overlay, printers can now produce multiple colors in registration with high-gloss coatings and ultra-violet protection, Bartolucci says. "They give us a lot more punch than ever before in a disposable medium."Plastics are also becoming more complex, says Jose Raul Padron at Swatch USA. "We're molding more parts and using the plasticity of the material to add a visual value or project a different look that provides an upscale image."The improvement in power sources to operate a unit for longer periods has given them far more potential, says Duracell's Joseph Ricci. "Supplying a battery that can run the unit for 90 days fits our cycle of promotion, which means I can incorporate those items into my displays. When they would only provide battery power for a week, I couldn't do it."In some cases, marketers are finding ways to use cheaper technologies to achieve expensive-looking ends. Buena Vista Home Video, for instance, uses danglers, mobiles, light thieves and printed acetates placed behind objects to add motion effects inexpensively. "It makes the display special at a cost we can afford," says Randy Erickson.Of course, motion is still an option, says Cosmair's Thomas Verrangia. "Motion is making a comeback, especially if it's uncomplicated," he notes. "Everything is new if you wait long enough for it to come around again."Vendor Pool Grows - and ShrinksSome marketers are using more vendors than ever, while others are cutting back to a core group."We're using a wider group of P-O-P companies than ever, because our product line is growing so fast and the number of titles is increasing dramatically," says Randy Erickson at Buena Vista Home Video. "We're supplementing our existing vendors and doing different things that require vendors with unique talents and expertise."That's also true at Duracell, confirms Joseph Ricci. "We've expanded our base in the last six months, and we're looking further," he says. "We're increasing our range of P-O-S materials tremendously, because we're venturing into new areas, like banners and LEDs. But I don't know if we'll still be using the same vendors in two years, because things are changing so fast."Russell Athletic's International division is expanding its services so quickly that it's still experimenting with approaches that work best for its overseas markets, explains Alex B. Angelchik, marketing and merchandising area manager. "We're so open to new vendors we actually respond to some of the mailers we get," he laughs. "Our marketing coordinator is always looking for new companies that can help us."But other product marketers are consolidating to a few vendors, citing the need to go deeper into overall strategies and achieve better efficiencies. "Working with a core group saves meeting time and allows us to discuss a variety of projects in one call," says Gillette's Steve Bartolucci. "It's a workload and resource issue."Pentech's Kristen Penta cites the company's wide range of SKUs and its shift to more permanent fixtures as reasons why she's using a few key vendors. She's also focusing on local service. "Molds and designs can be sent overnight or faxed, but it's so much easier to jump in the car and drive over to see it while it's on the line."In choosing who does what, notes Bartolucci, low pricing doesn't automatically close the deal. "Price is a key attribute, but it's not in the top five of what I look for," he says. "We save that for when we really, really need it." Duracell's Ricci agrees: "We have plenty of creative ideas, but what I look for is something new, different, or better and not necessarily cheaper. I believe you often get what you pay for."Into The FutureBut the current approaches and restrictions may not last forever, at least in some categories, says Pentech's Penta. "As department store customers shop in mass chains and drugstores, the stores are beginning to see the need for someone to be able to answer questions about cosmetics," she says. "I believe there will be a whole wave that will change things again, returning to a counter with fragrance and its own register and more space. Not many are doing it yet, but I think it will grow." Stores will also give more promotional space to cosmetics, she predicts. "Promotions are no-brainers; customers like them and they keep the department fresh.""Trends float," agrees Duracell's Ricci. "The tide comes in and the tide goes out. Some of the stores that have had 'no-corrugated' policies are now interested in temporary promotions for their main aisles. But the promotions have to be blockbuster, unique events."At the same time, an emphasis on the use of more permanent displays may change the types of materials and designs P-O-P houses provide, notes Swatch's Padron. "The desire for more permanent displays may blur the line between what constitutes a P-O-P company and one making retail fixtures."Either way, no one expects the role of in-store merchandising to diminish. "We anticipate marketers' budgets will increase for P-O-P, because retailers are demanding more displays, especially for new products," says Don Youngren, president of Image Works. "They know displays can help boost incremental sales. Retailers will encourage P-O-P in general and force marketers to do more with each program."

1997 P-O-P Trends Report: Marketer Survey

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