Automotive P-O-P Shifts Into High Gear

"There have been distinctive changes going on in automotive-aftermarket stores over the past five years in particular," says Stephen J. Alexander, president of Automotive In-Store Marketing Inc., a Sanibel Island, Fla.-based consulting firm. "Prior to the chains gaining dominance, the stores gave scant attention to the interior environment, with few gondolas and little housekeeping. Now, the chains have grown to a size that they are attracting marketing executives who place greater value on the in-store look, and the stores' sophistication is increasing."Industry trends are also driving this change, he notes. Key consumable products such as spark plugs, motor oil and shock absorbers, which have been the backbone of many stores' sales in the past, are losing market share. Fewer auto enthusiasts seem willing to take the time to replace these products themselves, and the growth of speedy auto-service stores entices more customers who don't have the inclination. Autos have also become more computer-driven with high-tech systems that can be daunting to dabble with.But as those trends have shifted sales of some products to the service franchises, auto stores have found new markets for accessories. These sales are being driven by the larger, sportier types of vehicles that are popular right now, especially sport utility vehicles and pickup trucks, as well as by the increase in female ownership. "These consumers are accessory-conscious, and manufacturers have realized the accessory market is taking off," Alexander says.As a result, retailers are "extremely interested in new materials and designs" for in-store mechandising, he says. "They realize the name of the game today is attracting consumers into the store and then getting them to buy once they're in. And manufacturers understand that the way to help retailers achieve that is through the time-honored method of creating on-shelf presence." To aid this process, Alexander has created special sections on his company's Web site, www.autoinstore.com, featuring 118 searchable categories of in-store merchandising products, services and companies.Even those products that are losing their high prominence in the stores are helping retailers maintain their profits. "Motor oil products are shifting out of retail and into the service sector," agrees Ed Farris, manager of creative development for Castrol North America Inc., Wayne, N.J. "In such a declining retail market, it's more important for us to focus on higher-margin products at the premium end of the scale, and we do that by creating displays with more education value. That way they can hold onto the enthusiasts and move them up to a product that better serves their needs."Industry Continues to GrowIn fact, Alexander says, the industry is continuing to grow, with overall sales rising about 3 to 4% annually, although some retailers are seeing double-digit growth. Total sales have risen from about $130 billion in 1995 to an estimated $160 billion in 2000, he notes. The sales are derived from a base of about 42,000 stores nationwide, including auto specialty chains, small regional chains, programmed distribution stores and parts suppliers such as NAPA.The customer base for auto-treatment products has definitely splintered, says Tim Wipf, marketing manager for SynPower Chemicals at The Valvoline Co., Lexington, Ky. He divides customers into four groups: the "Skeptics," who must be convinced the products will work; the "Novices," who must be reassured they are buying the right one; the "Tinkerers," who are looking to buy a product and must be convinced to buy your brand; and the "Enthusiasts," who are looking for reasons to upgrade to a premium product. All these customers need certain types of education and messages, he says. "We need to find the proper combination of creating attractive materials while communicating the problem-solution message," he says.This ongoing growth while the customer base evolves has led to changes in store design, notes Alexander. With fewer parts and more accessories being sold, stores are changing their images. In some, the counter area is being shifted to the center of the store, where it serves as an information counter and parts look-up facility. Putting more products onto the floor means those products must have more attractive packaging. "The stores are providing more visibility for employees while reducing the boxed goods in the back room," he says. "That means the boxes have to look good and attract attention on their own. Marketers can't get away with plain white boxes any more."Packaging Takes Center StageCastrol's Farris agrees. "Packaging has become our one guaranteed display," he says. "It may be our only touchpoint, so it's the main source of our marketing communications. We know it will get to the shelf, and we can broadcast across the box. Particularly in motor oil, where consumers see the product as more of a commodity, the packaging has stepped up to create differences. That makes it critically important.""Packaging is the one message that does get out," says Donald DeBouse, director of marketing for Radiator Specialty Co., Charlotte, N.C. "We're seeing more companies adding elements to packaging -- flags and tapers and violators." More metallic inks and foils are being used as well, notes Valvoline's Wipf, whose company uses metallic inks for the base colors in packaging for a number of lines. "When you can create a glossy box, it makes a pretty strong statement on the shelf."This effort extends to displays as well, observers say. Sandy Sallman, advertising manager for the Riviera Beach, Fla.-based Tire King chain, notes graphic improvements in the materials she receives from marketers. "We like receiving large pieces that are different and attract attention to the promotions," she says. "And we're seeing several changes, especially brighter colors and a better grade of cardstock on standees." This allows the pieces to remain in place longer while also improving the quality of the look while they're on the floor.Manufacturers are aware of these options, but they also must keep the displays within budget, some report. "We've been presented with a lot of new material options," says Dawn Gagne, supervisor of marketing services for Exide Technologies Inc., Reading, Pa. "But our focus has to be on cost effectiveness. Right now, a lot of the options are too expensive for us to use." The company has added see-through window posters to its lineup recently, she notes. "Those definitely have a benefit that is worth the cost."P-O-P material upgrades can offer an enhanced image to product lines, notes Castrol's Farris. "We're not looking so much for glitter and glitz but to convey the premium quality of the high-end products," he says. Others note that sturdier packaging and displays maintain their attractiveness longer in the stores, encouraging store employees to leave the materials in place longer.Co-Branding Offers BenefitsAnother reason for package enhancements comes from licensing and co-branding efforts that attract attention from key demographics. NASCAR licenses are popular with auto-store products, as are co-branding merchandising programs with outdoor gear companies. Valvoline has run several such tie-ins, including a current national campaign that offers a Rapala fishing lure with the purchase of SynPower fuel-system treatment. The company has also offered free Mattel Matchbox toy cars in its packages."We use these offers to draw in consumers and differentiate ourselves through the packaging. We provide something that's not expected, which elevates us beyond the clutter," says Wipf. "If they see something different, it makes them stop, and we believe we have a pretty powerful message once we get their attention." The promotions pay off, he notes, as the company has seen sales lifts of up to 50% in some stores for the co-branded items."Creating a strong co-branding effort helps us build the brand and leverage off-shelf space because of the value-added package," Wipf explains. "It also gives us better control of our trade dollars. We spend a fortune to gain retail space, and it doesn't benefit the customer. But if we can use those same dollars to attract more customers, we can give an incentive to the retailer and give the consumer more value."Wipf reports seeing a definite trend with marketers to promote bonus packs and multipacks too, creating a value-added perception. These typically are done for endcap programs, he notes, as retailers are resistant to any promotion that changes the size of the package on the shelf. "If it's an in-and-out promotion, you might be able to convince them, but otherwise, you need to stay within the same package footprint." The best adjustment is to change the depth, reducing the number of products on the peg but not overlapping space on either side or below. "Retailers definitely prefer to see a multipack with the products packed back-to-back rather than side-by-side."Educational Materials IncreasingIn addition to gaining customer attention, packaging and displays have to produce sales results. "Premiums and strong packaging can get them to pick up the product," says Wipf. "But you need to educate them about your product and its benefits, or they'll set it right back down." Castrol's Farris agrees. "We're focusing more today on explaining the products and trying to eliminate the myths and fables to help customers understand them, which lifts the entire category. We want to give them a call to action."That's also the approach being taken by Big O Tires Inc., a chain of tire stores based in Englewood, Colo. "We're focusing our materials on how our product lines solve the customer's problems and less on the specific features," says Kelly O'Reilly, senior vice president of sales and marketing. The company used to emphasize tire jargon and technical information to differentiate the product lines, she explains. Now, the company focuses on what the customer wants -- and that may include the speed and ease of purchasing more than the tire's specific attributes. "Efficiency is more important to some customers than quality, so that is something we're promoting more than ever," she says. "We're trying to take more of an outward look at how the customer buys rather than an inward approach that provides detailed information on each tire."But education is a prime ingredient, particularly in stores where it's easy to buy the wrong size or product for a particular car model. "You can never over-educate a consumer," says Castrol's Farris. "When a retailer gives you a lot of choices and education, you feel good about your purchase, and you're more likely to go back there. At all levels, including enthusiasts, if you educate them well and define the product categories so they can locate products easily, and you use off-the-shelf displays to explain the products and highlight promotions, the customers will come back to buy again."Exide's Gagne feels education and eye appeal are critical because her battery products are seldom purchased until absolutely necessary. "In many cases, our P-O-P is devoted to helping the customer locate the products in the store and find the correct model and size," she says. But it's also vital for her pieces to be eye-attracting. "When customers are ready to buy new batteries, we want them to remember where to come to buy," she says. "We have to help retailers identify themselves as the source." Exide is aided in that goal by promoting its car batteries in its P-O-P for other products, including motorcycle and boat batteries, which are replaced more often.Honeywell Consumer Products Group, makers of Fram, Prestone and Autolite car products, also is focusing on education, says Shelley Huffman, trade marketing manager for the Danbury, Conn.-based company. "We realized that we needed to help customers understand the options." To achieve that, the company has introduced shelf-edge merchandising pieces that feature educational material on the exterior panel and an interior panel that pulls down to describe additional specific benefits and uses for each of the company's four oil filters and its air filter. This approach provides twice as much selling space on the shelf edge.Category Management BloomsAuto aftermarket retailers are taking the educational approach to the point of devising category-management systems as other channels have done, says Alexander. "This is part of creating more efficient merchandising systems that better present the products overall," he says. In March, that effort became official when the Automotive After-market Industry Association (AAIA) announced that it was working with a wide range of manufacturers, retailers, program groups and wholesalers to find ways to improve industry efficiency and profitability.The group met to begin working on formats that will create a category-management system "to streamline and improve industry performance," says Alfred L. Gaspar, AAIA president and ceo. "The intended output is a fully integrated system of information, software and analysis tools to be made available to participating retailers and subscribing manufacturers that will provide key market data in a standardized universe while ensuring complete retailer confidentiality," says Gaspar. (For more information on AAIA and its category-management programs, contact the group through Rich White at AAIA, (301) 654-6664 or at the association's Web site at www.aftermarket.org.)Castrol has found a strong reception for category-management programs, says Farris. "We've had some success because retailers understand how these programs can provide education and uplift the entire category," he says. The company recently developed such a merchandising system for a regional auto retailer with 700 units. The section attracts attention to the motor-oil department and explains the Good-Better-Best concept. "We wanted to explain why it pays off to buy up," he explains. "Even if we don't convince them to use the 'Best' product, we may be able to get them to take the halfway step to the part-synthetic oil and help them start understanding the options."Gold Eagle Co. in Chicago is also working with manufacturers to create category-management programs, says Marc Blackman, vice president of marketing and sales. "We can sit down with the retailers and explain the program completely, and they are responding to suppliers who are consumer-knowledgeable on category management," he says. "They are moving more toward convenience and need the products to help guide the consumer to the right purchase."Having strong sales data is a must, Blackman stresses. "If you can share data on why the promotional concept you're doing will work, it's more meaningful than bells and whistles," he says. "It's not easy to obtain that information, but the industry is growing up, and we need to do it. It's been done in other consumer-goods product categories for many years, and we have not been as aggressive in the automotive field."Customization is PopularAnother reason for the growing acceptance of these programs, Farris notes, is because they can be customized to the account. "This is an ownable program, especially when we print their name on the headers. It's theirs, and it differentiates them." Such customizing is becoming more routine, but it also makes it more compelling to work with each retailer to focus the program."Five years ago, we'd do one thing and offer it to everyone," Farris says. "But with the consolidation that's taken place, there are now five or six national accounts and a handful of regionals, instead of 20 accounts we have to please." Castrol has a dedicated sales team that works with national accounts, keying in on their specific needs. "That is where the opportunities are," he says. "We can build a program specifically to their needs on our budget, because they're big enough to create a program just for them."Valvoline's customizing efforts often enhance a planned national promotion, explains Wipf. For instance, a sweepstakes may be added to a co-branding effort for a particular retail chain. In some cases, those programs work as test campaigns that can be expanded into national efforts in later periods. "I expect in the future we'll have one traditional large program per year and then use smaller, regional or account-specific ones at other times," he says.Customizing is a key consideration for retailers, agrees Radiator Specialty's DeBouse. "Most of the retailers carry the same products, so they need to differentiate themselves with their P-O-P." Some retailers are brand conscious and want to promote the name-brand products they stock, while others want to promote themselves as the brand. "Retailers are trying to portray themselves as 'the destination' versus other stores, so our merchandising philosophies are centering on what they want to do to create that difference."Three Keys to AcceptanceDeBouse says three key ingredients will get a merchandising program in the door: a promotional price, strong advertising support and effective P-O-P materials. "If you can bring all three together in a coordinated way, you'll generate success. But the key challenge is to effectively implement the program. We can produce a really creative promotion, but getting it placed in the stores correctly on time for the advertising takes a great deal of coordination, communication and effort. That's where most programs fail."Customized programs can help with this, notes Castrol's Farris. "If it's account-specific, the retailer believes in it more and will execute it better by helping with communication downstream, which provides more incentive to the stores," he says. "They'll also tend to leave it up a little longer. Instead of two to four weeks, we might be there two to four months." Even then, he stresses, the program must be easy to assemble and quick to reach the aisle. "You can't send them Tinkertoy kits," he says. "If you're only as good as your execution, your execution has to be incredibly good, and that's a challenge."As marketers focus on executing more focused programs, some are also looking to other markets to diversify their marketing efforts. But most marketers don't hold much hope for expanding their presence in mass merchant stores, which tend to give automotive products short shrift. "We are looking to put our products into distribution channels such as home-improvement, marine and c-stores, so we can expand our presence," says Valvoline's Wipf.Kiosk-type displays are also becoming more prominent, says consultant Alexander, who has pioneered these efforts. "Parts look up is a major challenge, and I believe we'll see interactives growing rapidly," he says. They will be part of a larger trend that locates more materials at the centrally located service desk, which is staffed more extensively -- a trend that bucks those of most types of retail."Auto-parts stores have a culturally embedded process of shopping unlike most other types of stores," he continues. "There are a great many products that require confidence to purchase, and that often has to develop through conversation. You can't replace it in many cases by free-roaming the store." But it can be enhanced by kiosks supplemented by employee help at a visible, centrally located position.He also sees this approach expanding to include other types of visual selling aids. On the horizon are such options as holographic projections that allow a customer to apply an accessory option to a specific car model and rotate the image to view it from different sides, he says. "There will be great growth in show-and-tell approaches where visuals create a much sexier appearance. I expect a dramatically increasing trend to creating more of a theater approach to entertainment."

Automotive P-O-P Shifts Into High Gear

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