New Millennium: New Spalding

Spalding Sports Worldwide is getting into the in-store merchandising game. P-O-P has never been more important to the Chicopee, Mass.-based company. In fact, consumer packaged goods specialists have recently been recruited to revamp the company's P-O-P efforts. A New York-based investment firm, Kohlberg Kravis Roberts & Co., got the ball rolling when it purchased the sporting goods manufacturer and inaugurated a new era of marketing and merchandising in 1996. Today, the balls are not just rolling, they're bouncing off the ceiling.As part of its plan to rebuild the company's sales and brand appeal, the new ownership first persuaded Jim Craigie to leave his position as president of Kraft's beverage and desserts division to head up a revitalized Spalding in 1998. Later that same year, Ed Artzt, former ceo of Procter & Gamble, was appointed chairman of Spalding's board of directors.Craigie quickly tapped Kraft associate Ed Several to serve as vice president of marketing services. Eddie Binder, from Dunkin Donuts, was hired as executive vice president of marketing. And another Kraft marketer, Dan Bracken, signed on in July 1999 as director of consumer promotions and merchandising."This is the first time Spalding has had a marketing services group whose specialty is promotions and display," says Bracken. Prior to the reorganization, each brand director had to do everything, from setting the sales direction and strategies, to developing and executing promotional plans. Wearing so many hats made it very difficult for them, says Bracken. "Now rely on us to handle merchandising and promotion so that they can concentrate on growing the brand," he says.In 1871, Albert Goodwill Spalding, a future Hall of Fame pitcher for the Boston Red Stockings and the Chicago White Stockings, entered the world of sporting goods when he developed his own baseball. The company he formed with his brother in 1876, after his retirement from pitching, continued to manufacture official Major League baseballs for the next 100 years.In 1884, Spalding became the first U.S. manufacturer of golf clubs and the following year of golf balls. Golf remains an important part of the business, accounting for approximately 70% of company sales. Supplementing its Topflite and Strata brands, Spalding acquired Etonic golf shoes in 1996 and equipment maker Ben Hogan Co. in 1997.Basketball is the company's second leading product category today. Albert Spalding is credited with inventing the now familiar orange leather basketball, replacing the soccer ball originally used by players when the sport was first conceived in the 1890s. As befits the day when its name was written into the rules of the game, Spalding still remains the official basketball of the National Basketball Association.Not all categories have seen continued growth, however. The company abandoned its tennis business, an important product line in the 1970s and 1980s, in December 1999.Understanding ConsumersMarketing equipment for various sports is as different and specialized as the sports themselves. Each requires a keen understanding of the consumers who purchase these products and what they're looking for in stores. "Sporting goods and golf are completely separate categories with two totally different audiences," says Bracken. "They cross over in retail channels, but we have a direct salesforce on the golf side and manufacturers reps for sporting goods."To help reach the diverse audience of sporting goods, the company looks to an outside services company to help generate effective merchandising solutions. The company's 20-year-old in-house creative services department was recently closed and replaced with Colangelo Synergy Marketing, Darien, Conn.At the same time, the company has more than doubled the number of employees company-wide and cut the number of SKUs across all categories in half. The company has also taken a new consumer-oriented approach to merchandising its brands.Several says the first step in revitalizing the brand is to "make sure that our P-O-P is more fully integrated into the overall marketing program." The second step, he notes, requires listening to the retail customer and understanding the P-O-P process as it affects the store, from arrival to reorder."P-O-P is no longer something to fill the last page of the catalog," says Bracken. "Brand managers are very much behind point-of-purchase. I've seen them cut advertising before they'd cut P-O-P spending."Bracken says that Spalding's earlier approach to P-O-P was more literal, simple racks to house the company's products. Now, the new marketing team regards each display "as a marketing vehicle, not as a piece of wood with metal rails and a header," says Bracken. "[We ask ourselves] 'How do we create the best marketing program at the point-of-purchase?' A lot more structure, more thought, more detail and more strategy go into what we do now."Prior to the restructuring and lacking a dedicated department staffed with experienced professionals, the Spalding brand was becoming lost at retail and was in danger of being viewed by consumers as a store brand. The new direction aims to reenergize the brand by emphasizing the history, tradition and quality of the company's products.P-O-P and promotional budgets have been expanded to support products at retail. Estimated 2000 marketing budgets include $17 million for Strata, $16 million for Topflite XL2000 and approximately $5 million for the company's other sporting goods. Etonic's 1999 advertising and promotional budget of $2.5 million was increased to $9 million for 2000, about 15% of which will go toward P-O-P, estimates Category Director Ted Almy.Whether for golf or sporting goods, P-O-P materials produced at Spalding include category management tools like shelf strips, benefit guides and signage, temporary corrugated displays and semipermanent fixturing. "We do more temporary, but we still spend more on permanent displays," says Bracken. "Category management is more concentrated on the sporting goods side," he says. "Smaller sporting goods locations are tight on space, and they need us to offer them merchandising solutions."Using a model he first developed at Kraft, Several leads the marketing team in evaluating P-O-P as a financial investment. The key difference today, he says, is that displays are regarded as revenue producers rather than expenses."The brand groups come up with the volumes, explain what their goals are and give us ideas for advertising," says Bracken. "We develop promotions and displays around those promotions."We meet with marketing at the beginning of the year and, based on volume for each brand, we establish what consumer promotions we can do to help the salesforce sell that volume to our customers and hopefully create consumer pull-through. We're always trying to increase the turns of the product when it's in the marketplace," he says.Several says his people spend a great deal of time attempting to better understand the retail environment. "We want to make it as easy as possible for retailers to merchandise our products and as simple as possible to put displays together," he says. Retailers are commonly asked how they receive P-O-P, who physically sets it up, how long P-O-P generally stays up, and questions regarding store restrictions. "We want to better understand what their needs are so that at the end of the day, we're having a much better dialogue with our retail constituents," he explains."We try to incorporate P-O-P into everything that we do from a marketing standpoint. Too often P-O-P gets managed as a purchasing element," Several says.Still, the company doesn't produce a display simply to hold product. Instead, P-O-P is woven into the overall marketing plan. "When you approach merchandising and display as a critical element of the marketing plan, you elevate it from a cost item to a revenue item. If put together properly, you can really frame it as something that will grow your business," says Several."We want to build a display that is easy to shop, best delivers the equity of the brand and makes the retailer happy," says Several. "We want a more consumer-focused approach to everything we do. P-O-P is absolutely critical to that. We're trying to design programs that educate consumers at the point-of-purchase and also provide an opportunity to get them excited."If the first two rungs of the new marketing strategy at Spalding concern consumers and retailers, the third involves vendors. "We're trying to develop a more forward-looking approach, involving our vendor community from the beginning in a partnership that allows us to get better quality and more timely delivery, and more importantly, better ideas," says Several. In the past year, vendors have been encouraged to work on multiple Spalding brands. Previously, a vendor was strictly limited to designing and producing P-O-P for a single product line. "We have a lot of good vendors, but because they were all being approached separately, there wasn't the integration that we desired," he says.Bracken oversees individual vendor relationships, seeking bids from three suppliers for each project. Keeping the field open ensures that the company gets the most innovative design work at the best price. "I rely very heavily on design work from my suppliers, especially with golf where you're speaking to a higher income clientele in an upscale environment -- we want to have an especially nice design element to the displays," he says.Primary suppliers include Henschel-Steinau Inc., Englewood, N.J.; Rand Whitney, Worcester, Mass.; and Smurfit Stone Display Group, Sandston, Va., for temporary P-O-P projects. For semipermanent displays, the company often consults AG Industries, Cleveland; Flair Display Inc., Bronx, N.Y.; Henschel-Steinau Inc.; and New Dimensions Research Corp. Melville, N.Y.Finlay Printing, Bloomfield, Conn., serves as a single source for all sales communication. "We hotkey linked our two Web sites," says Bracken, allowing salespeople to order sell-sheets and signage directly from the printer.Furthermore, Bracken had Adobe Acrobat software installed on all of the marketing services department's PCs so that brand directors could easily share files and communicate quickly and directly with suppliers.More changes are on the way. For example, while the company presently relies on retailers to set displays up in stores, Bracken says he hopes to develop other ways to execute and place P-O-P in the future.

New Millennium: New Spalding

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