P-O-P's Wave of the Future

Clients and P-O-P suppliers sometimes take the core vendor approach (See article, Page 18) one step further and create a true partnership, in which the P-O-P professional is involved with the total marketing program right alongside the customer's staff. That offers many advantages, both creatively and financially, say those involved in such arrangements. But others are hesitant about committing so many resources to one arrangement."There has been so much talk about partnering that it has almost become trite," says Mike Wahl, chairman of HMG Worldwide, New York, which has worked on a partnership basis with many clients. "But I think only a handful of today's manufacturers and P-O-P vendors are cultivating partnerships."Howard Topping, senior vice president at RTC Industries, agrees. "We're not fixated on the partnership approach, but it's beginning to eclipse the rest of our business. More clients are interested, because they see the advantages we can offer by being involved in the decision-making process from the very beginning."That happens because P-O-P programs are becoming a more critical component of the overall marketing plan, says Richard Nathan, RTC's chief executive officer. "With the complexity of the programs and the commitment they need from us in time and resources, we need to know they're committed to the program and to our participation."This becomes more important as companies hope to produce category-management programs or other long-term display efforts. "For us to do a good job, we need to have access to information early in the program," says Nathan. That's becoming easier, he notes. "Key retailers are beginning to take more control of their own aisles and defining what goes into them. That means manufacturers are learning the key ingredients earlier, and they are turning to P-O-P professionals for help in managing the category."That not only helps the client, but it poses barriers to possible competitors, notes HMC's Wahl. "When the P-O-P supplier can add value for the retailer at that level, it makes it difficult for a competitor to supplant him in the store. But to do it takes a major commitment on both sides. We're afraid to let pencil touch paper before we understand the client's objectives. That requires information about the entire program, not just the displays."Adds RTC's Topping, "Companies need to integrate merchandising, retailing, promotion and research to be effective today. That creates more synergy, but it takes time to reach that point."Foremost, partnerships require one element: Trust. "It is important to work with clients in an environment of mutual trust," says Wahl. "Many decisions require intimate understanding of the product and its competitive advantages -- and in some cases, its disadvantages. Sharing this information sometimes is uncomfortable. It's our role to ensure all pertinent information is uncovered, evaluated and addressed in the ultimate solution. That means we need facts."Two key arguments arise from marketers who resist committing all work to one company: the fear that creative will drop off and costs will rise. Some believe that once a vendor has a commitment, there may be a natural tendency to relax and not maintain a cutting-edge approach."We make competitiveness an issue upfront if the client doesn't," says RTC's Nathan. "If we're going to be in a relationship, there must be a lot of comfort, and that won't happen if the client is concerned about the effort being put out." He argues that a partner that knows the client's goals and objectives so intimately, as well as the budget parameters, can produce better creative targeting the key needs closer than any other vendor.Glenn Sessoms, vice president of retail marketing operations and sales at Federal Express, Memphis, Tenn., a partnered client to RTC, agrees. "We don't want to think we have all the marketing expertise on staff," he says. "We feel comfortable explaining our vision of a project and letting RTC bring it to life, because we've worked with them so closely. They come back to us with refreshing, multiple ideas that we can collectively examine to determine which best fits the marketplace." Adds Marc Tate, FedEx's manager of retail product design, "RTC operates as virtual staff members for us."Others, however, feel as one packaged-goods marketer does when he says, "It's hard for one company to come up with the greatest creative idea each time out. Competition keeps vendors on their toes and always searching for new ideas." Even so, many admit, while it's always possible to solicit one more creative idea, there's no way to know which will work best until it's executed in the store.Pricing, on the other hand, is something that can be quantified, although it's difficult to compare prices with other companies once a client has entered a partnership. But in truth, says Nathan, partners receive a better deal overall. "We have a lower level of margin expectations in a partnership because we don't have the overhead required for speculative approaches and wasted effort. But to retain that lower margin, we need a longer commitment." That commitment also allows the company to devote more personnel and other resources to the account long-term, because it can depend on that business being there.Some vendors in partnerships offer open-book policies, allowing the clients to see what mark-up is achieved, notes Wahl. "We also let our clients bid out work they've given us, because we consider ourselves a low-cost provider," he says. "Since we have commitments for the long term, we can agree upfront what the margin will be and stick to that, and we can let our partners see we're maintaining that."That is the approach FedEx uses with RTC, Fed Ex's Sessoms notes. "RTC's policy allows us to review their books to see what costs they're incurring and what their profit margins are. That satisfies us that they are making some money while assuring us that we're getting the best price in the market."Not all partnerships are one-on-one situations, notes Pat McNabb, manager of Michelin brand retail materials at the tire manufacturer, Greenville, S.C. His company has worked in a partnership arrangement with RTC on four separate projects, but that relationship has included the company's ad agency as well. "It's not as tight as if it were only the two of us," he explains. "But RTC has made a number of beneficial modifications to our programs by being involved from the beginning. We're pretty tight with them, but it's done on a project basis, and it's more of a triangle than a linear approach of us going directly to them."Regardless of the final permutation, market forces are leading more marketers to consider some form of partnership approach, notes HMG's Wahl. "The downsizing of companies and outsourcing of programs requires marketers to develop long-term strategic partners who can pick up the slack," he says. "That makes us more accountable, but it also ensures we can do the best job for the client."It also ensures both client and supplier are focused on the true goals: Market success and growth. "In a partnership, both companies grow together and aid each other's success," notes RTC's Nathan. "As we help them meet their goals, they help us meet ours. It's a straightforward, non-emotional way to be fair, in which nothing is being hidden."

P-O-P's Wave of the Future

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