Power Up: Consumer Electronics P-O-P Report

Nothing moves quite as fast these days as technological advancements, and that includes the merchandising for the products that feature those high-tech improvements. Rates of maturity are condensing rapidly in these categories, which include cellular phones, computer peripherals, hardware and software, electronic organizers and office equipment. That makes it a wide-open frontier in which retailers and suppliers have to entice both the expert and novice electronic customers."There's a mixed bag of merchandising being done," says Fraser Smillie, manager of merchandising in the Channels Group at Xerox Corp., Webster, N.Y. "There's everything from soup to nuts out there."A good example of the rapid change taking place can be seen in the merchandising being done for Palm Computing Inc., makers of electronic organizers. Several years ago, no one had heard of their product. But they have now, thanks in part to P-O-P. Palm Computing introduced two products to its line this spring, bringing the total to four. Electronic organizers were a brand new, complex, high-margin category and many retailers didn't have anywhere to put them in their stores, explains Caitlin Spaan, channel marketing manager for the Santa Clara, Calif.-based company. "A lot depends on the channel and the specific account, because some have customers further along the education curve than others," Spaan continues. "We've been successful with our retail approaches because we get in front of the buying, merchandising and store-planning teams in the planning stage of our materials, to be sure their needs are recognized and to learn their plans for the category. They're interested in talking about display concepts, but many are also interested in hearing ideas on how they can reset the store to create an area for this new category. It's quickly become a category that is worth their while."That has led the company to work chain by chain to learn their needs. "We're having to design displays both to fit their existing space as well as working with them to expand it," Spaan says. "We're trying to react as their needs change, and some of them are also transitioning between formats. For instance, in some older stores, our products are under glass, but as new stores open, they're featured in other formats."The move to displays hit cellular phones several years ago, says Monica Jacoby, director of global merchandising and packaging for these products at Motorola Inc., Libertyville, Ill. "Five years ago, merchandising wasn't a key to selling," she says. "The products were too expensive and too rare. But as the technology has become more pervasive, it's become more commoditized and retailed more like other retail products."Motorola, like Palm Computing, is working to establish the critical mass that produces a separate department for the products. It structures its line as a "personal communication" category to include phones, pagers and two-way radios. "This format presents all the options and gives us a better way to explain to the consumer all the benefits and applications to their everyday life," Jacoby explains.But there still isn't the level of sophistication in merchandising and retailing in this category as there is in other more mature areas like cosmetics, apparel or jewelry, Jacoby notes. "We just don't see it happening yet. But we are seeing that successful retailers are the ones who have opened their minds to the idea that merchandising can help convert a consumer from exploring the products to being ready to make a purchase."Even computer software companies are seeing this shift occur, says Gail Blumenfeld, group manager of channel promotion at Havas Interactive, Torrance, Calif., which produces both educational and entertainment-oriented products. "We're selling much more into mass merchants, which is changing the industry," she says. "We're getting our message out to more non-traditional computer shoppers, and that requires a different approach to the message and displays."Even highly technical computer components manufacturers are experiencing this, but none more so than Intel Corp., the microprocessor manufacturer whose product has gained high visibility with consumers who don't really know what it does. "We have to deal with a wide range of customers in different channels, everyone from first-time buyers to those on their fifth computer," says Shannon Smith, worldwide merchandising manager for the Santa Clara, Calif.-based company. "We try to tailor our communications to the lowest common denominator but keep them exciting enough for the more experienced buyers. We also have to understand the different needs of the office superstores, the computer superstores and the consumer electronics stores."The challenge for marketers is two-pronged. They have to attract the consumer's attention in a department that might not have existed a year ago and also quickly explain and differentiate key features for consumers who are unfamiliar with the products. "There are more products out there, and we're not getting much more shelf space," notes Rebecca Stoolfire, merchandising manager for printers and scanners at Hewlett-Packard, Vancouver, Wash. "A few years ago, consumers had only four or five products to choose from and could compare choices more easily. Now, there's an entire aisle, so it's more difficult just to attract them to our products. They're also more savvy about how printers work and what their own needs are." That led H-P to create a new branding initiative, focusing on key signature colors and packaging designs to help consumers quickly identify and differentiate the products.Education in these categories is critical because of the rapidly expanding lines and the confusion that can cause. Cell phones in particular need this, Motorola's Jacoby stresses, because many customers confuse a phone's features with the services provided by their phone service. AT&T Wireless Services, Chicago, has addressed this by producing a floorstand with five brochure pockets, allowing retailers to stock information on the company's personal network, rate plans, coverage-area maps and other options."We're trying to be more retail-friendly than the cellular business has tended to be in the past," says Jim Matthews, director of indirect distribution for the Chicago/St. Louis region of AT&T. "We want to do what traditional retail suppliers have done and expand their merchandising options however they want and with whatever works."AT&T's display features a two-sided back panel for graphics and four attached phones. The graphics can be changed quickly, offering the ability to update to new promotions or services, as well as a capability for customizing. "We want to provide interchangeability from the same basic display and make it multi-functional," Matthews explains. The display works as a floorstand, countertop unit or wall display. "We sat with our P-O-P vendor and took all the variables into consideration of all the various channels we deal with, from the mom & pop stores to the big boxes, to find a piece to fit them all."Intel, too, has shifted toward replacing graphics or educational tear-pads on semipermanent units, Smith says. "We've realized that retailers for our categories are moving away from 'the cardboard jungle,' because those displays don't hold up and they get moved around too much," she says. "Semipermanent displays provide more perceived value and are more likely to stick around. The cost upfront is higher, but they last longer, so it pays off in the long run."Consumer interaction also plays a key role in selling these products, showing the customer how easy they are to operate or how light they are to hold. But retailers are wary of pilferage. That has led companies such as Palm Computing and AT&T to create displays with tethered products. But that can become expensive, Palm Computing's Spaan notes: "Customers really need to see the product live to understand how small and powerful it is. But there's a large cost involved with doing that. We're trying to determine the learning curve in different channels to see how long that's necessary." One option they've adopted is to provide dummy units that are weighted correctly and have demonstration samples on them but aren't full-featured products.Security concerns aren't limited to product samples, adds Pam Richards, a channel marketing specialist for Palm Computing. "In this industry, most endcaps tend to feature empty boxes. We've tried to move past that by using the endcap as a display space to show posters explaining the products. That turns the space into a kiosk-like format and avoids stacks of empty boxes."Packaging, full or empty, plays a key role in merchandising strategies for these products, stresses Kerry McGowne, marketing manager for Microsoft's Hardware Group in Redmond, Wash. "We've learned that display materials have to be basic -- 1-2-3, A-B-C -- information," he says. "Our goal is to drive the customer to pick up the package, which has to do the hard work of explaining the technological advantages and benefits and explain how we compare to competitors. We've made the mistake in the past of putting too much stuff on the display graphics, and we're putting a lot of time into planning our packaging to make it work on-shelf."Hewlett-Packard is also evaluating its merchandising messages as consumer expertise with printers changes. "Merchandising is critical for getting the customer's attention, but customers' needs have changed," Stoolfire explains. "They want us to provide features and benefits in fewer words and to the point. And they want those to be comparable not only across our line but with other brands, too."Because of the complexity and lack of space for explaining details, some companies are extending their merchandising aids to include sales help for store personnel. AT&T Wireless is currently developing a calculator-size case that will help clerks lead a customer through the selection process. The outside cover features a questionnaire to help determine usage, breaking down a month's phone minutes by number and length of calls. Inside, a matrix for determining the best rate plan and different options is provided, with the back featuring explanations of different options, such as voicemail, caller ID and text messaging. "It helps us be a team member with the retailer's personnel," Matthews says.Intel has also found value in going beyond on-shelf aids, says Smith. "We're spending more time training salespeople in how to use our P-O-P materials," which include take-one pads and in-computer demonstrations. These are installed by the company's 45 channel reps, with permission of the computer vendor. The company has also begun an initiative to create joint demos with computer manufacturers. "We hope to be able to work more closely with them to create joint merchandising pieces."At Microsoft, that in-store help focuses on the basics. "We're changing our focus in the stores to emphasize detailing our displays rather than concentrating only on what they look like," McGowne says. "We've found that we need to actually send someone into the store monthly or quarterly to ensure the displays are located where they should be, that they have fresh graphics, and that everything is working the way the store manager wants it to. We haven't spent much time or money on that in the past, and it's where we're going to be putting more of our resources in the coming year."That in-store help is critical, notes Xerox's Smillie. Price club stores will let the company do almost anything, leading to some creative approaches, he says. But in most venues, Xerox is limited to small table tent-type pieces on top of its copiers. As a result, the company has focused on presenting a clean, long-lasting format using no-wear stickers in signature colors. "There's so much product that merchandising has to be restrained. And it has to have a good look, or the store manager will rip it down even if it was approved," says Smillie. "There's no magic to what's happening out there -- the key is to keep it appealing and keep it refreshed."A number of companies are meeting these needs by offering a range of merchandising pieces from which each retailer can select what best suits his needs. Although no one retailer is expected to be able to use all the offered pieces, each will be used by enough to justify its presence in the menu options, marketers explain. The move toward replaceable poster-type graphics also allows companies to customize pieces for retailers with logos or special requirements. "Everybody wants something different from what their competitors have," says H-P's Stoolfire.The need to remain fresh is leading companies into new materials, emphasizing durability and crisp, colorful printing. In many electronics fields, it is also shifting them toward more natural textures and materials. "Hi-tech products often scare mainstream consumers," explains Palm Computing's Spaan. "We're trying to create more of a comfort level by designing displays in cherry and blonde-finished woods. That gives customers more comfort and adds warmth, rather than the metallic-and-glass image that has a coolness factor but might scare away some customers."Motorola's Jacoby agrees: "We're seeing a move away from chrome and toward more approachable materials that are engaging and colorful." She is also finding more uses for injection- and roto-molded pieces. "These are more forgiving in a busy retail environment and require less attention than metal and glass," she says. "Advances in material technology are giving us new options."Needless to say, these categories will continue to evolve as more products are introduced and their penetration increases. "Retailers and suppliers both are beginning to understand that merchandising is an area that needs to be dealt with every day," says Jacoby. "It needs to be kept fresh and give consumers the feeling that something new is happening." A key focus for Motorola will be addressing window displays, which draw in customers. "We don't see as much attention being given to those as we'd like or think they deserve."The expansions will also present the need to work closely with those with expertise in the field, notes Spaan. "As our product line expands, we're looking to take a more integrated approach to our merchandising. To do that, we have to rely on our P-O-P producers. They've been educating us as we go along and helping us address new areas. That partnership is as important as the one we have with our retailers."

Power Up: Consumer Electronics P-O-P Report

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