Where's here? What now? - Marketing & Advertising

DSN Retailing Today, March 8, 2004 by Laura Heller

"Right Here. Right Now."--that's the banner under which Kmart has positioned itself as it tries to win back consumers and position itself as a destination for national and proprietary brands as well as a leader in the Hispanic and urban markets.

It's a tall order for the retailer as it slugs its way toward profitability. Since filing for Chapter 11 Bankruptcy protection, Kmart has dramatically reduced its operational costs, and advertising and marketing programs along with them. The retailer launched its current advertising slogan and campaign in October 2003, ran a series of national ads during the 2003 holiday season and has been relatively quiet ever since.

"We are continuing to use the elements of the campaign first launched, while building on it," said Michele Jasukaitis, a Kmart spokeswoman. "It's an image-building campaign that is segueing into being more about the products."

But just what image is Kmart trying to project?

"'Kmart. Right Here. Right Now.' is our message, representing our strong presence in the community with great brands at a compelling price," said Kmart president and ceo, Julian Day. "Kmart's exclusive brands are a very powerful reason for customers to visit our store, which will be highlighted in our new campaign, but we will always emphasize that Kmart is the only place to buy them."

But response to the program has been muted. "My gut reaction is that it's well produced eye wash," said Ellis Verdi, president of DeVito/Verdi Advertising. "It doesn't land in any positioning area. Although the music is upbeat and it gives me a good feeling, I'm missing a strategy."

Kmart has clearly stated it intends to target ethnic markets, primarily Hispanic and urban consumers. The introduction of the Thalia brand gives the company a better draw for the Hispanic market and the chain's stores are better positioned in inner cities and urban centers than any other mass retailer. All this allows Kmart to occupy a unique niche apart from its competitors, neither of which have the right store locations or interest in pursuing these demographics. Kmart is trying to convey this message with its current ad campaign, but according to Verdi, that message isn't as powerful or as far-reaching as it should be.

"They use all the cliched urban picture material," he said, calling the effort bland. Nor is the company outreach hitting directly to the ethnic consumers it wants to target. Kmart discontinued its ethnic-targeted publications La Vida, Urban Direct and Tea Leaf, and although Thalia Sodi produced a Spanish-language version of her Kmart commercial for targeted markets with a heavy Latino population, the program has not run past the initial launch of the Thalia brand, said Jasukaitis.

Currently, Kmart is largely relying on its weekly circular to reach its customers. "The preprint is the most efficient method for sales, cheaper than direct mail or any other medium," said Tom Holliday, president of the Retail Advertising and Marketing Association (RAMA). "There's thousands of people whose lives are devoted to making preprints." Sears, for example uses 20 printing plants to put out 56 million impressions each week, but Holliday estimates that Kmart's preprint operation generates less than half that. And although the retailer does produce a circular in Spanish, preprint circulation is facing reductions to further trim costs.

Achieving stronger financial footing will help free up funds to put toward marketing, but can the company regain consumer awareness without a stronger marketing program? It's a chicken-and-egg question, to be sure.

How important is it that Kmart increase its communication with the consumer?

"There are lot of retailers out there that don't even have the top of mind position, either positive or negative, that Kmart has," said Verdi. "There's just a little bit of light at the end of the tunnel because they are regrouping on the profitability front, and that might give them the strength to move on. I just don't know how long people will wait or how much of a chance they'll have."