Creating a retail chain by spreading the word

Home Channel News, Feb 21, 2000

$30 million image campaign to be launched nationally, but will eventually shift to local promotions

The cornerstone of TruServ's efforts to create a recognized chain of retail outlets will be put in place next month, when the company begins airing national television advertisements designed to impress upon consumers that the True Value brands stand for convenience and service.

The first ad -- which was produced Jan. 31 and used Woodland True Value Home Center in the Bay Area city of Woodland, Calif., as its backdrop -- will be the initial salvo in a $30 million brand-building campaign that TruServ is launching this year to present its network of stores as venues for people who want to spend less time on home repairs and more time enjoying life. The goal of the campaign is to greatly increase the number of consumers who are aware of the True Value brand. The first commercial begins airing nationally in early March, for 14 weeks.

"The commercial's focus on convenience really captures one of the many advantages for customers who choose their local hardware stores over Home Depot or Lowe's," said Joe Moya, manager of Woodland True Value, whose market includes 25 Home Depots.

Since the company's merger and consolidation efforts began in spring 1998, TruServ "has been very quiet about advertising. In 2000, we're not going to be silent anymore," said Tom Filipski, the co-op's senior vp-marketing and sales.

The marketing of the True Value brand corresponds with the conversion of around 2,000 ServiStar and Coast to Coast stores to that brand. In mid-January, many dealers were still waiting for their signage to arrive, but co-op officials expect the conversions to be completed by March.

TruServ offered co-op funds of up to 0.3 percent of each member's 1999 warehouse purchases to cover their costs for running a full-page newspaper ad touting their conversion to True Value. (On Feb. 20, ServiStar's and Coast's ad-circular campaigns were discontinued.) The co-op has also simplified its ad charges to all members to a minimum of either 0.9 percent of purchases or $600 per year, and a maximum of $8,500 per year. Until now, rates for ServiStar and Coast members have differed from those for True Value members.

Filipski claimed that no other company in the industry has ever converted so many dealers to one brand at once, and emphasized that the move was essential in order for the TV ads to have the national impact the co-op intends for them to have.

SHOPPERS WANT CONVENIENCE

The concept behind the upcoming TV spots is the result of extensive consumer research conducted for TruServ, which found that shoppers go to independent hardware stores looking for customer service and the ease of being able to get in and out quickly. "It's that person [who] doesn't want to spend half the day shopping at Home Depot," said Frank Rothing, TruServ's vp-advertising.

The co-op's national brand campaign cedes some ground to the big boxes to make its case, acknowledging that the independent hardware store won't fulfill all needs. As Rothing put it: "Selection can be a negative. If you're building a room, Depot is a nice place to go. If it's a home maintenance project, you don't need to go to a place the size of a football field."

Last November, MARC USA, a Pittsburgh-based advertising agency, took over the $50 million TruServ account, which it had held jointly for years with Leo Burnett. Beyond the upcoming television ads, the agency is handling promotions for TruServ's specialty operations, such as Home & Garden Showplace and Taylor Rental/Grand Rental Station, along with its support of IROC and motor-sports programs. (The co-op recently farmed out its $10 million Yellow Pages account for all its various banners recently to TMP Worldwide.)

The co-op's motorsports support will be extensive this year: four IROC races, which TruServ will back with selected vendor partners; and 50 "True Value Night at the Races" during NASCAR events.

The co-op also plans to step up its support of the National Basketball Assocation, Major League Baseball and Division-1A college events.

While this year's marketing efforts will largely be devoted to promoting the True Value brand to a national consumer audience, a significant portion of its total $12 million ad budget for the year will be devoted to regional advertising, according to Filipski. Over the next two years, the co-op will shift more of its time and capital to regional efforts. Underlying those efforts are 60 regional groups of TruServ members that advertise together. The national ad campaign is a foundation to establish the True Value image, said Filipski. But, he added, "in the long run, the regional programs will be more important."

Indeed, he noted that dealers in some markets would be able to make a "price statement," whereas others will be in market situations where service is much more important.

Filipski added that the co-op's circular program and direct-mail pieces would become more useful as promotions for in-store "events" that are aimed at drawing more customer traffic. For example, Gulf Coast True Value in Englewood, Fla., conducted four major events around its community-awareness programs, as well as in-store demonstrations for barbecue grills and paint. "These give our customers reasons for being in the store other than just picking up some products," said Gulf Coast's owner, Mitch West.