Retailers communicate to differentiate - discount retailers using advertising to differentiate themselves from the competition

Discount Store News, May 23, 1988

Retailers Communicate to Differentiate

The expected sluggishness in the retail atmosphere over the next six to 18 months will challenge discount store marketing executives to develop new and sophisticated ways of differentiating their stores from the competition.

The nation's smartest marketers are leaving no stone unturned as they use myriad forms of media to communicate more effectively with their customer.

Print advertising continues to be the preferred form of communication for most general merchandise retailers. While newspapers have faced problems of declining readership and the rising cost of newprint, most are making concerted efforts to be more responsive to their retail customers.

"The attitude of today's newspaper publishers is much more alert to advertisers' needs," said William Dean Singleton, president of Media News Group, publisher of several daily newspapers, to a gathering of discount store marketing executives at the International Mass Retail Association's Advertising Conference held earlier this year.

Cost Efficient Demographics

Citing the greater fragmentation of television viewership due to the proliferation of cable channels, Singleton claimed that in the 1990s, newspapers "will be the only medium that can offer a cost-efficient 60 percent of the marketplace, at the same time with better [more upscale] demographics."

Paul Hingham, vice president of advertising for Minneapolis-based Target Stores, refused to be drawn into a comparison between the effectiveness of newspaper and television advertising. "The biggest waste of time is to compare print to TV," said Hingham, who will serve as chairman of the IMRA Advertising Executives Council next year. "You can't measure them the same way. TV provides a unique sales proposition--movement, sound, color--while print is archival and appropriate for showing many items."

Hingham did note that the "level of receptiveness" of newspaper publishers to retailers' needs is "at an all-time high." Newspapers' decline in household penetration "has really bottomed out," said Hingham. "As baby boomers mature, they are picking up the habit of newspaper readership. Like it or not, newspapers are our best method of reaching our target customers."

Singleton of NewsMedia also noted that newspapers are stepping up efforts to convert retailers' inserts into run-of-press lineage. Promotional "blockbuster" programs which offer a large discount off the ROP rate for an eight-page or more ROP ad section are being developed by an increasing number of daily newspapers.

Circulars continue to offer retailers their best opportunity to showcase a wide range of products, but many discounters are reevaluating their use of circular programs.

K mart, for example, returned to a once-a-week circular program from a twice-a-week program, but dedicated itself to showing the best merchandise fully in stock throughout the entire seven-day life of the ad. While the frequency of the circulars has been cut in half, the size of the program in terms of pages of advertising will be about the same in 1988 compared to 1987. In addition, K mart is now breaking its ads on Sunday in metropolitan markets, while approximately 600 stores not serviced by a Sunday newspaper still break their ads at midweek.

"In the future, we are going to use more magazine advertising, more ROP advertising, more radio advertising, more outdoor advertising and especially, more television advertising," said chairman Joseph Antonini recently to a group of retail stock analysts.

As Hingham pointed out, television commercials provide retailers with a unique way of getting their message to their customers. Hills Department Stores, based in Canton, Mass., devotes 58 percent of its ad budget to broadcast media and close to 50 percent of ad expenditure to television, said Wes McDonough, vice president, advertising.

Hills' TV commercials tend to be institutional image spots--"sell-the-store type of advertising," said McDonough at the ad conference. Hills operates an in-house ad agency, called Compton Inc., to buy air time and produce its TV commercials. About 60 institutional and 100 vendor-paid spots are aired annually.

One way Hills breaks the commercial clutter is by utilizing its own employees as spokespeople in the commercials. Ray Brinkman, senior vp of operations, is "the single biggest star we created," said McDonough. Using inexperienced talent "adds to the credibility" of the spots.

Whether they use television, print, radio or billboard advertising, one problem all retailers face is understanding the characteristics and needs of their customers. Because of its size and spending power, the most intensely-courted and oft-analyzed customer group is the baby boomer generation.

According to "The Boomer Generation as Consumers, Implications for Marketing Strategy," a report conducted for People magazine, the boomer generation is not one gigantic, homogenous market. The study reveals three distinct segments driven by three different sets of needs. "Marketers who provide information--that all segments seem to want--and stress quality, status and price have the best chance of being successful," said Robert L. Cohen, vp for the Westport, Conn., consulting firm.