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Grainger seeks local ad impact

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W.W. Grainger, the nation’s largest distributor of supplies for maintenance, repair and operations, is rolling back its national marketing and launching more local advertising to promote its expansion into new markets.

Lake Forest, Ill.-based Grainger’s largest national marketing effort has been its sponsorship of Nascar race car driver Greg Biffle since 1998. This year, Grainger is dropping its Nascar sponsorship and redirecting marketing dollars to local radio advertising, billboards, events and print.

"Local advertising is much more impactful than national advertising," said Jim Ryan, group president of Grainger’s U.S. businesses. "Our customers think of us as a local company, and we get much more of a lift from that kind of advertising than national."

Along with the change in marketing strategy, Grainger has introduced an updated logo incorporating its new tagline: "For the ones who get it done." The logo and tagline were unveiled at Grainger's annual shareholders meeting last week.

Gary Stein, advertising analyst at Jupiter Research, agreed with Ryan’s assessment that local advertising can have more impact than national advertising for companies that rely on local partners. He likened Grainger’s strategy to that of automobile dealers or consumer package-goods companies that promote local deals and prices.

"Especially for large companies, their local partners—whether industrial distributors or franchise owners—understand the local customer and the local press," Stein said.

However, he said, there are some challenges for national companies doing local advertising. "If you are recreating the same ad in local newspapers 400 times, there is the potential for more things to go wrong, such as the wrong phone number and information about promotions and pricing," Stein said.

Three new markets

Grainger will roll out local advertising in the three new markets it announced last week it plans to enter: Houston, St. Louis and Tampa, Fla. In addition, it will continue to advertise in trade publications, including Purchasing, Industrial Maintenance and Plant Operation, and Electrical Construction and Maintenance Magazine.

Last October, Grainger announced an aggressive market expansion plan, under which it would boost its operations, inventory, sales and service in the top 25 metropolitan markets in the U.S. The three new markets bring to 10 the total number of markets into which Grainger has expanded since October. The others include Denver, Seattle, Atlanta and San Diego.

"Grainger is aggressively going after growth and we’re beginning to see the results," Richard Keyser, chairman-CEO of Grainger, said at the shareholders meeting.

For the first quarter, Grainger reported net earnings of $62.6 million, up 19% from the year-earlier period. Sales for the first quarter were $1.2 billion, up 8% from a year earlier.

Jeffrey Germanotta, an analyst at William Blair & Co., said the first-quarter results point to the success of Grainger’s market expansion strategy so far.

"Based on early test data, they are seeing better results in terms of increasing numbers of accounts, increased sales penetration, increased orders in branches and a rising revenue growth rate," he said.

Germanotta also said the move from a national marketing strategy to a local one is smart. "To a large degree, the largest number of customers are local and regional, so it makes good sense to me," he said.

Grainger’s three-to-five-year expansion plan is aimed at growing its U.S. sales by an average of 7% to 10% a year. "We’re on target to achieve 5% to 10% growth this year," Ryan said.

Grainger plans to expand its sales force this year by more than 20% nationwide. It will also do more events, including open houses in the new facilities, and increase its direct marketing to promote its expansion.

Under a corporate reorganization announced earlier last month, Ryan is now in charge of all operations for Grainger’s U.S. businesses, including 400 branches and nine distribution centers.

In addition to its branch offices, Grainger sells through catalogs, call centers, a direct sales force and its Web site.

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