This has led to a decrease in the support of brand equity, which in turn has encouraged major retailers to provide more shelf space to their private labels and offer them at prices that are sometimes 50% less than the national brand. Thus, more promotion has led to an increase in commodity thinking by both the retailer and consumer
We are now all conditioned to wait for "inventory warehouse clearances," "Founder's Day Sales" and special promotions in general before buying anything-unless it is an emergency. We have in effect created our own Catch 22, whereby more promotions will lead eventually to less effective promotions-because the brands being discounted will have less perceived value.
Promotion is now virtually driving advertising, with local TV spots and newspaper ads backing up the general promotion. The normal and primary vehicle for establishing and reinforcing brand equity, i.e., national magazines, now fight for less than 15% of most advertisers' total marketing budget.
Ironically, these magazines are being squeezed for more added value-free merchandising and special price deals. Major marketers should instead start to utilize the magazine companies to build promotional programs tied to their databases. This will have particular value to those consumers who no longer shop in a store, but via catalog, home shopping networks and 800 numbers.
Relationship marketing budgets can be best spent with companies that truly have relationships with the recipient, i.e., magazine subscribers.
With the exception of Meredith, Hachette and The New York Times Magazine Group, most traditional publishing companies tie promotional programs to a requirement to buy ad pages. The people who buy promotional programs do not buy advertising. Thus, major publishers are not calling on the people who buy promotional programs to help them solve their marketing challenges.
Instead, they are putting virtually 100% of their sales efforts against 15% of the marketing budget and operating as if it were still 1980.
If promotions are to have value in the year 2000, the national brands must have value. Otherwise everyone will be offering commodity promotions, deals and fighting for shelf space. Likewise, if the traditional magazine companies do not start to unbundle their promotional assets-databases, custom publishing, editorial and production know-how, etc.-they will allow the same promotional programs to dominate: FSIs, price promotions, rebates, etc.
Magazine companies need to work with the client's promotion people to develop promotional programs that enhance and grow brand equity. They need to help clients develop redemption and retention premiums such as videos, books and guides that create added value for the brand.
Clients have promotional budgets that can pay for these programs. The magazine companies must be open to sell these programs, but not tied to pages. The advertising will eventually follow, but it cannot be a prerequisite.
Mr. Blacker is executive director-publishing and promotion at Frankfurt Balkind Partners, New York.