POINT OF PURCHASE;MARKETERS GETTING WITH THE PROGRAM;NOW 17 BILLION REASONS TO CRAFT THE CORRECT MESSAGE AND HIT THE CONSUMER AT RIGHT MOME

By Published on .

Point of purchase is at a turning point.

Once considered mostly icing on the cake of a "traditional" media plan, POP advertising is now a thriving $17 billion industry.

But as POP claims the title of a legitimate advertising medium, its practitioners are trying to become partners with clients, rather than simply suppliers.

Until recently a commodities-driven business where several suppliers bid for specific projects, POP is now more recognized as an integrated part of the marketing strategy. The result is that advertisers are looking to their suppliers to develop a long-term POP direction, forcing them to commit more resources and time to clients.

"There is a great deal of growth in the area where people are incorporating displays as part of their media mix," says Richard Blatt, president of the Point-of-Purchase Advertising Institute. "And that appears to be a trend that is not only growing, but will be with us for quite awhile."

A first step in becoming a partner, however, is in changing POP's low-price mentality.

Miller Brewing Co. at one point was using 30 to 40 different POP suppliers-choosing them on price-but three years ago the company narrowed the group to 10.

"It reduces the learning curve," says Ron Harrison, corporate purchasing manager, point of purchase at Miller, noting that he needs his suppliers to understand beer marketing.

"Our business is different and unique," says Mr. Harrison. "We can't be marketed like other beverages."

Such reductions are possible because today's suppliers are willing to commit more time and energy into developing relationships with marketers.

"The reason why a more structured type of relationship is important is because merchandising has finally become strategically important to our clients," says Richard Nathan, president of POP company RTC Industries. "Today retail is more make-or-break in many categories."

RTC woke up to this reality about three years ago. To forge a continuing relationship with its client Sega Corp., RTC restructured to form a dedicated Sega team.

Previously, when Sega dealt with RTC, it had a different company liasion each time. Now, to service Sega, RTC runs a 10-person team of designers, sales representatives and project managers strictly for Sega. These groups also coordinate with retailers, learning each one's per-ameters for in-store displays to move more quickly for the client.

As a result, Sega, which primarily sought out RTC only for projects, has made a long-term commitment to the POP provider.

Besides the growth of the POP industry (it's up 8.3% from $15.7 billion in 1993, according to Veronis, Suhler & Associates), there are two other main forces drawing suppliers and marketers closer together.

One is the downsizing that has occurred among marketers and the other is the increasing importance of retailers to the POP industry.

Brand marketers who rely on smaller staffs because of company downsizing are shifting more responsibility on POP suppliers, who are carrying out in-store marketing programs from start to finish rather than just creating displays.

Mr. Harrison says that a changing marketing environment also leads the brewer to rely more heavily on POP, and logistically, its suppliers. "Because of regionalization, customization and localization, we are putting out more event specific point-of-sale material," he says.

"We are doing more work for our clients today in the management of the program then we've ever done before-and it's striking," says Mr. Nathan.

"There are fewer staff members working on the client side and they have become more reliant on us," says Michael Lauber, president-CEO of Tusco Display.

The downside, however, is that small POP companies don't have the staff or the time to carry out full programs for clients. Therefore, most of the smaller suppliers still work on a project-to-project basis on a lowest-bid strategy and are unable to compete with the bigger companies who can supply client services such as long-range, five-year POP plans.

"Some suppliers don't have the resources [for planning]," says Mr. Nathan. "The industry is going to consolidate over the next few years toward a smaller number of companies that are more resource-driven and more asset-based so they can provide these wide range of services."

To survive, smart POP suppliers are also concentrating on developing not just relationships with clients but also with retailers, who are driving in-store displays.

`There is a bit of a shift where the retailer is calling all the shots," he says. "They are not being asked just to approve a program [by the advertiser], they are running the program."

"Partnering between brand marketers and retailers is becoming more common," says Mr. Lauber. "Therefore, brand marketers are seeking out suppliers who have an expertise with the retailer."

Most suppliers agree that relationships and loyalty between them and their clients will be the key to success in the future of POP.

And job-to-job suppliers will lose.

"It will be impossible to run a job-shop enterprise. Suppliers have to build business on long-term logic," says Mr. Nathan.

In this article:
Most Popular