Buy Programs, Not Products

by Jack Evans

"How can we compete against the chains?"

This question is asked in almost all of my seminars by independent home healthcare providers and pharmacists. I listen to complaint after complaint about how the lower volume pricing gives chains and marts an unfair competitive advantage. Yes, their pricing might be lower, but there is another issue here concerning advertising and promotion that needs to be addressed.

Every national chain and mart includes promotional monies in the wholesale pricing that they negotiate. These retailers are not simply buying products but rather buying or funding promotional programs that will sell-through these products. This distinction is crucial for retailers in achieving higher turns and return-on-investment.

Buy a Package

Here is a "power" list for retailers:

• Retail packaging
• POP displays
• Shelf talkers
• Floor samples
• Consumer literature
• Coupons and rebates
• Product training
• Co-op advertising

What's the difference between two similar products, one that comes alone in a brown box and the other that includes the above list? Profitability: the difference between dead inventory and monthly turns!

Are these value-added benefits included in the prices you pay for products? If not, then start shopping around until you find suppliers that do include these selling tools at no additional costs to you. Each of the following should be part of your ongoing marketing and advertising programs if you want your retail sales to profit from double-digit percentage growth annually.

Let Packaging Sell for You

Retail packaging helps sell product by attracting people to striking visual graphics and national brand recognition. Merchandising research studies have documented that people like to look at people. Packaging that utilizes lifestyle photographs, showing people using the respective product, are proven to outsell regular packaging four-to-one. Packaging that highlights strong user benefits helps motivate the customer to buy.

POP Displays Attract Customers

Point-of-purchase displays are used to attract attention, educate customers, generate sales and identify with a corporate image or national advertising campaign. According to marketing studies, they facilitate the purchasing process by moving product off of the shelves and into customer's hands. Remember that when a consumer touches or holds a product, they are two-thirds of the way to making a purchasing decision.

Signs Point & Sell

Why do chain drug stores have signs everywhere? Because in-store signage has proven to increase sales by at least ten percent. The goal of retailers is to facilitate the buying experience and make shopping a pleasurable experience for their customers. Consumer's value the ease of finding products in any given store. Both category and shelf signage are as important to customers as road signs are to drivers. When buying any product, look for collateral window, category and shelf signage to help increase sales for you.

Educated Consumers Stay & Buy

Why place a Starbucks in every Barnes & Noble Bookstore? Yes, being trendy is part of the reason. But the bottom line is that consumer studies have shown how every incremental minute that a customer spends in a retail store dramatically increases the amount of their purchases. Utilizing consumer literature is another way of both educating the consumer (thereby enabling them to make and educated buying decision) and keeping them in the store longer. Brochures, fliers, product selection guides and catalogs are all valuable tools to use on the shelf.

Dangle the Coupon Incentive

Do you find yourself reading shelf coupons even if you don't need the product? That is why two out of three retail purchasing decisions today are made in the store: people respond to promotions! Coupons and rebate offers help close sales by stimulating customers to buy. Statistically, they will double or triple sales of a particular product as well as increase sales per customer. Coupons satisfy the customer in two ways: first on an intellectual level by validating their choice of product for quality and/or price; and secondly on an emotional level by either rewarding loyal customers for their continued patronage, or rewarding cost-conscious buyers for their diligence. Even private label "Compare & Save" signs increase both sales of those respective products and retailer profit margins.

Train to Sell

Product knowledge is essential for employees to provide high levels of customer service. However, knowledgeable and caring employees are not necessary good salespeople. Ensure that your professional staff has retail sales training and understands customer service. Teach them how to find out your customer's needs in order to demonstrate how your products and services will improve the quality of their daily lives.

Co-op & Save

Retailers view co-op advertising programs from manufacturers and distributors as another available discount. Their goal is to buy the highest quality products with the best available discounts. Co-op advertising programs work to lower customer retail pricing by providing rebates or discounts on promoted products. Every program is different and has specific requirements, so be sure to read the contract. But the benefits for the retailer are worthwhile: 50% paid on any ad, 5% off invoice, 90+ days dating, consigned floor samples, ready-made print ads or audio/video spots and set promotional funds per campaign.

Co-op funds are also invaluable because they increase your frequency and continuity in advertising. The basis of any successful advertising campaign is to sell more product as well as build a business's name and image. By partnering with your suppliers through co-op, you can afford to run larger-scale ads more often - and thus increase your sales and profits significantly.

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