Subway Rides the Blue Line
Subway Sandwiches & Salads broke into the big leagues of kids’ marketing this summer, and its first at-bat was a home run.
Subway tapped Nickelodeon’s hit pre-school show Blue’s Clues for a June promo giving away five toys based on show characters. It was the Milford, CT-based chain’s first Kids’ Pak promo to be supported by national TV, and just the first in an ambitious slate of entertainment-based promotions designed to lure young families away from the burger chains once in a while.
Blue’s Clues was so popular with franchisees and consumers that Subway cut short the original six-week window and rolled out early with its follow-up Kids’ Pak, a tie-in with Sports Illustrated for Kids. That effort broke July 1, giving sports toys like hackey sacks and Frisbees as premiums.
Subway is blowing out the doors until Christmas with four more Kids’ Pak deals worth an estimated $20 million to $25 million. Back-to-school taps Warner Bros.’ Marvin the Martian 50th anniversary blitz with toys that double as school gear – Marvin’s Rocket pencil case, and the six-inch Ruler of the Universe. A tie-in with Kraft Foods’ Kool-Aid in late September/ early October puts a packet of drink mix in each Kids’ Pak, and lets kids earn points for stuff in Kool-Aid’s Wacky Warehouse catalog. A late-October tie-in with DC Comics puts Batman and Superman together in a promo for the first time, featured on keychain-style backpack hangers. And finally, a Cartoon Network promo brings the Flintstones and the Jetsons into Subway’s 12,500 stores.
The slate of promotions is “certainly competitive,” says Subway marketing director Kevin Armstrong. “We’re looking not just at entertainment properties, but also at other things that are important in families’ lives.” The Kool-Aid promo stems from Subway’s “huge business relationship with Kraft,” which supplies meat and dressings to Subway, and helped launch Kids’ Paks. “We like to work with partners like them,” Armstrong says.
License-driven premiums replace the generic, year-round toys Subway has used in Kids’ Paks for five years. “We know premiums and brand association are important factors in meal selection,” Armstrong says. “It helps appeal to kids if you’ve got the right premium and the right media support.”
Subway put an estimated $5 million in media support behind the Blue’s Clues Kids’ Pak, mostly on Nickelodeon. But Blue’s Clues wasn’t just a media swap, Armstrong insists. “We chose a significant amount of Nick in the media mix because it fits who we’re trying to reach,” he says. The Nick theme ran deeper in-store as well: Nick at Nite and TV Land trivia cups targeted adults, with or without kids, with trivia questions about classic shows including Happy Days, Hogan’s Heroes, and The Brady Bunch.
The Kid’s Pak tied into the June 14 Blue’s Birthday special and the June 9 release of Blue’s Clues episodes by Paramount Home Video, with cross-couponing in Kids’ Paks and video boxes. B. little & co., New York, handled Kid’s Pak; Subway’s ad agency, Hal Riney & Partners, Chicago, handled ad support and P-O-P. Upcoming promos are farmed out to a handful of promo shops, with Subway’s longtime agency, Johnson Grossfield, Minneapolis, handling all fulfillment.
Kids’ meals account for 4 percent of total sales for quick-service restaurant chains, and get more important every year. “All QSR chains that aren’t specifically geared to adults need to have an acceptable kids’ package,” says Dennis Lombardi, a restaurant consultant with Technomic in Chicago. “That means food items and a price point that kids like. A premium is good, but it doesn’t have to be a movie tie-in. Generic toys are OK, but they’re not as good as Beanie Babies.”
McDonald’s blew out the doors again this spring with its Teenie Beanie Babies giveaway. The chain stockpiled 200 million toys, twice as many as it ordered for Happy Meals last year, and applied a five-per-visit purchase limit. McD has done better with Beanie Babies than with its vaunted Disney tie-ins, Lombardi says. Mulan, McD’s first global Happy Meal offer – with the same toys slated for restaurants on four continents – broke June 16 in the U.S. and Canada. McDonald’s U.S. Happy Meal sales increased 7 percent last year, the company reports, due in part to seven Disney-themed promotions.
Still, movie tie-ins are a gamble, says Lombardi. “It really depends on how a movie does, and they’re limited to the really big chains.”
Subway’s tack with TV and print properties hedges its bets against fickle movie audiences and gives the chain a solid promotion alternative to cutting prices. Pairing quality premiums with its nutrition ad message and meals with branded Frito-Lay and Pepsi products may be enough to tempt moms and kids often enough to build brand loyalty. That, says Armstrong, is preferable to the kind of traffic that discounts bring.
“We’ve done intercepts with consumers who buy discounted food, and they don’t add substantially to our profits,” he says.
Profits have been good without the cherry pickers: Subway sales rose 7.4 percent to $2.9 billion for 1997, outpacing category growth of 6.3 percent, reports Technomic. The 12,500-store chain leads U.S. sandwich-shop sales, which totaled $10.8 billion last year, according to Technomic. That still pales next to burger sales, but Subway could take a bite out of McDonald’s if it plays the TV remote right.
It was a computer program that got Heinz USA on the Super Bowl this year.
Heinz funded its first Super Bowl advertising with an estimated $5 million the company found by cleaning up its trade promotion system.
Heinz used Vista CPG, trade marketing management software from Vista Technology Group, St. Charles, IL, to streamline trade budget planning, tracking, and retailer reimbursement. Since first testing the software in February 1996, Heinz has eliminated about $5 million in spending errors in trade promotion payments to retailers. The company now tracks about 13,000 trade deals a year for a dozen brands in 1,300 supermarket and mass-merchandise chains via Vista CPG.
Heinz hasn’t cut its trade spending, but “we’ve seen some efficiencies” from the software that improve its ability to spend trade dollars appropriately, says Rick Toboz, Heinz’s manager of sales technology. “We’ve gone from thinking we had a rough idea of what we were spending to having a very clear picture of what we’re spending, where, and with whom.” Heinz helped Vista develop the software by providing a real-life laboratory, but owns no part of Vista or the software rights.
Sun-Diamond Growers, Bush Brothers, and private-label vitamins marketer Leiner Health Products also have adopted Vista’s software, including account-level analysis that reports how well a promotion juiced sales. With nearly $75 billion in marketing budgets earmarked for trade promotion, packaged goods companies are striving to clean up their systems.
“The level of [trade-allowance] deductions isn’t likely to increase, but manufacturers are working harder than ever to control spending and improve efficiency,” says Ted Combs, Vista vp-sales, a former Keebler sales exec. As sales staffs assume more marketing responsibility for a bigger portion of trade budgets, field reps are eager for tools to track and analyze regional and local deals.
Vista CPG overlays a manufacturer’s existing operating software with tailored marketing functions to track trade deals in real time, with sales force proposals automatically routed to headquarters for approval, then back down to the field force for execution. An online chart shows managers and field reps a complete list of all live, pending, and proposed deals by chain and by brand. Vista’s next step is to introduce brand management tools to improve consumer-promotion planning and spending, probably by mid-1999.
“Packaged goods companies want to plan promotions further out. “Category management is driving longer lead times,” says Greg Price, vp-sales of Vista’s southern division and a trade marketing veteran of Kraft Foods. “But marketers either don’t know where they’re spending their money, or they’re spending it on the wrong kind of events.”
A forecasting function lets field forces plan regional and account-specific promos based on a template set by the brand manager. As a manufacturer compiles a database of local promotions via Vista CPG, brand managers can track results of frequency-card tie-ins and other store-level activities that aren’t reflected in syndicated scanner data. That likely will have an impact on consumer promotion strategies as loyalty programs proliferate.
