Circuit Maker

Skip-free technology in portable CD players makes life a dream for skateboarders and joggers. Yet Sony’s Discman with ESP2 Steady Sound needed to give consumers a shove. Panasonic, Sharp, and Aiwa, among others, had been selling comparable wobble-proof systems for two years, so the feature was starting to look like ancient history. Sony’s unlikely retro-remedy?

Would you believe a hula hoop contest?

Kids competed at Sony booths for a chance to win a Discman at last summer’s ESPN X-Games tour, which visited 11 cities and ended in a week of extreme sports in San Diego.

Sony had more in mind than providing teens with a little ’50s-style fun. The contest highlighted the Discman’s ability to absorb knocks and still play smoothly. Kids could clip on the players, shimmy and shake, and experience it for themselves.

Sony is hardly alone among electronics makers plugging into promotional tactics to spark product sales. Marketers of everything from personal computers to blank tapes are taking marketing cues from their packaged goods brethren to steal attention from virtually identical competing products and create brand halos for their hardware.

Vendors are reaching for partners like science majors at a sophomore mixer, dropping a boring, self-absorbed rebating habit in favor of alliances with other manufacturers and retailers. They’re testing bounce-back coupons, gifts with purchase, continuity programs, direct mail, demonstration events, and sweepstakes in an effort to become less dependant on product features and discounts.

“We have to get away from price and build a brand into the product,” says Joe Tibensky, vp-marketing at Sony’s Recording Media and Energy Group (RMEG).

Starting in March, consumers buying Sony audio and video tapes can send for debit cards packing values of up to $25,000 in a Charge It To Sony $1 Million Giveaway, a unique promo for a segment in which rebating is incessant, and is still the norm in segments from stereos to digital scanners. “It’s the only tactic right now that retailers are accepting,” bemoans one agency exec.

Yet while rebates might be a sharp tool for securing sales, they are expensive to manufacturers, and they have become less enchanting to retailers who have to field calls from frustrated consumers looking for unmailed rebate checks. “Rebates are becoming old hat,” says Packard Bell NEC advertising manager Marla Sandall.

Computer makers are linking with strategic partners such as peripherals and software vendors to push related products and educate consumers. Pair an ink jet printer with free printer software and you’ve got the shopper thinking about what the printer can do. At the least, a partner helps pay for the rebate.

Packard Bell NEC, Sacramento, shared costs with Microsoft last year in its Buy Smart Get Smarter sweeps, in which consumers entered to win $55,000 for tuition. Charles Chaney, a freshman at John Carroll University in Ohio, took home the prize. AOL helped IBM sell its Aptiva PC last year in IBM’s back-to-school rebating extravaganza. Consumers who subscribed to AOL for six months received a $175 rebate check.

Electronics brands can’t stay focused solely on driving sales of their own products if they want promotions accepted into the superstore chains that dominate electronics retailing. Marketers need to devise promos that help stores make high-margin sales and support the chains’ own branding designs.

Computer makers in particular are still fixated on trade channels, where sales folk wield czar-like power over consumer buying decisions. But “plug and play” technology has freed vendors to focus less on sales training and incenting. “When Windows 95 came out there was a lot of confusion. Today, products don’t require much setup and installation,” notes Page Murray, vp-management supervisor for the Hewlett-Packard account at Highway One, a San Francisco-based promotion agency.

Swing time Sony has emphasized promotions more in the past several years, both in its Consumer Products Marketing Group (CPMG) and in sister division RMEG. Under the promo marketing umbrella Where the Music Takes You, Sony is conducting integrated marketing programs for its personal audio and video products.

Sony gave dealers in the X-Games tour markets handouts explaining the technology in a fun, hip way to distribute at the events. The tour tied in with print ads in national magazines such as Runner’s World and Elle that featured a Russian circus performer holding a Discman aloft as hula hoops orbited her waist. Sony carried the theme to the trade by sending the performer- who keeps 35 hoops twirling at once- to sales conventions. It also hitched a ride on the K2 Skatapalooza Tour, mounting Discman displays on the rears of touring vans.

“We bought into this generation’s lifestyle with a hands-on, come-and-feel-our-product event,” says Richard Wilczynski, Sony CPMG marketing communications and retail manager. “The attendance was far beyond what we expected. We had 7,000 kids a day going through our booth in San Diego.”

Focusing on a target audience of moviegoers, Sony joined with Turner Broadcasting to advertise a Dinner & A Movie sweeps (tied to the food and flick show of the same name) to sell its Maximum Television home entertainment system. Top Sony account Sears featured the system and its own Kenmore products as prizes. Sony took the TV ads, tagged them with a call to action, and ran them on Sears’s in-store TV network.

Sears got to showcase its brand on national TV, while Sony used the promo to get exposure in the stores with a major display, which it hopes will stay up past the event.

“Our plan was to get a footprint in the stores for a dynamic display to show our DVD demo disc. We feel we can keep them up longer than the promo lasts,” says Wilczynski.

In a second effort for Max TV, Sony teamed with Montgomery Ward for a Bond World Tour sweeps, offering trip prizes during the 15 Days of 007 December event on TBS.

Retailers generally don’t mind having vendor reps in the stores explaining how products work. Manufacturers from Canon Computer Systems to HP host in-store demo days. But chains don’t want the manufacturers’ products or promotions spilling out of their allotted spaces, or footprints. As though trying to emulate a computer lab or office, the stores proscribe programs that would garland walkways and walls with tear pads and P-O-P stands.

Marketers have to be creative to get promotions accepted, by partnering with related products to drive more sales or targeting offers to retailers’ preferred customers.

Woodstock minus the mud PC makers’ marketing options have increased as distribution has expanded beyond computer superstores like CompUSA. At least in theory, vendors now have a greater chance of finding chains to support promotions. Office product superstores such as Staples and Office Max sport computer departments, and Office Depot features 10 aisles of computers. Even mass channels carry computer ink and paper.

In reality, though, the chains’ clean-store policies often thwart all but the most discreet in-store elements of a marketing campaign. P-O-P messages have to scream from monitor stickers, screen savers, and flip charts tucked into the vendor’s allotted store footprint, while tear pads go up on a common bulletin board. “The policies carry into circulars and ROP ads. If you’re doing a major themed promotion, chances are it doesn’t get in,” says Murray.

“Co-marketing is underdeveloped. The retailers have the ability to hold a gun to the manufacturer’s head,” says Craig DeWolf, general manager at the San Francisco office of promo agency J.Brown/ LMC Group.

Yet vendors are finding ways to reach shoppers in-store without violating retailers’ house rules and brand-imaging goals.

This quarter, HP broke Good Karma Good Capitalism, which gives consumers buying its OfficeJet Pro all-in-one device up to a $150 rebate if they donate their old printers, scanners, faxes, and copiers to charity. “We are communicating the four functional aspects of the OfficeJet,” says Highway One’s Murray.

Elements include a Web site, online banner ads, and co-op ads with participating retailers – a group that includes most of the office, computer, and electronics superstore chains. In-store P-O-P looks like an acoustic Woodstock, minus the mud. Tear pads, stickers, and cards feature a rather subdued tie-dyed rainbow effect as a visual theme.

To teach consumers about its PhotoSmart PC digital photo system, Hewlett-Packard rolled out a demo van for one-day fairs at stores, festivals, and work centers. It direct-mailed households before the event with offers to bring photos to the vans and see how PhotoSmart works. It also e-mailed rebate and holiday offers on PhotoSmart products, and collected e-mail addresses of people who demoed the products for follow-up. J. Brown/LMC, San Francisco, handles.

Sony’s RMEG division, meanwhile, is launching new promotions in the traditional superstore channel and in mass channels, embarking on value-added spins for products from camcorder tapes to floppy disks and CD recordables.

Saying goodbye to rebates Sony boosted sales of its floppy disks and CD recordable discs 150 percent in Staples stores last year with an @School & Work Cash promo, according to a Staples spokesperson.

Multi-packs carried action checks worth $3 to $10 that consumers could use on any merchandise in the store. Staples, CompUSA, and Office Max are among retailers participating in Sony’s Software Cash 2.0 effort, which began in October and runs through March. Offers are off-pack on tear pads. Consumers send in UPC codes off multi-pack CDs and floppies to get store checks of $5, $10, and $20, good toward CD-ROM software titles. Sony has teamed with Eidos’s Tomb Raider, Hasbro Interactive’s Monopoly game, and Intuit’s Turbo Tax, featuring them on in-store displays.

“You buy a 50-pack of diskettes or a 10-pack of CD recordables and the $20 check covers the cost of Turbo Tax,” notes Dan Wynne, Sony director of marketing for data media.

“Most people shopping in these accounts are buying software. We are driving them back into the store for purchases that are very profitable to the retailer,” Wynne adds. Sony landed a shipper-display at Staples and an endcap at CompUSA.

Food, drug, and discount stores will enjoy bounce-back traffic starting March 1 in a Charge It To Sony promo for audio/video tape multi-packs created by Flair Communications. Packs include a scratch-off game piece revealing debit card prizes of $5, $10, or $25,000. Players who don’t win a card get a free VHS videotape. Instant-winners then mail in the piece to receive the Sony card, co-branded with MasterCard, processor of the debit transactions. “The MasterCard brand here is important because it builds trust and confidence in the debit card,” says Sony RMEG’s Tibensky.

Consumers with cards will get a list of participating retailers nationally, and stores will have a chance to co-brand the cards. A full-page freestanding insert targeting 40 million appears March 28.

Meanwhile, Sony will reprise the Video Vacation Sweepstakes for camcorder tapes in the mass channel for a second year. “The demo here is very specific. We knew we had to address the lifestyles of the users,” says Tibensky. The effort breaks May 1 in the graduation, wedding, and summer vacation-planning window. In-pack certificates alert winners if they win prizes including a grand prize of a trip to Hawaii, the Grand Canyon, the Caribbean, or Vancouver.

Hold the phone Cell phone users will switch carriers in a New York minute.

They’re always shopping around for rebates on hardware, monthly fees, or phone time. AirTouch Cellular, Walnut Creek, CA, used a continuity promotion to safeguard its carrier service customers against competing offers.

Since customers tend to jump to a new service every 11 or 12 months, AirTouch mailed users who had been on the system 11 months one-time use certificates for credit on their billing statements in 1997’s fourth quarter. The credit value increased the longer it was held over a period of six months. The pieces included reminder calendar stickers and an 800 toll-free number for redemption. Customers were put in four categories based on phone use, and earned from $30 to $120 if they held the certificate to full maturity.

Preliminary results show that 50 percent held on for six months, says Mike Nash, senior account executive at Alcone Marketing, which developed and handles the customer service support and fulfillment.

Ericsson Mobile Phones is branding its hardware under a new Y&R Advertising-developed Make Yourself Heard theme, which will extend across internal, trade, and consumer marketing. Wunderman Cato Johnson won the $15 million assignment last quarter.

“End users associate cell phones with the service providers. Carriers have driven the business, outspending manufacturers 10 to one. We want to take ownership in building our brand,” says Fred Medina, director of brand development at the Swedish company’s Miami, FL U.S. base.

Last year, Ericsson offered gifts with purchase of a $40 food basket and a Celine Dion video, tying in with its sponsorship of the Canadian songstress’s North American tour. A sweepstakes included a trip to see Dion on this year’s tour, which Ericsson again sponsors. Make Your Self Heard, Make Your Self Free this quarter gives cell phone buyers a $70-value portable hands-free set, a system that includes ear and voice mikes so users can keep the phones on their belts.

The phone maker already made an impression during last year’s The Power Of Voice campaign. Attendees at Dion’s concerts began holding aloft their phone lights, mimicking a TV ad in which fans used the phones to light up two-year-old Ericsson Stadium in Charlotte, NC.

Rebate checks just don’t get consumers shining like that.

Why did DVD – the digital future of video and audio recording – turn out to be the technology hit of the season?

Listen to John Campbell. “DVD flawlessly recreates every color of the rainbow and every sound, from the tiniest whisper to a jet’s roar, in true digital perfection, no matter how many times played. The only limit is your imagination.”

Whew. Quite a mouthful. Is the year-old video/audio technology really so attractive, or is Mr. Campbell just an espresso-stoked public relations pro in the employ of Toshiba?

John, it so happens, is a true fan. The passage is a snippet from an essay the 22-year-old journalism student wrote to win a nationwide contest sponsored by DVD Video Group, a Los Angeles-based, industry-funded company that promotes the format. Campbell earned a trip to Hollywood with an itinerary that included a visit to the closed set of the Austin Powers sequel The Spy Who Shagged Me, which is being filmed with DVD in mind.

It wasn’t DVD’s quality alone that impressed seasonal shoppers, though. Entry digital video players cost less than $200, and video stores have started renting the hardware and software. One million DVD players were shipped to retailers in 1998, up from 400,00O in 1997, according to the DVD Group. Thus, retailers – including Internet merchants – experienced galloping sales as the format made its first serious bid to unseat VHS.

Retailers and manufacturers united in an exceptional multi-partner effort to make sure the technology didn’t go unnoticed. In a promo that ran Nov. 15 to Dec. 31, consumers who bought featured DVD players from Toshiba and other vendors at Best Buy, The Wiz, or The Good Guys were offered five free DVD movies provided by Warner Home Video and New Line Home Entertainment. Shoppers sent in proofs-of-purchase with in-store coupons from the retailer to get the movies, plus a coupon book for 13 free DVD rentals at the Hollywood Entertainment and West Coast Entertainment chains.

As recordable players and more family-style movies reach the market this year, observers see the growth continuing.

DVD for the home video market is just one facet of a digital revolution, through which digital’s high resolution and crisp sound will show up in personal computer peripherals, cameras, and TVs.

As Austin Powers would say, it’s a shagedelic new world.