New Arrangements at Hallmark

The Masters of The Moment figure it’s time for flowers, candy — and figure skating.

Mother’s Day means an awful lot to Greg Field this year.

He’s lined up flowers and chocolate to accompany the traditional Hallmark card, and he’s made a date with Katie Couric.

After all, Field has 6,800 retailers to win over.

Hallmark Cards’ vp-marketing is on the front lines of the Kansas City, MO-based company’s marketing makeover, and Mother’s Day is a crucial point for the plan’s success.

Hallmark steps up marketing this year with an aggressive national promotion strategy, new product lines (including chocolates and fresh-cut flowers), and a slate of sponsorships including the U.S. Olympics Team. The company is ratcheting up its marketing budget to an estimated $50 million and shifting to four national promos per year — a dramatic change from a plan that used to cover 250 or so retailer-driven campaigns annually.

“Hallmark is kind of waking up,” says Field. The brand’s equity ranks in the top five, but has been underplayed. Now, under the direction of vice chairman Don Hall, Jr. (who also serves as executive vp-strategy and development and marks the third generation of leadership for the privately held company), it is “aggressively expanding the definition of ‘Hallmark’ beyond greeting cards,” Field says.

Its Mother’s Day campaign runs this month. A tie-in with Disney’s 100th anniversary, themed One Hundred Years of Magic, breaks in late summer with a birthday theme.

Net revenues hit $4.3 billion in 2000, up a meager three percent globally (up five percent in North America, down four percent for U.K.’s Hallmark International). Market share is estimated at 55 percent of retail dollar sales, flat from 1999. Hallmark credits the lift to its 2000 intro of Fresh Ink cards targeting women 18 to 34, its online card-sending and gift-giving service, and continued success of the 99-cent Warm Wishes line, introduced in 1999. The goal is to hit revenues of $12 billion by 2010 — ambitious, since that would require 12 percent growth annually for the next nine years.

Hallmark has tapped key players to improve its consumer focus. In October, it hired retired American Stores chief operating officer David Maher as consultant on consumer issues at retail. Former Marketing Corp. of America consultant Anil Jagtiani came in February to the new post of senior vp-corporate strategy to help broaden consumer reach and add new business. Procter & Gamble veteran Jan Murley joined as vp-marketing in 1999 and rose to group vp-marketing last year, and Field joined from Sprint Corp. in February 2000.

The company is adopting a “_____ and a card” multi-purchase strategy to extend the brand beyond the shrinking greeting-card segment. “That shift [to multiple purchases] will take us into the next decade,” explains Field, who coordinated Sprint’s sponsorship of the Rolling Stones tour. Hallmark has pegged six platforms to parlay the brand: greeting cards, gifts, memories, life celebrations, personal development, and family entertainment.

Scaling Back the Moments

With fewer, bigger, direct-to-consumer promotions, Hallmark makes an abrupt about-face on the retail-driven promos that have been its bread and butter for several years. Account-specific “buy two, get one” and “three cards for $2” deals “are not breaking through to consumers,” Field says. Add competition from e-mail and phones and Hallmark’s key consumers — primarily young moms — are sending fewer cards.

“It’s been painful” selling retailers on the new tack, Field says. “It’ll take three promotions to show them.” Retailers got their first taste with a Peanuts tie-in for Holiday 2000, which bumped sales one percent, Hallmark reports. Traffic rose on Valentine’s Day with a wildly popular Kiss-Kiss Bears offer. (Picture two Beanie Babies with magnetized noses.) If the Mother’s Day campaign drives card sales as well as traffic, Hallmark will have the hat trick it needs.

The three-pronged One in a Million Mom campaign broke April 16 with a watch-and-win sweeps tied to The Today Show. Card UPCs serve as gamepieces; the $1 million winning number will be announced live during The Today Show’s May 14 broadcast.

A separate essay contest will award another $1 million. Consumers enter in-store, writing about why their mom is special. Couric and The Today Show staffers judge all entries to pick five finalists, which are then put to consumer vote at cnbc.com.

The third piece is an on-pack sweeps for Hallmark chocolates. Two million six-ounce boxes carry instant-win gamepieces for prizes ranging from free Hallmark flowers to $50,000; each box contains a 10-minute Sprint phonecard. National TV and in-store P-O-P support. Ad agency Leo Burnett USA, Chicago, and Simon Marketing, Los Angeles, handle.

Hallmark hired Simon last year, abruptly replacing long-time agency SJI Promotions, St. Louis. Field continues to trim Hallmark’s agency roster, which is now down to four shops from 11. His goal is three, to streamline integration and give all materials a consistent look. McCann Relationship Marketing, New York City, began handling direct marketing last fall, as Hallmark began increasing postcard and catalog mailings to Gold Crown customers. Field may replace Carlson Marketing, Minneapolis, on its Gold Crown Card loyalty program later this year.

Hallmark’s broad portfolio lets it tailor product assortment for different retail channels. “Consumers have different expectations of Hallmark in a Gold Crown store and in the supermarket,” Murley says. “We can target the line to reflect what consumers — and retailers — expect in each channel.”

Past retail-driven campaigns brought excitement in-store. A Kmart-exclusive promotion called Get Caught with a Card in Your Cart helped launch the Expressions from Hallmark line in 1997. “It was mystery shoppers to the 10th power,” says Mark Shevitz, ceo of SJI Promotions, St. Louis, Hallmark’s agency of record for 11 years. Spotters in bright uniforms visited nearly 900 Kmart stores in eight days, checking shopping carts for Expressions cards. Winners got on-the-spot prizes ranging from a Kmart gift card to a $5,000 check. Every store had a winner. Store managers were gung-ho, and eager to repeat the blitz, Shevitz remembers.

Some retailers are wary of Hallmark’s new approach. “We keep badgering Hallmark to drive traffic to our channel, card shops, rather than to mass merchandise or supermarkets,” says Gary Kirlin, president of Kirlin’s Inc., Quincy, IL. The 100-store chain is Hallmark’s biggest independent distributor.

National promos run in all outlets, “which isn’t necessarily bad. We just don’t want Hallmark to do more national promotions and cut Gold Crown-exclusive programs — which they haven’t done so far,” says Kirlin. “Hallmark will sell its brand to anyone who will carry it. I hope they don’t dilute the brand so it loses its equity.”

Kiss-Kiss Bears were “a tremendous success” that sold out, adds Kirlin. “They’re trying to raise the scarcity of some products to make them more collectable. They’re finally learning a thing or two.”

Figuring in Figure Eights

Hallmark pushes its own envelope further with a first-ever sponsorship: The 2002-2004 U.S. Olympic Team, the 2002 Salt Lake City Games, and the Canadian Olympic Team.

The promotional cornerstone is Hallmark Flowers, which rolled out nationally in March after a five-market test last year. “Where else when you get a medal do you get a big bouquet of flowers?” posits Field. Hence the Hallmark Celebration Plaza, with nightly medal presentations and live invitation-only concerts for 15,000, televised on NBC as part of the network’s Games coverage. With figure-skating as the umbrella theme, Hallmark plans in-store displays encouraging consumers to send good-luck cards to athletes and a Perfect Pair promo for Valentine’s Day that will award pairs of prizes. Plans also call for a tie-in to the Torch Run, Field says.

“We’re partnering with very few people, [only] brands with the same stature as ours and a common target audience,” Murley says. “We work very hard together to be sure one doesn’t outshine the other.”

Some observers question whether a sports sponsorship is appropriate for Hallmark. Even Field says it was a tricky sell: “You should have seen our head of operations. He thought I was on Cloud Nine because he didn’t see the connection.”

But the Olympics make sense, says Sean Brenner, managing editor of IEG Sponsorship Newsletter, Chicago. “The last few years, people have talked about a great Olympic sponsorship angle that goes beyond winners and losers to how consumers relate to the Games,” Brenner says. “There’s a sense of tradition with family and friends, and smarter sponsors are taking advantage of that. Hallmark will have to overtly make that connection because, on the face of it, greeting cards don’t fit with athletic competitions the way Nike shoes do. But then, companies like McDonald’s, Coca-Cola, and Xerox have made the fit, and on an emotional level of congratulations and good wishes, Hallmark makes sense.”

Rose-Colored Glasses

Hallmark Flowers is a departure in distribution as well as product assortment. Flowers are arranged and shipped from the company’s distribution center in Southaven, MS (seven miles from Memphis), via FedEx to arrive a week faster — and fresher — than floral shops. Bouquets range in price from $40 to $70 and come with a full-sized Hallmark card. Shoppers order via Gold Crown stores, hallmark.com, or a toll-free number.

“Hallmark’s decision to sell flowers through its site, stores, and telephone channels is a no-brainer — and an important step toward parlaying its brand name into a larger slice of the [online] gift-buying market,” says Evie Black Dykema, an analyst at Forrester Research, Boston. “Online sales of gifts will swell to $36 billion by 2005, and the Hallmark brand name is at the top of gift givers’ minds.”

But Hallmark needs to expand its online offerings, perhaps by partnering with other sites; carefully manage its partners — especially growers — with certification programs and performance standards; and foster synergy between store, phone, and online channels, Dykema says.

Kirlin worries that customers will see displays in-store, but bypass the retailer and order directly via phone or online. “Then we don’t get credit for the sale,” he explains. “I’m telling our staff, ‘Don’t let them get out the door, bring them right to the phone and give the best customer service you can.’”

If the business blooms, Hallmark may win over retailers and consumers, thus widening the field for more brand extension.

That would make a nice Moment.