Better Marketing at the Point of Purchase

The retail point of purchase represents the time and place at which all the elements of the sale—the consumer, the money, and the product—come together. By using various communications vehicles, including displays, packaging, sales promotions, in-store advertising, and salespeople, at the point of purchase (POP), the marketer hopes to influence the consumer’s buying decision.

Partly because of the diversity of communications vehicles available and partly because effective POP programs can aid in competing for retailers’ support, marketers need to manage their POP programs carefully so as to ensure that both retailers and consumers will see consistency and coordination in the programs rather than confusion and contradiction. Recent examples of innovative, well-managed POP programs include:

• Atari’s Electronic Retail Information Center (ERIC), a computerized display installed in more than 500 stores that is designed to help sell computers. An Atari 800 home computer linked to a videodisk player asks a series of questions to help the retailer determine a customer’s level of computer ability and product needs. ERIC then switches on a video disk that plays the most appropriate of 13 messages based on the customer’s inputs.1

• Kodak’s Disc Camera, launched in May 1982. A rotating display unit presented the disc story to the consumer without the need for salesperson assistance. In addition to the display unit, the POP program included merchandising aids, sales training and meetings for retail store personnel, film display and dispenser units, giant film cartoons, window streamers, lapel buttons, and cash register display cards.2

• Ford Motor Company’s showroom wine-and-cheese parties, started in Dallas and San Diego in 1982 to provide a “more comfortable [car] buying process for women” and to respond to the fact that 40

  %

  of new car purchases (valued at

  $

  35 billion) are now made by women. The auto showroom has traditionally been an uncomfortable environment for women, whom salesmen have often patronized or overpowered with technical details. The showroom events represent an effort to manage the point of purchase to attract an increasingly important customer segment.3

Innovative management of the point of purchase has been applied to a broad range of consumer product categories, including:

• Candy, gum, and magazines, which depend on impulse purchases for a large percentage of their sales.

• Personal computers and other new technical products that require in-store demonstration.

• Pantyhose and vitamins, which because they include multiple items in each brand line must be presented especially clearly to the consumer and efficiently stocked.

• Lawn and garden appliances, which are sold through several types of retailers, each of whom requires a different POP program.

• Liquor and tobacco, which are prohibited from advertising in some media.

• Automobiles and other mature, large-ticket items usually associated with intensive personal selling.

We believe that the expenditures of consumer goods manufacturers on POP communications will increase and that marketers who can manage events at the point of purchase well can gain competitive advantage. In this article we consider why managing the point of purchase is becoming more important, the roles of each element of the POP communications mix, and how consumer goods marketers can improve their management of the point of purchase.

POP’s New Importance

POP expenditures are of increasing significance to marketers for three reasons. First, they often prove more productive than advertising and promotion expenditures. Second, the decline in sales support at the store level is stimulating interest among retailers in manufacturers’ POP programs. Third, changes in consumers’ shopping patterns and expectations, along with an upsurge in impulse buying, mean that the point of purchase is playing a more important role in consumers’ decision making than ever before.

For the same reasons, retailers are becoming increasingly receptive to manufacturers’ offers of POP merchandising programs. Even K mart stores, long off limits to manufacturers’ sales representatives, now allow them to set up displays and offer planograms. The delicate power balance between the manufacturer and the trade is such, however, that retailers will not give up control of the POP readily, particularly at a time when its importance is growing. Moreover, the pressure on retailers to carve out distinctive positionings to survive heightens their determination to control store layouts, space allocations, and POP merchandising.

Hence, at the same time that their interest in manufacturers’ POP programs is rising, retailers are becoming more selective than they once were and beginning to impose constraints, such as restricting the height of displays to preserve the vistas in each department and on each floor. To maintain consistency in store formats and to take advantage of volume discounts, Sears, Roebuck and Company recently centralized all fixture ordering at headquarters.

Improving Communications Productivity

Marketers are carefully examining alternatives and supplements to media advertising, which has roughly tripled in cost since 1968. POP programs cannot substitute for media advertising, nor are they as easily controlled in the store since they are implemented on someone else’s turf. They can, however, reinforce and remind consumers about the advertising messages they have seen before entering the store. POP programs help improve productivity in the following ways:

Low Cost

While reaching 1,000 adults through a 30-second network television commercial costs $4.05 to $7.75, the cost per thousand for a store merchandiser or a sign with a one-year life is only 3 cents to 37 cents.4 These figures reflect the low production and installation costs of POP materials and the fact that the same POP materials are seen repeatedly by consumers and salespeople.

Consumer Focus

POP programs focus on the consumer but also provide a service to the trade. Because they help move products off the shelves into consumers’ hands, POP expenditures are often more productive than off-invoice price reductions to the trade, which risk being pocketed and therefore withheld from the consumer.

Precise Target Marketing

POP programs can be easily tailored to the needs of local markets or classes of trade in response to marketers’ increasing emphasis on region-by-region marketing programs and on account management of key retail customers. In addition, particular consumer segments can be precisely targeted. Revlon’s Polished Ambers Dermanesse Skin programmer, a nonelectronic teaching aid used at the point of purchase to suggest appropriate cosmetic combinations to black women, exemplifies a targeted approach that could not be undertaken efficiently via media advertising alone.

Easy Evaluation

Alternative POP programs can be inexpensively presented in split samples of stores. Stores equipped with check-out scanner systems can quickly provide the sales data needed to evaluate the impact of POP programs for the benefit of both manufacturer and retailer.

Declining Retail Sales Push

Manufacturers are increasingly questioning whether they can rely on retail sales clerks to push their products at the point of purchase. The quality of retail salespeople appears to have declined as their status has diminished. Their high turnover rate (often more than 100% per year) reflects their relatively low educational level and remuneration.

Sales positions are increasingly being viewed as dead-end jobs since more retailers now prefer to hire university-trained managers.

To reduce labor costs and remain price competitive, retailers such as Sears have cut the number of clerks covering the floor in favor of centralized checkouts. Consumers have developed the impression that salespeople are less attentive and knowledgeable when, in fact, they have to cover more shoppers and product lines than before.

To cut costs while extending opening hours, retailers have also shifted to inexperienced and uncommitted part-time salespersons, who often know little about a product’s features and cannot demonstrate its use.

Thus, retail salespeople increasingly lack both ability and credibility. Effective POP programs can compensate for such sales weaknesses by enabling the manufacturer to maintain control of the message delivered to the consumer at the place and time of the final purchase decision. Marketers who provide the most attractive, educational, entertaining, and easy-to-use POP programs are likely to win the favor of store management. Their products are also likely to receive more push from overextended retail salespeople because an effective POP program can increase their credibility and facilitate the selling task.

Changing Consumer Expectations

These days consumers are inclined to seek special deals and wait for sales before they buy large ticket items or stock up on small items. As a result, consumer demand for such products as cosmetics and home furnishings fluctuates more widely than ever before. Retailers are interested in POP merchandising techniques and displays that can productively occupy consumers while they are waiting for sales help. For this reason and because of union restrictions on part-time personnel, Bell Phone Centers, for example, offer consumers many POP aids, including demonstration units.

The increasing use of automatic teller machines and vending machines, the expanded use of self-service store formats, and the advent of computerized shopping mall guides all indicate that consumers who value speed and convenience are becoming amenable to helping themselves at the point of purchase. This trend is evident, for example, in hardware stores, where manufacturers such as McCulloch and retail chains such as ServiStar are providing more and more display centers to present their product lines.

Many consumers wish to do their shopping quickly and efficiently; yet, at the same time, the longer they are in a retail store, the more likely they are to buy. Purchases planned least often were, according to one survey, auto supplies (94%), magazines and newspapers (91%), and candy and gum (85%).5 Drugstore purchases, too, were largely unplanned—60% of them, including 78% of snack food and 69% of cosmetics purchases.6 An average of 39% of department store purchases were unplanned, ranging from 27% of women’s lingerie purchases to 62% of costume jewelry purchases.7 Effective POP programs not only present useful information efficiently; they can also make shopping entertaining and remove some of its frustration.

The Point-of-Purchase Communications Mix

How can consumer goods marketers address the different—and sometimes conflicting—interests of the manufacturer, the retailer, and the consumer at the point of purchase?

Using Displays Effectively

For one thing, they can use well-designed displays. They attract consumer attention, facilitate product inspection and selection, allow the access of several shoppers at once, inform and entertain, and stimulate unplanned expenditures. Because additional display space can expand sales without any change in retail price, consumer goods marketers increased their spending on POP displays 12% annually between 1980 and 1982. Well-designed displays respond to the needs of both the retailer and the consumer.

They reduce store labor costs by facilitating shelf stocking and inventory control, minimizing out-of-stock items, and lowering the required level of backroom inventory. For example, automatic feed displays such as 7-Up’s single-can dispensers eliminate the need for store clerks to realign shelf stock.

Good displays are designed for a particular type of store and often for a specific store department. For example, the Entenmann Division of General Foods realized that its display designs in the bakery sections of supermarkets were not transferable to the cash register areas, where the company wished to sell its new line of snacks, so it developed an additional range of displays.

Good displays reflect the likely level of trade support. There is no point in designing a large display that will not generate the retailer’s required level of inventory turnover. Likewise, there is no point in offering the trade a permanent display for a seasonal product. Richardson-Vicks, for example, redesigns its display each year rather than provide a permanent fixture because retailers give floor space to Vicks Cold Centers during the winter months only.

Well-designed displays are versatile and can accommodate new products. Max Factor, for example, provides retailers with a floor-stand display consisting of a series of interchangeable trays and cartridges. New product lines, packed in similar trays, can be easily inserted, while the cartridges can, when removed from the floor stand, double as counter display units.

Manufacturers must, of course, also keep their own interests in mind when they are designing displays. For example, Johnson & Johnson’s First Aid Center provides supermarkets and drugstores with a permanent display for more than 30 of its first aid items.8 By creating a strong visual impact at the point of purchase, the display presents Johnson & Johnson as a large, well-established company that offers consumers the convenience of easy product selection and “one-shelf shopping” for all their first aid needs. It also discourages retailers from stocking only the fastest-moving items. In addition, the display carries the company name and thus prevents the retailers from using the display to stock other products. At the same time, it helps Johnson & Johnson preempt competition in slow-moving product categories in which the retailer can justify stocking only one brand.

While displays such as these are becoming prevalent in self-service environments, other innovative displays are being developed to supplement the efforts of salespeople. For example, Mannington Mills’ Compu-Flor, a small computerized display placed in floor covering retail outlets, is programmed to use a potential consumer’s answers to eight questions about room decor. The terminal then displays three to ten appropriate Mannington styles for the customer to choose from. When idle, the machine beeps periodically to attract consumers. Mannington had placed the units in 700 stores by the end of 1982 at a cost of $8 million, an amount equal to the company’s advertising budget.

Mannington found that Compu-Flor selected styles for customers more efficiently than salespeople (who had trouble remembering all the styles in the product line), encouraged salespeople to push Mannington products rather than those of its two larger competitors (Armstrong and Congoleum), and boosted the number of sales closed on a customer’s first store visit.9

Compu-Flor is just one of a number of computerized video displays at the point of purchase that provide a standard controllable message from manufacturer to consumer, a way of engaging customers’ attention while they are waiting for sales assistance, and entertainment.

A Package Is More Than a Container

Packaging has many functions beyond acting as a container for a product.

Appropriate packaging, of course, attracts attention at the point of purchase. Manufacturers such as Nabisco and Kellogg use the same package design for many items in their product lines to present a highly visible billboard of packages to consumers at the point of purchase. In 1979, Nabisco standardized the package design of its chocolate-covered cookies; the market share for this product rose from 24% to 34% by 1981.10

Standardized packaging also permits easy identification of brands, types, and sizes. Private-label suppliers have imitated the color codes used to identify various sizes of disposable diapers made by the brand name manufacturers. Similarly, packaging communicates product benefits and identifies target groups. Contrast the packaging of Marlboro cigarettes, aimed at men, Virginia Slims, targeted at women, and Benson & Hedges Deluxe Ultra Lights, with a silver package designed to appeal to elitists among both men and women.

And the right packaging limits the potential for pilferage of small items. The manufacturer of Fevertest, a plastic strip that, when placed on the forehead, indicates the presence of fever, added size and value to the product by enclosing the strip in a wallet, packaging the wallet in a blister pack, and displaying the item on pegboards at supermarket and drugstore checkout counters.

Consumer and trade expectations of product packaging should not discourage marketers from innovation, though frequent changes in package size and design breed trade resistance, especially when existing shelf configurations cannot easily accommodate the new packages. Reflecting the shift to self-service car maintenance, Kendall and Arco recently began to sell oil in plastic containers with built-in pouring spouts.

Making Shopping Fun

Manufacturers are increasingly using consumer promotions to make shopping exciting. These include premiums, coupons, samples, and refund offers in or on product packages to help them stand out and break through the visual clutter at the point of purchase. Package-delivered promotions have the further advantage of being inexpensive in comparison with consumer promotions offered in magazine advertisements or direct mail campaigns.

Manufacturers are also becoming aware that retailers favor manufacturers whose promotions bring consumers into the store. For example, some sweepstakes promotions, such as Brown Shoe Company’s Footworks contest, encourage the consumer to match symbols in an advertisement with those on a store display or package in order to enter the contest. Retailers also like promotions that tie into store merchandising themes and cross-sell other products (promotions built around recipes or complete home decorating services, for instance) and promotions that avoid the use of special price packs that require retailers to replace existing shelf stock and set up new Universal Product Code entries in store computer systems.

In-Store Advertising Media

Manufacturers can extend to retailers a number of innovative approaches for reinforcing brand awareness and delivering advertising messages at the point of purchase. These include:

Commercials broadcast over in-store sound systems.

Moving message display units with changeable electronic messages.

Customer-activated videotapes and video disks that show merchandise such as furniture that is too bulky to be displayed on the department floor; the videotapes can also be played in window displays to present, for example, designer fashion shows.

Television sets installed over cash registers to show waiting customers commercials for products that are usually available nearby.

Advertisements on carts used in supermarkets and other self-service outlets.

Danglers and mobile displays that use available air space rather than limited floor space

Implementation Steps

Recognizing the significance of the point of purchase is not enough. Consumer goods marketers must pay more attention to developing effective POP programs and, even more important, to ensuring that they are properly implemented at the store level.

Before developing a POP program, managers must have a clear understanding of their marketing strategy—which products are being delivered to which markets through which channels of distribution. Given the marketing strategy, marketers should go on to answer such questions as:

What must happen at the point of purchase to satisfy consumer needs?

Which channel members—manufacturers, retailers, consumers—are willing to perform which functions?

Which members can perform them most cost-effectively?

How should the functions be allocated?

How should the pricing structure for the product (and for the POP program) reflect this allocation of functions?

Program Development

Once they answer these questions, marketers can work out the specifics of the POP program—objectives, vehicles, and budgets. Here are five principles that should guide this process:

1. Integrate all elements of the POP communications mix. The package, for example, cannot be designed independently of the display. All POP vehicles should communicate consistent and mutually reinforcing messages to both the trade and the consumer.

2. Offer the trade a coordinated POP program for an entire product line rather than a collection of POP materials for particular items. To further impress the trade, make sure that the POP program is easy to understand and financially realistic.

3. Link POP assistance to trade performance. High-quality displays, for example, should not be given away to the trade unless linked to a quantity purchase or paid for with cooperative advertising dollars earned on previous purchases.

4. Assume that various POP programs will be necessary for distribution channels. The traditional hardware store and the self-service mass merchandiser, for example, differ both in store environment and in type of customer; the ideal POP program for each will not be the same.

5. Integrate POP communications with non-POP communications. Television advertising should tell consumers in which stores and departments they can find the advertised product and should include shots of product packages and displays to facilitate consumer recall and brand identification at the point of purchase. Sometimes a POP display becomes the basis for a television advertising campaign, as in the case of the Uniroyal POP unit, which invited the consumer to drill a hole in a Royal Seal tire to demonstrate that no air was lost if it was punctured.

Program Execution

Any POP program is only as effective as the quality of its implementation at the store level. Effective implementation requires that managers, first, recognize the execution challenge. Many innovative approaches to managing the point of purchase fail because responsibilities for such tasks as stocking and maintaining displays are not clearly allocated or, once allocated, are not properly performed. Under these circumstances, cooperation between manufacturers and retailers can quickly turn into recrimination.

Consumer goods marketers are often too eager to assume POP responsibilities themselves. To increase their control over the execution of their marketing programs, they might enhance effectiveness and reduce expense to make the programs work by appropriately compensating the retailers.

Two recent examples highlight the risks of ineffective execution at the point of purchase:

• General Entertainment Corporation failed in its 1982 attempt to market popular music cassette tapes from floor-stand displays in supermarkets partly because its field sales force could not maintain display inventories of 168 stockkeeping units, many of which changed every few months.

• Binney & Smith, manufacturer of Crayola crayons and other arts materials, quickly placed 1,500 special merchandising units called Crayola Fun Centers in a variety of distribution outlets following their introduction in 1980. But efficiently servicing the displays proved difficult, and Binney terminated the contract of the servicing firm handling this task.

In general, the greater the number of stockkeeping units in a display and the greater the diversity of channel environments in which the displays are placed, the more complex and challenging effective execution becomes.

Next, managers must evaluate the execution alternatives. Consumer goods marketers usually have three options for carrying out POP programs—to use their own salespeople, to contract with brokers or service merchandisers, and to rely on the retailer. The evaluation should center on comparative costs, degree of marketers’ control over the execution, and the relative importance of effective POP merchandising in leveraging a product’s overall marketing program. The more important it is, the more justification the marketer has for using a direct sales force.

One important reason for the success of L’eggs was the company’s decision to have its own salespeople deliver the product on consignment to stores and to assume total responsibility for managing the point of purchase. Yet the ability of the L’eggs salespeople to stock product displays efficiently had a negative twist; although it enabled L’eggs to introduce numerous line extensions, their addition complicated the product selection process at the point of purchase and made it seem inconvenient in the minds of many consumers.

To ensure the freshness and integrity of its snacks, Frito-Lay’s 9,000 van salespeople visit 300,000 outlets each week. Beyond taking orders, they are trained to advise retailers about how to allocate shelf space in the snack food section according to a six-point space management program. Yet, despite the clout of its sales force, Frito-Lay could not persuade supermarkets to stock its new line of Grandma’s cookies at supermarket check-out counters; they are now being displayed in the cookie sections.

These two examples deliver an important message. Even when a company has the sales force to ensure the execution of a POP program, it must never lose sight of the needs of consumers and the trade.

Many consumer goods marketers cannot afford their own sales forces and must rely on brokers or service merchandisers. Both are often unfairly demeaned. A good broker is sometimes more effective than a direct sales force in managing the point of purchase, as many big companies, including H.J. Heinz and Pillsbury, know well. Because they carry a number of noncompeting product lines, brokers enjoy economies of scale that enable them to visit retail stores more often than a manufacturer’s sales force to check stocks, reset displays, and offer planograms. Brokers can establish close relationships with retailers in their local areas and organize blockbuster promotional events for their principals. For frozen food manufacturers, brokers are especially important to managing the point of purchase. Frequent store visits are essential because freezer space is limited on account of equipment and energy costs, and stores carry little, if any, backroom inventory.

If your company uses brokers or service merchandisers, here are four approaches to ensure that they effectively execute your POP program:

1. Check the size of the broker’s sales force against the company’s product line commitments. Is the brokerage firm overextended? How important is your business to the firm?

2. Develop a POP program that is creative yet easy to implement. As a result, your company may gain more attention from the broker’s sales people (and, therefore, the trade) than the broker’s other principals.

3. Compensate the broker appropriately for the POP tasks you expect him or her to perform. Do you provide bonus incentives to broker salespeople for additional display placements?

4. Evaluate POP performance. Do you buy display audits to compare your share of display space with your market share? Do you occasionally play the customer, visit stores, check displays, and ask sales clerks for information?

These same principles are relevant whether the retailer, a broker, or a direct sales force is responsible for executing the POP program. The most important point for the consumer goods marketer to recognize is that an effective POP program never runs like clockwork. It needs constant attention and reevaluation.

Many consumer goods marketers are increasing their expenditures on POP programs. In 1982, for example, Elizabeth Arden, Inc. raised its POP budget by 40%.11 What these marketers recognize is the old adage that the difference between success and failure often depends on the last 5% of effort rather than on the 95% that preceded it. In consumer marketing, that last 5% manifests itself at the point of purchase just before consumers choose what to buy.

A version of this article appeared in the November 1983 issue of Harvard Business Review.