What The Bleep Is POWERMAT And How Did They Get Retail Leverage?

By Ben Smith

WHAT IS POWERMAT?

powermatEverybody has cursed a charging cable at some point.  Either you left it at home / in the hotel room / at the office, or you simply lost it.  In turn, I don’t think it is a stretch to think that in this wireless age, you could dream of wireless charging.  I vaguely recall hearing about the power induction technology behind Powermat at CES 2009 but never gave it a second thought.

Then today’s article in Ad Age set off my Retail Leverage radar and provided a perfect opportunity to frame some retail leverage concepts around a hot new product.  Be sure to play the TV spot below.

[youtube=http://www.youtube.com/watch?v=fiCb4l1Hzcw&hl=en&fs=1&autoplay=1]

Have you seen or heard about Powermat yet? If you haven’t yet, you will soon.  You won’t necessarily see the commercial, although they will be running ads like this one.  Where I’m confident you will see it will be in the top retailers in their respective categories.

POWERMAT GETS RETAIL LEVERAGE:

When you start breaking down Powermat’s launch strategy, you’ll realize they are using a hybrid of retail leverage strategies. More importantly, they are doing it on a scale much more relevant to challenger brand marketers used to dealing with 7 figure budgets.

1) Offer Program or Product Exclusivity (sort of)

best buy logotarget logo.aspxWhile I can’t call their launch an retailer exclusive strategy- it is not far from it, as they are focusing their launch efforts in Best Buy and Target.  Best Buy and Target tend to serve different customer types.  On the male / female spectrum they are about as far apart as you can get for consumer electronics purchases.  They both also provide best-in-class opportunities to tell your story to consumers.  Note – we love the power of Walmart and I’m sure Powermat has them in their future plans – but Walmart makes more sense down the line, once this new class of product is better established with consumers.

2) Have Something So Big “They” Can’t Ignore

Albeit on a more modest scale (see financial estimates below)-  they are employing the “Something So Big It Can’t Be Ignored” strategy.  First of all, by concentrating your retail distribution your marketing efforts at those 2 retailers go farther, and in turn the sales are concentrated.  PowerMat will feel BIG to the Best Buy and Target, even if their overall impact at retail is not large.  Secondly, according to Beth Harrison Meyer of Powermat (as quoted in Ad Age),  ”You will not be able to walk into these retailers and miss Powermat.” This is a clear signal that you will see those concentrated dollars in the form of endcaps, special signage, and probably demos too.

shopping in storePowermat will feel big to the consumers when they are most engaged – in the store on a shopping trip.  Finally, they have to be banking on capturing the attention of buyers at other retailers who will feel like they are missing out on something big.  After all – a buyer can only take so many consumer requests, store requests, and more important – demands from the boss that they get this product in-store ASAP in 2010.

MORE DETAILS ON POWERMAT’S LAUNCH:

From the Ad Age article: “The push breaks in the U.S., U.K. and Italy on Oct. 5, with an integrated campaign that includes everything from airport signage and installations to a four-page insert in Wired magazine and full-page print ads in other publications, and a series of humorous 15- and 30-second commercials intended to show people’s reactions to the new technology.”  The article also estimated their spend for the first phase of the launch campaign to be between $10M and $15M.

POWERMAT(H) – BREAKING DOWN THEIR BUDGET:

I’d like to give you a better idea of how I think their budget breaks down, to get it to numbers that marketers focused on the US market can relate to from their own budgets.  They mentioned a range of $10M – $15M for their launch budget for the initial phase, which I assume is Q4 (Oct – Dec).  They referenced launching in US, UK and Italy.    I’m betting a 60/30/10 split between US, UK and Italy.    Let’s assume for round numbers that the launch campaign is $10M, and the launch period is Q4 (Oct – Dec).    Let’s zero in on the US.  How far does that $6M go?  (note – even if I was on the low side assuming $6M for the US and it turns out to be $9M, you’d just add 50% to each of the estimates above).

BUDGET ESTIMATE BY LAUNCH COMPONENT:

TV: $3M (50% of total)

tv ad as seen onThat covers production and a modest TV campaign.  Here’s hoping the production is a lot closer to $500K than $1M.  A $2M campaign hardly makes a dent, so expect something concentrated and on cable.  Interestingly  & from personal experience – if they went the infomercial route which could have also been a viable strategy, that same spend would feel HUGE.

In-Store / Retailer Marketing: $2.4M (40% of total)

best buy in storeYou could easily spend $1M+ on premium shelf space, incremental displays and fixturing between Best Buy and Target for Q4 alone.  Then add a demo program that ramps up the last 6 weeks and you could burn another $1M.  Demos are highly effective but expensive (600 stores, 15 days of demos/training, 4 hours per event, $30 per hour = 7 figures).

Print Media, Airport Ads, PR: $600K (10% of total)

usa todayWho knows about the mix here – or cares for that matter.  I probably am under-estimating the spend here but I feel like these levers are more strategic and also smells of the dreaded 360 campaign compulsion.  They probably got a recommendation to spread their dollars across multiple vehicles and to target business travelers or something like that.  I do think their PR budget should go a long way as they shouldn’t have to fan the flames too hard to get coverage of this product.  As Vince from Shamwow would say, “It sells itself.”  No word if the Germans make it – cause you know they make good stuff.

TAKEAWAYS:

penny pincherOnce you start to zero in on Powermat’s launch strategy you can see a pretty focused “looks bigger than it really is” type of program.  I’m not sure how much the TV campaign will get them outside of the buyer’s meeting, but for starting out in only 2 retailers they are launching with a bang.  With over 40 years of challenger brand marketing experience, the crew here at Retail Leverage is used to doing more with less so that is why Powermat’s launch is so interesting to us.  Anytime you have the ability to launch a brand new product and brand for that matter, you are starting with the proverbial clean slate.  An exercise that Retail Leverage advocates is to think like a start-up, imagine you’ve just been given several million dollars and start ideating on what you’d do.  Priorities can emerge pretty quickly when you are forced to allocate the dollars.  With limited dollars, it is clear that Powermat started with the end in mind, which is in-store at the point of sale.  They worked backward from there doing what it takes to get 2 leading retailers to buy-in and support their launch.  In effect, they are launching with Retail Leverage.  That is a great place to be as long as the sales back up the expectations.  If Q4 is a success, you can bet they will expand their leverage to other retailers,  If they fail, you could say they BLEEPED up by putting all their eggs in just a few baskets.  We’ll check back in once we get an indication of their results!

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