By Ben Smith

WHY MINNEAPOLIS?

For Retail Leverage purposes, 3M doesn’t stand for the company that gave us post-it notes.  In this case, it stands for Mobile Marketing In Minneapolis – where you should look for leadership in this rapidly expanding consumer touchpoint.  Target and Best Buy are retail leaders in different aspects of mobile marketing, and their leadership will impact adoption throughout the rest of the retail.  This article provides an overview of their mobile marketing efforts.  If you deal with Target or Best Buy, your antennae should be tuned to how you can incorporate / leverage mobile marketing in your business with them.

TARGET LEVERAGING MOBILE COUPONS

One point of differentiation between Target and Walmart has been that Target embraces coupons.  So it is no surprise that Target will become the first retailer to accept mobile coupons at all of its stores. Target’s program requires consumers to opt-in to receive text messages to their mobile phone, with links to mobile web pages with barcoded offers they can use at checkout.

I don’t have the data to prove it, but I’m willing to bet that Target’s customers have a higher adoption rate in smart phone usage, as well of general text messaging usage than Walmart’s customers.

Promoting the usage of coupons also helps Target in its quest to overcome the perception that customers don’t save as much when they choose to shop at Target over Walmart.  On a related note, I wonder if the mobilization of coupons will cause Walmart to warm up to them?

BEST BUY LEVERAGING SALES LEADERSHIP IN SMART PHONES

Best Buy demonstrated their mobile marketing leadership early by enabling consumers with mobile phones to get product info sent via text message.  They plaster the 7 digit code & instructions throughout their circular ads and in-store POS and got valuable learning from consumers use of the technology.  However, the text messaging was just a piece of their evolving mobile marketing strategy.

Best Buy’s unique position as the leading retailer of smart phones (and mobile phones in general) positions them at the front lines of the rapid growth / evolution of uses for Smart phones, including mobile commerce.  In a recent article appearing at www.mobilemarketer.com, Tracy Benson, senior director of interactive marketing and emerging media at Best Buy, shared the trends Best Buy sees in mobile commerce, as well as provided a peek into their mobile commerce results.

6 trends in Mobile Commerce that Best Buy discussed:

1. Increased Smartphone Sales And Usage
2. Dramatic Increase In Mobile Web Usage
3. Mobile Commerce Adoption Grows
4. Mobile Search Becoming Essential
5. Multichannel Marketing Mix Expanding
6. Market Fragmentation Continuing

Visible Impact to Best Buy online traffic:

3% traffic coming from mobile (and increasing as a percentage of total)

Significant Impact to Best Buy’s Conversion rate:

25% higher on mobile platform than wired website (and increasing as compared to wired website)

Ways Consumers Are Using Best Buy’s Mobile Platform:

• 30% are using for research
• 18% are using to check inventory
• 28% are using to make a purchase
• (In store pickup heavily used)

Where Best Buy’s Mobile Platform Is Used:

• 60% are accessing from home via their mobile device
• 14% are accessing while in store

TAKEAWAYS:

You already knew retailer dot-coms were increasing in importance.  It’s not like that internet thing is going away – but I’m not sure if everyone sees the mobile marketing tsunami silently rolling across the ocean.  The smart phone arms race will accelerate the mobile applications available and consumers understanding of how much power they have in their hands.  If you’re visited Retail Leverage before, I’m sure you’ve picked up the theme that your retailer’s priorities should be your priorities also.  So add mobile marketing to your retailer checklist and bone up on the latest applications that consumers will use when making decisions in the aisle.  The good news is that retailers dot coms can be a great equalizer for challenger brands versus the big guys.

Finally, here are 3 things brands can do to improve their mobile marketing efforts:

1. Optimize your brands website for mobile.  The goal is to help consumers find info about your products from their mobile phone, without regard for where they actually purchase it.
2. Improve / increase your presence on your retailers website.  If you have a brand showcase on a retailers website, investigate its mobile appearance / functionality.
3. Optimize search on the retailers website.  Yes you have to pay for this.  Others are already doing it.  It is only going to increase in importance.

RELATED READING / RESOURCES:

• Related Retail Leverage Article: “Buying BIllboards In Bentonville”
• Ad Age article (subscribers only) An App for That, Too: How Mobile Is Changing Shopping
• Mobile Marketing Watch article about the killer barcode scanning app from ScanLife – it’s being preloaded on millions of handsets sold by Sprint and others. Note – it can even read basic UPC’s on every product.
• Mobile Marketing Watch coverage on Target mobile coupon announcement
• Mobile Marketer article that shares Best Buy’s insight on mobile marketing

By Ben Smith

WHAT IS POWERMAT?

Everybody 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)

While 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.

Powermat 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)

That 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)

You 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)

Who 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:

Once 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!