Agency: Frame Cunningham Holden Edy Authors: Tristan Fulton

Global Video

THE PROBLEM

Global Video is a video retail multiple with a turnover in 1997/98 of 31 million, and currently over 230 outlets situated primarily in Scotland and the north of England. Frame Cunningham Holden Edy (FCHE) was appointed in September 1997 to conduct a full marketing audit and to develop and implement a marketing and brand strategy, while continuing to provide ongoing promotional support throughout the period of change.

The advertising marketplace for video hire outlets is dominated by two main players Global Video and Blockbuster. The differentiation in size and expenditure is significant; Blockbuster's average promotional budget has been 7 times that of Global over the last three years (Appendix 1), with approximately 660 stores against Global's 230.

After interviews with senior staff FCHE found that Global had no clear idea of where it was positioned within the market. There was no consistent pricing policy; with variations between stores, and frequent price changes. Global often changed promotions and offers, which confused and annoyed customers.

There was little acknowledgement of the regional variations in performance with the marketing budget being spent on blanket coverage door drops, local press ads, and TV with poor communication. There was no effective model for launching new stores, or for supporting underperforming stores.

In general, there had been no clear marketing strategy resulting in a piecemeal promotions effort with no consistency across stores.

THE RESEARCH

On appointment, FCHE conducted qualitative research on a number of marketing issues with focus groups of customers from Manchester, Dundee, Newcastle, and Glasgow, and store managers. The findings are summarised below in Table 1.

table 1

 

Store Managers' Thoughts

Customers' Thoughts

Service

Thought service was poor. Staff not able to borrow videos for home use. Therefore, felt they had little product knowledge.

Thought managers were quite informative. Customers were not looking for any more in-depth knowledge.

Price

Thought price parity with competitors was very important, so were quite keen to alter prices frequently.

Customers were irritated and confused by frequent price changes.
Saw Global as comparable, or cheaper than Blockbuster.

Product

Wanted to offer wider ranges, with additional services and merchandise to imitate Blockbuster. (NB Blockbuster are now taking out all 'extras').

Were not interested in 'extras'. Wanted purely to hire a video.
Perceived Global to have a greater variety and depth of stock than Blockbuster at a better price.

Shop layout

Thought the layout was a mess and POS cheap.

Thought store layout was easy to follow and the point of sale gave the message.

Branding

Thought branding appeared cheap.

Customers felt branding reflected their expectations.

Competition

Blockbuster more upmarket and more expensive.

Blockbuster more upmarket and more expensive.

Why choose a video store?

Availability of product, depth of titles, locality, price.

Availability of product, depth of titles, locality, price.

Global as a company

Disenfranchised

Fine

Improvements

Branding
Service
More training

As long as the staff were friendly, the shops were clean and tidy, and they could get the title they wanted, customers were happy.

The research showed that perceptions of these issues between the customers and the store managers were massively apart. It was clear that Global had to reconcile the perceptions of these two groups.

FCHE then researched store managers and customers perceptions of Globals previous communications. Again, findings are summarised below, in Table 2.

Table 2

 

Store Managers

Customers

In-store promotions

Quite good (largely because they were price driven).

Quite good, but changed far too often. Therefore, confusing.

TV commercials

Tacky and didn't communicate any clear message.

Tacky and didn't communicate any clear message.

Magazine (24 page, bought externally then branded)

Full of irrelevant adverts. Promoted some bad films, therefore not a reliable guide.

Full of irrelevant adverts. Promoted some bad films, therefore not a reliable guide. Very little of it worth reading.

Press advertising

No clear strategy, or planning.

Too much information and confusing.

Point of sale/branding

No consistency, messy.

Fine.

STRATEGIC OBJECTIVES

Globals objective in 1996/97 was to pursue an expansion policy by providing video rental representation in towns and cities where none existed. To achieve the above, FCHE identified the following strategic marketing objectives to help to finance the expansion plans:

  • Introduce consistent pricing to maximise profits
  • Generate a higher spend from existing customers
  • Identify extra revenue-earners (that is, the potential of ex-rental sales)
  • Improve the performance of under-performing stores
  • Develop a launch strategy for new stores

From which, FCHE recommended the following action:

Improve the consistency of the branding

Fully integrate the advertising message across all media

Develop a relationship with existing renters

Ensure media coverage of lapsed/potential renters

Market regionally to take account of regional variations

Overhaul internal communications

TARGET AUDIENCE

Research defined the current market profile as:

  • 1634 year-olds (mainly male)
  • Each spending 1020 minutes in the shop
  • Hiring three films per week over Friday, Saturday, Sunday, and returning them on Monday
  • Very price conscious and offer-driven

BACKGROUND TO CREATIVE STRATEGY

FCHE's research revealed the following points:

  • New releases were the biggest draw
  • The availability of top titles was the most important factor in choice of store
  • The in-store magazine was the main source of information on new titles released, and forthcoming releases

CREATIVE STRATEGY

FCHE aimed to create a campaign which made the brand seem more significant in the market place than it really was. The market has little brand loyalty, so FCHE wanted to strengthen the Global brand to encourage the target market to identify more strongly with it and to maximise the 'front of mind' awareness of the brand. To do this, FCHE created a character, Mr Global, who personified Global's primary product of 'entertainment', and its brand values of:

  • smart-thinking
  • young
  • value for money
  • quirky
  • humorous

FCHE reasoned that Mr Global would have the effect of raising brand awareness, while giving Global a vehicle with which to deliver information about new releases, sales promotions, and so on.

FCHE created 6 versions of the Mr Global 'idents' to use interchangeably to top and tail video trailers.

THE PROMOTIONAL OFFER

Customers' main concern was the availability of top titles. So, FCHE created the concept of promoting monthly a top new release as a 'guaranteed product' which, if not immediately available, the customer would get free the next time. This offer is promoted with the strapline:

'Get it first time, or get it free. That's the Global guarantee.'

Mr Global is also used to promote the other main promotional message created by FCHE:

'Get three for the price of two'

For which a generic TV ad has been created (see video accompanying this entry) for use during months where no new release is strong enough for the guaranteed product offer.

Combining the Mr Global character with strong sales promotion tools appeals to both consumers' emotional and rational values.

FCHE encouraged Global to stick to one promotion for a sufficient period of time (initially quarterly) to allow the message to filter into the customers' consciousness. However, both 'guaranteed product' and '3 for 2' have worked so well that they are now permanent and central to all Global's communications.

(Blockbuster saw the creation of the 'Get it first time, or get it free. That's the Global guarantee' campaign as so potentially damaging that it launched its own version of this promise one week later)

BRANDING

With the strategy, message, and vehicle decided, FCHE implemented the campaign. involved:

  • Modernising the logo
  • Creating a full TV, radio, and press advertising and media campaign
  • Developing a magazine (in-store and direct mail item)
  • Improving the stores' exteriors
  • Improving the consistency of store layout and design
  • Improving the branding of cases, cards, and shelf-talkers
  • Improving the consistency of POS promotions and information

MEDIA STRATEGY

Research showed that TV and radio advertising fitted the target market's main media consumption. The heaviest video renters are a small proportion of the customer base, so research was undertaken to identify the profile of these individuals, what media they consumed and when. Since the guaranteed product varies every month, four 'film types' were identified as a basis for targeting the more occasional renters:

  • Action/adventure
  • Horror
  • Humour
  • Children's/family

The majority of heavy renters were identified as young, single, less affluent that the norm, and relatively heavy media consumers (source: TGI 98). The occasional renters where more elusive, but using TGI Lifestyle/Stage characteristics, routes were matched to the 'film type' of each product to maximise coverage.

A buying audience was selected to encompass all film types, ensuring access to the best programming. Outside these times, additional access to programming was delivered for specific film types.

A volumetric model was built to relate performance to adspend by month and by region allowing for new areas to be upweighted, or re-assessed for financial viability.

Television is used to reach occasional renters (and by default the heavier users) with a clear product offer, and well-branded. The media buying is weighted to take into account regional profitability.

Radio

Because of the targets' high consumption, radio was adopted as a support medium to reinforce the TV message. However, radio also stands alone in areas where TV is not cost-effective.

Press

Full page adverts in national press are used to reinforce TV and radio advertising.

In addition, local press adverting is used tactically to:

  • Reinforce the information in the magazine.
  • As sponsorship of TV pages and film reviews
  • To support the launch of new stores in local press
  • To support underperforming stores

BELOW-THE-LINE INITIATIVES

New stores opening

A model was created to support the launch of new stores. This comprises a leaflet drop across relevant postcode areas, with two local press adverts placed prior to opening and four after.

This model, combined with the strengthening of the brand, means that new stores now take three months to get up to the target level of operating profit; where previously, the average was nine months.

Again, because of the strengthening of the brand, new stores can open on a higher price of 1 .99 than previously, and are scaling to the full price of 2.99 much faster than before.

Customer magazine (direct mail and in-store)

FCHE created a monthly A4, four page magazine to replace the 24 page centrally-bought one which customers thought was unreliable and lacking in content. It is available at the point of sale in-store and contains information on:

  • Top l0 films
  • 'Coming soon' films
  • Guaranteed product
  • New releases
  • Quarterly offers
  • Ex-rentals for sale
  • Price points

Poor performance stores

Once Global started to collect figures on individual stores' performance, FCHE identified thirty stores which required additional support at a local level. Monthly door drops to catchment postcode areas were introduced using a version of the main customer magazine with artwork changes to include money-off, and two-for-one vouchers as incentives. 'First video free' vouchers were also introduced to encourage new customers.

A series of special offers were promoted through radio and press to back up the activity and boost the performance of these stores.

Ex-rentals press ads and magazine

In the twelve weeks up to Christmas in 1997, FCHE ran a press ad campaign to promote the sale of ex-rental videos. As a direct result of this, Global generated an additional 1.2 million of turnover. This revenue earner had previously been untapped; ex-rentals had been sold in-store, but no effort had been made to promote them.

For Christmas 1998, FCHE created an A4 double-sided Ex-Rentals magazine. It is designed as a companion to the main customer magazine, and is carried inside it. Combined with a press campaign, this initiative resulted in 1 million additional turnover. The drop from the previous year was accounted for by the fact that there was less stock to sell. However, pro rata, the stock was sold quicker than the previous year.

Loyalty scheme

FCHE created a loyalty chequebook as an incentive to existing customers. The chequebook contains money-off vouchers, and other promotions and was to be sent out to members who reach certain eligibility criteria.

The chequebook has never been distributed; the initial estimate of 2,000 renters hitting the 75 films per period benchmark was grossly exceeded as a result of the other marketing activity. The real figure was found to have risen to 14,000 renters hitting the benchmark.

FCHE created a scheme for prompting lapsed members to return. However, due to costs having been allocated elsewhere to date it has never been implemented.

(NB Global is unable to provide figures on membership increases.)

Point of sale

The quality and consistency was improved by the introduction of strongly branded panels specific to the two main promotional offers; 'guaranteed product' and '3 for 2'.

These messages are also taken across all the shelf talkers etc, in-store.

Internal communications

Research among store managers revealed that they wanted to be able to influence what happened within their stores. FCHE recognised that exceptional levels of service were needed from staff to help to build up brand loyalty among customers. Based on the comments received from staff during the marketing audit, an internal communications exercise was developed which addressed the topics of:

  • Company history
  • Terms and conditions
  • Where are we?
  • Where are we going?
  • How can you influence the business?
  • What do we expect from you?
  • Our commitment to you
  • How we will communicate it?

And the following initiatives were implemented:

  • Quarterly managers' forum
  • Bi-monthly supervisors' forum
  • Monthly newsletter
  • Weekly briefing sheet
  • Suggestions scheme
  • Reward scheme for innovation/application
  • Putting in place training managers and area managers
  • Producing a training video for staff

In addition, to address the problem of disenfranchised branch managers, the following measures have been introduced:

  • A senior branch manager's post to provide experienced managers with additional responsibility and accountability
  • New bonus scheme for branch managers (For which 10,000 was estimated. However, response was so good, that around 18,000 was actually paid-out.)
  • A similar bonus scheme for area supervisors linked to operational appraisal.

These initiatives have significantly improved staff retention at branch management level.

Appendix 1

Spend Blockbuster and Global

Blockbuster

 

1996

1997

1998 (to Oct)

TV

2,027,000

4,280,000

32,000

Radio

565,000

1,298,000

2,690,000

Press

872,500

639,900

590,000

Other

515,000

437,600

Total

3,980,100

6,217,900

3,749,600

Global

 

1996

1997

1998 (to Oct)

TV

137,000

299,600

359,000

Radio

15,000

384,880

220,000

Press

207,000

141,800

804,000

Total

359,000

826,280

1,383,000

Source: MMS

Appendix 2

Notes

FCHE took over the Global account in September 1997.

Global's fiscal year runs from September to September.

Turnover per store

 

No of stores

Average turnover

 

Sept 1997

215

120,800

 

Sept 1998

227

137,000

Up 14%

When FCHE took over the Global account in September 1997, 45% of stores were making significant losses of between 20,000 to 30,000 per year. Now only 3 stores are making losses and those are all under 10,000.

Appendix 3

New branch performance

 

 

 

 

 

New store opening support starts

 

 

 

 

OctDec 97

JanMar 97

AprJun 97

JulSept 97

OctDec 98

JanMar 98

AprJun 98

JulSept 98

Average sales per new store opened

1562

1642

1619

1935

1694

2750

2158

2716

% increase

 

5.07%

1.40%

19.54%

 

62.35%

21.52%

25.82%

Average % increase

Before promotion:

7.74%

After promotion

22.22%

(The slump between April to June 1998 is accounted for by an overall decline in the market. See Figure 1 and Figure 2)

appendix 4

Underperforming stores

 

 

 

 

 

Promotion starts

 

 

 

 

 

OctDec 97

JanMar 97

AprJun 97

JulSept 97

OctDec 98

JanMar 98

AprJun 98

JulSept 98

OctDec 98

Average sales per store

919

968

1099

1137

1467

1649

1244

1716

1756

% increase

5.33%

13.50%

3.47%

29.08%

12.35%

24.55%

37.99%

2.32

Average % increase

Before promotion:

7.43%

After promotion:

11.44%

(The slump between April to June 1998 is accounted for by an overall decline in the market.  See Figure 2).NOTES & EXHIBITS


FIGURE 1: NEW BRANCH PERFORMANCE