April 3, 2008
Retailers Compete for Share of Consumers’ Rebate Checks
When those economic stimulus rebate checks start showing up in American mailboxes sometime next month, retailers and brand manufacturers want to make sure consumers know just where they can go to start spending the proceeds.
According to an AdAge.com report, Home Depot and Sony are already looking to get their messages out to be sure consumers earmark those dollars for their products.
Sony’s campaign encourages consumers to “Turn your 1040 into a Sony 1080p.” The Internal Revenue Service is determining the amount of rebates to send consumers based on their tax (1040) returns.
Home Depot is looking to get consumers thinking of turning their newfound greenbacks into purchasing a wide variety of green products available in the company’s stores and website.
The home improvement retailer has come out to support House Resolution 987, a bill introduced by U.S. Rep. Brian Baird (D-Wash.) that encourages consumers to spend their rebates purchasing energy-efficient products and services.
In an email to Ad Age, an unidentified Home Depot spokesperson wrote, “We think it is a great way to turn a short-term stimulus into a long-term investment by reducing consumers’ energy costs.”
While Sony and Home Depot have looked to get out front with their messages, industry watchers are not expecting them to be alone for long.
“It may actually become competitive to get a message across around the time the checks arrive. That’s why some progressive brands are already talking about it. Because, as we know, consumers are already spending the money,” said Marshal Cohen, analyst with NPD Group.
An unnamed spokesperson for the National Retail Federation told Ad Age, “When the majority of checks come, we’re sure to see many retailers jump on the bandwagon. Retailers recognize that many consumers don’t want to splurge when they get these checks, but for those that do, retailers are sure to be ready to help them get the best bang for their buck.”
Discussion Questions: Do companies advertising early with messages around the economic stimulus rebate checks have an advantage over those that may wait until closer to the date when consumers begin to receive the money? Is there a type of message that you think will best resonate with consumers as the checks come in?
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In my opinion, the amount of money involved is insignificant and will not make much of an impact. In addition, only low income people under something like $75,000 qualify. The average single or two earner family won’t see a dime. Checks of $300 to $1200 will not make any meaningful difference to anyone and is hardly worth the effort to make any special plans. The program should have been expanded to provide larger rebates for those who pay significantly more income taxes.
Nobody can be certain yet whether the tax rebates will cause a sudden rush of consumer spending or whether consumers might use the windfall to retire some existing credit card debt. It’s also likely that some of the money will be earmarked to help cover rising costs of food and fuel in the past few months, so there is no guarantee that stores will see a stampede to buy new HDTVs, outdoor grills and the like. My sense is that marketers and retailers would be better off waiting until “the check is in the mail” in order to bring more urgency and timeliness to their messages.
Top of mind awareness is always a plus in getting consumers to react. Combine top of mind awareness with an action plan–then you have them thinking and planning.
If you’re the zillionth retailer to promote spending income tax rebate money in your store, your ad will be ignored because you are a copycat bore. Change your name to “Copy Everyone Else Stores” and run ads 24 x 7 that tell everyone your mission is “Copying all the other boring stores.” Put signs on the doors that say “$50 reward guarantee: If you can find anything special we have or anything special we’ve done.” Be sure to pay your folks the same as everyone else so they won’t regret their resignations.
Remember: all the retailers who’ve gone out of business probably did something unique and that’s why they went broke.
When there is money to spend, advertising is usually a factor in how it is spent. Consumers are rightly concerned about the economy. They are being pinched by higher costs for food and fuel. Some might view the checks as a way to pay current bills; others may see the checks as being “free money” and splurge on a new electronic gizmo; some may put the money in the bank.
Should they decide to spend the check, consumers will be looking for a great deal. Retailers and brands that advertise those deals should have an advantage over those who don’t.
Timing is really everything when it comes to an ad campaign. You don’t want consumers to forget about your brand 1 or 2 months down the road but on the other hand, you don’t want to be lost in all the other marketing blitzes going on at the same time. Targeted marketing through a chain’s loyalty program would be the best way to get customers to spend their checks in your store. Chains that don’t have a loyalty program are best suited to marketing themselves in strong bursts over the next few months to get the point across (and perhaps assess the need for a loyalty card).
There are so many themes that can be used for this type of situation. I like HD’s going green with your green campaign. It really connects with consumer as the environment is a huge topic these days. How about a ‘help the economy and be patriotic by spending your stimulus check at our store’ theme? Support the Red, White and Blue by giving us your green!
Most consumers waiting on their rebate checks already have determined how they will spend it. The majority of them, I suspect, will use it to pay off old debt rather than indulge in some new purchase. But for the rest of the recipients, tell them early on why they can’t do without a certain product.
I personally love the Sony line on turning your 1040 into a Sony 1080p. As the owner of a Sony 1080p LCD I would tell you it’s a great investment. But I digress.
I don’t believe the timing is as important as the ability to get the message to stick. I think it takes something memorable like the Sony line to stand out as more and more retailers will push spending the rebate checks with them. But get out early with a “sticky” message and it will definitely benefit both retailers and manufacturers.
What will resonate most with consumers is that the value they receiving when spending their rebate checks. It doesn’t matter if it is their paycheck or Uncle Sam’s, people today are looking for as much value as possible when spending money. So the most effective campaigns will be those that demonstrate to the consumer that their promotion offers consumers the most for their government dollars.
We did a survey on this among our retailer base, and found that first of all, 65% of the 95 retailers that responded said they had no plans to do anything around the stimulus plan. Of the 35% that do have plans, 77% plan promotions, but only 37% plan to specifically increase inventory for the event. Now, keep in mind that based on NRF’s consumer survey, they estimate that consumers will put nearly $43B of the $168B package into incremental retail spending, which by their numbers makes it a bigger “sales event” than Valentine’s Day, Easter, and Mother’s Day combined.
So first, my advice is to be very careful what you promote. It’s a great tie-in to try to tap into both the stimulus package and green sentiment–but only if you’ll have the products to sell. It looks from the numbers that most retailers are waiting to see what they’re heavy in, inventory-wise, and then promote that. But survey respondents said that they mostly expect consumers to spend $200 or less (the estimate of 70% of respondents), and they expect it to go to consumer electronics (48%) and fashion (29%)–not big ticket items like appliances, and not “trading up” luxury items, even “mass” luxury.
Second, the used car salesmen and discount furniture stores have already jumped all over the “spend your stimulus check here” bandwagon–at least in my market. So if you’re going to be advertising to try to capture stimulus spending, be careful of the company you keep. I think for most retailers, it’s going to have to be a more subtle message than “Bring your check, baby!” And in that sense, I think Home Depot might have it right–a less overt message about “Hey, it’s not a splurge, it’s investing in your future–money that you can spend now and reap returns from down the road, while helping both the economy and the environment.”
I used to work for a cellular carrier (later bought by another carrier) and our phones were available for purchase at check cashing locations. One spring we created a poster for them with the “use your tax refund to buy a phone” theme.
It stimulated our economy for a short period.
We can only speculate on what “most consumers” will do with the rebate checks. Probably, there are a wide range of ways this money will be used, and just as with any other consumer issue, segmentation and need analysis would give insight into the probable behavior of any given segment.
I am unfamiliar enough with the specifics of the rebate program to be confident on the precise consumer segments most likely to benefit, and to what extent. However, if I was a marketer, I would know that, and use that information to decide if an opportunity existed for my organization.
I might also argue that we are in for a long run of tough times. Attempting to convince consumers to “consume” when many should be retiring debt or building reserves back up…well…I don’t see how that serves anyone. If I was a company with a competitive advantage built around “value,” I might, radically, consider spending ad money suggesting the consumer NOT spend the money. I know this is almost impossible to consider, yet there is considerable evidence that consumers trust organizations who appear to act against their own short term benefit in favor of the long term co-benefit of all involved.
Why not take the “high” road and build equity, rather than try for a short term spike in volume?
In the eyes of the consumer, this is free money. As such, they will tend to be more inclined to spend it on luxury items rather than necessities. This presents a great opportunity for any retailer to drum up additional sales.
When it comes to marketing, getting the message out first, keeping it frequent, and making it appealing is essential. The goal is to lock up potential buyers’ “mental real-estate” so that the only thing they can think about until the cheque arrives is your product. Those retailers that wait too long may lose out on the opportunity.
As for Home Depot’s marketing angle, great effort. But I think it will be tough to convince a consumer to forgo getting a new HD TV in favor of a push mower.
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In my opinion, the amount of money involved is insignificant and will not make much of an impact. In addition, only low income people under something like $75,000 qualify. The average single or two earner family won’t see a dime. Checks of $300 to $1200 will not make any meaningful difference to anyone and is hardly worth the effort to make any special plans. The program should have been expanded to provide larger rebates for those who pay significantly more income taxes.
Nobody can be certain yet whether the tax rebates will cause a sudden rush of consumer spending or whether consumers might use the windfall to retire some existing credit card debt. It’s also likely that some of the money will be earmarked to help cover rising costs of food and fuel in the past few months, so there is no guarantee that stores will see a stampede to buy new HDTVs, outdoor grills and the like. My sense is that marketers and retailers would be better off waiting until “the check is in the mail” in order to bring more urgency and timeliness to their messages.
Top of mind awareness is always a plus in getting consumers to react. Combine top of mind awareness with an action plan–then you have them thinking and planning.
If you’re the zillionth retailer to promote spending income tax rebate money in your store, your ad will be ignored because you are a copycat bore. Change your name to “Copy Everyone Else Stores” and run ads 24 x 7 that tell everyone your mission is “Copying all the other boring stores.” Put signs on the doors that say “$50 reward guarantee: If you can find anything special we have or anything special we’ve done.” Be sure to pay your folks the same as everyone else so they won’t regret their resignations.
Remember: all the retailers who’ve gone out of business probably did something unique and that’s why they went broke.
When there is money to spend, advertising is usually a factor in how it is spent. Consumers are rightly concerned about the economy. They are being pinched by higher costs for food and fuel. Some might view the checks as a way to pay current bills; others may see the checks as being “free money” and splurge on a new electronic gizmo; some may put the money in the bank.
Should they decide to spend the check, consumers will be looking for a great deal. Retailers and brands that advertise those deals should have an advantage over those who don’t.
Timing is really everything when it comes to an ad campaign. You don’t want consumers to forget about your brand 1 or 2 months down the road but on the other hand, you don’t want to be lost in all the other marketing blitzes going on at the same time. Targeted marketing through a chain’s loyalty program would be the best way to get customers to spend their checks in your store. Chains that don’t have a loyalty program are best suited to marketing themselves in strong bursts over the next few months to get the point across (and perhaps assess the need for a loyalty card).
There are so many themes that can be used for this type of situation. I like HD’s going green with your green campaign. It really connects with consumer as the environment is a huge topic these days. How about a ‘help the economy and be patriotic by spending your stimulus check at our store’ theme? Support the Red, White and Blue by giving us your green!
Most consumers waiting on their rebate checks already have determined how they will spend it. The majority of them, I suspect, will use it to pay off old debt rather than indulge in some new purchase. But for the rest of the recipients, tell them early on why they can’t do without a certain product.
I personally love the Sony line on turning your 1040 into a Sony 1080p. As the owner of a Sony 1080p LCD I would tell you it’s a great investment. But I digress.
I don’t believe the timing is as important as the ability to get the message to stick. I think it takes something memorable like the Sony line to stand out as more and more retailers will push spending the rebate checks with them. But get out early with a “sticky” message and it will definitely benefit both retailers and manufacturers.
What will resonate most with consumers is that the value they receiving when spending their rebate checks. It doesn’t matter if it is their paycheck or Uncle Sam’s, people today are looking for as much value as possible when spending money. So the most effective campaigns will be those that demonstrate to the consumer that their promotion offers consumers the most for their government dollars.
We did a survey on this among our retailer base, and found that first of all, 65% of the 95 retailers that responded said they had no plans to do anything around the stimulus plan. Of the 35% that do have plans, 77% plan promotions, but only 37% plan to specifically increase inventory for the event. Now, keep in mind that based on NRF’s consumer survey, they estimate that consumers will put nearly $43B of the $168B package into incremental retail spending, which by their numbers makes it a bigger “sales event” than Valentine’s Day, Easter, and Mother’s Day combined.
So first, my advice is to be very careful what you promote. It’s a great tie-in to try to tap into both the stimulus package and green sentiment–but only if you’ll have the products to sell. It looks from the numbers that most retailers are waiting to see what they’re heavy in, inventory-wise, and then promote that. But survey respondents said that they mostly expect consumers to spend $200 or less (the estimate of 70% of respondents), and they expect it to go to consumer electronics (48%) and fashion (29%)–not big ticket items like appliances, and not “trading up” luxury items, even “mass” luxury.
Second, the used car salesmen and discount furniture stores have already jumped all over the “spend your stimulus check here” bandwagon–at least in my market. So if you’re going to be advertising to try to capture stimulus spending, be careful of the company you keep. I think for most retailers, it’s going to have to be a more subtle message than “Bring your check, baby!” And in that sense, I think Home Depot might have it right–a less overt message about “Hey, it’s not a splurge, it’s investing in your future–money that you can spend now and reap returns from down the road, while helping both the economy and the environment.”
I used to work for a cellular carrier (later bought by another carrier) and our phones were available for purchase at check cashing locations. One spring we created a poster for them with the “use your tax refund to buy a phone” theme.
It stimulated our economy for a short period.
We can only speculate on what “most consumers” will do with the rebate checks. Probably, there are a wide range of ways this money will be used, and just as with any other consumer issue, segmentation and need analysis would give insight into the probable behavior of any given segment.
I am unfamiliar enough with the specifics of the rebate program to be confident on the precise consumer segments most likely to benefit, and to what extent. However, if I was a marketer, I would know that, and use that information to decide if an opportunity existed for my organization.
I might also argue that we are in for a long run of tough times. Attempting to convince consumers to “consume” when many should be retiring debt or building reserves back up…well…I don’t see how that serves anyone. If I was a company with a competitive advantage built around “value,” I might, radically, consider spending ad money suggesting the consumer NOT spend the money. I know this is almost impossible to consider, yet there is considerable evidence that consumers trust organizations who appear to act against their own short term benefit in favor of the long term co-benefit of all involved.
Why not take the “high” road and build equity, rather than try for a short term spike in volume?
In the eyes of the consumer, this is free money. As such, they will tend to be more inclined to spend it on luxury items rather than necessities. This presents a great opportunity for any retailer to drum up additional sales.
When it comes to marketing, getting the message out first, keeping it frequent, and making it appealing is essential. The goal is to lock up potential buyers’ “mental real-estate” so that the only thing they can think about until the cheque arrives is your product. Those retailers that wait too long may lose out on the opportunity.
As for Home Depot’s marketing angle, great effort. But I think it will be tough to convince a consumer to forgo getting a new HD TV in favor of a push mower.