Vons mulls stake in electronic promotions outfit: technology forks out coupons, ads at checkout line.

Vons Cos. Inc., after testing electronic promotions system at checkout stands last year, this month is expected to finalize an agreement to install permanent technology for high-tech promotions at all 345 supermarkets.

Deepening their commitment to so-called micromarketing, officials at Arcadia-based Vons said they plan to sign an agreement to use the so-called Vision Value System and invest $5 million for a 9.3 percent stake in the technology's manufacturer, Deerfield Beach, Fla.-based Advanced Promotion Technologies Inc.

Based on customers' buying habits, the system would spit out both "electronic" and paper coupons, seduce waiting customers with video advertisements, speed check approval and tally points toward claiming prizes, said Vons spokeswoman Julie Reynolds.

For instance, a loyal buyer of a certain brand of ham might be awarded a coupon for a rival's ham. The coupon is offered instantly at check out when the bar-code scanner triggers APT's printer. The competitor would pay APT for the opportunity to steal a confirmed ham-buyer.

Vons would pay APT an average 5.5 cents per promotion "trigger" in hopes of currying favor with special customers, said APT spokeswoman Cathy Amann.

But also Vons would build a vast database of customer names and buying habits. That could also be used to target customers at home with direct mail promotions, Reynolds said.

The Vision Value Network would be primarily targeted at the 1 million VonsClub members, who mostly live in Southern California. Some of those loyal shoppers, who have volunteered personal information in exchange for earning benefits, have already been tested on a rival electronic promotions technology.

Just as marketers exploited radio in the 1930s, television in the 1950s and direct mail in the 1980s, today they are harnessing checkout-stand technology. They match identities and habits of customers to reward certain behavior, downplaying privacy concerns over possible misuse of buyer databases, especially concerning items like medicines or personal hygiene items.

That controversy erupted on a different front last week when the Federal Trade Commission tangled with the big credit-reporting agencies over selling personal profiles to direct marketers.

Some marketing experts said Vons' new technology is not as innovative as it may seem, and not all its inherent gimmicks will necessarily be effective.

The points-for-prizes promotion, for instance, might not be all that successful, said Dave Stewart, a USC marketing professor.

"Those programs haven't worked (in non-electronic formats) well because they require more effort by the consumer," he said. "Consumers are often required to buy things they wouldn't ordinarily buy."

Douglas Christopher, a securities analyst with the Los Angeles-based brokerage firm Crowell Weedon & Co., also said he wasn't certain how effective the new promotions would be. Southland grocery chains will woo customers in the 1990s more by providing better service, rather than with technology and gimmicks, he said.

Other ad industry experts, though, herald the shift away from mass marketing to "micro-marketing" as among the most potent industry trends.

"I think this is a new wave, with enormous importance," said Chief Executive Murray Bowes of direct-response ad agency Bowes Dentsu & Partners.

Nationwide, supermarket chains like Giant Foods, Safeway and Ralphs Grocery Co. have tested the wares of established techno-marketers like Chicago-based Information Resources Inc.; New York City-based Nielsen Marketing Research and Catalina Marketing Corp. of Anaheim. These firms are elbowing into the incentive-promotion industry, where advertisers spent an estimated $63 billion nationwide, according to ad industry trade magazine Promo.

Much was spent on traditional media, like newspapers and direct mail.

"We're trying to eliminate the need for direct mail," said Amann of APT, a relative start-up.

For grocery items, 11 coupons are redeemed for every 100 dispensed electronically vs. just two for traditional mailed or inserted coupons, according to a study by Lincolnshire, Ill-based research firm NCH Promotional Services.

"This would certainly reduce direct mail some and free-standing inserts in the newspapers too," predicted Kenneth Longman, owner of Longman-Moran Analytics in Princeton, N.J., an advertising research firm that counts Coca-Cola and Campbell's Soup among its clients.

Bowes, however, speculated his 33-employee ad agency could profit from the trend if hired by retailers to "help communicate" the technology's benefits to buyers.

Either way, the technology is clearly tapping into a growing segment of advertising. Coupons and other quick-sell promotions accounted for some 60 percent of business' ad budgets in 1990, up from 40 percent a decade earlier.

The flip side, however, is potential privacy invasion.

"It's a major concern of the Direct Marketing Association that (retailers) use this responsibly," said Bowes, a member of that 3,600-member organization's international governing board.

Consumer advocates question whether one's sexual or racial characteristics, possible gleaned from buying diapers or kosher foods, should wind up in an exploitable database.

In the past, Vons has mailed promotional products to VonsClub customers' homes. But membership is voluntary, with a check-off box regarding promotions.