Co-op advertising: retailer and manufacturer working together to boost sales.
Twenty years ago there was a common misconception that dominated the thinking of all too many independent retailers. Unfortunately, the same fallacious theory still seems to be doctrine with an inordinate number of firearms retailers today. It goes something like this: "Word of mouth is my best advertising." Sure it is. And if you believe that you probably still believe in the tooth fairy, that the good guys always win, and that all brides are virgins on their wedding nights. So much for fractured fairy tales.
The fact is, in today's mile-a-minute world of competitive retailing, every retailer needs effective advertising--real advertising--just to help him stay afloat, never mind getting rich. "But", you say, "where's a struggling gun dealer to find money to pay for a costly luxury like (ugh!) advertising? We had a drought this past year, you know, and my money tree failed to bloom." Valid point. And, I'll be the first to admit that most advertising isn't free. But there is a way to reduce your advertising costs while actually increasing the amount of advertising you do. It's the same way appliance dealers can afford to advertise their refrigerators, car dealers their new cars, and socks `n jocks sporting goods dealers their sneakers and golf clubs. It's called...
Cooperative advertising is an advertising program originated and funded by a manufacturer. It provides financial reimbursement to retailers who advertise that manufacturer's product(s) within the retailer's local market. It's premised on the sound theory that well directed local advertising sells as much or more product than national advertising. And there is a great deal of truth in that assumption. After all, no manufacturer forks out piles of money to a bunch of local retailers just to see the company logo in print in the Cedar Rapids Gazette or the Peoria Journal-Star. When a local retailer advertises a product, both the retailer and the manufacturer benefit through increased sales.
Sadly, of the many millions of dollars of co-op advertising funds available from manufacturers every year, most of it goes unused simply because most retailers don't know about co-op (we just changed that, didn't we?) or don't understand how to use it (we're about to correct that, too).
Not all co-op advertising plans are the same, but the majority of them do have some common characteristics:
1) There are two primary types of co-op programs. The first and most common is fairly generic, and pretty much lets you advertise what you want whenever you want within certain boundaries and limitations. The second is more promotion oriented, and offers help only if you advertise specific promotional items during clearly defined promotional periods (ammunition during hunting season, for example). Neither type of plan is necessarily better nor worse than the other. You just need to understand the difference so you can weigh the relative value as it pertains to your own marketing scheme.
2) Every co-op plan includes some kind of eligibility requirement. In other words, in order to participate in the program and receive reimbursement, the retailer must meet certain qualifications -- like stocking a predetermined quantity of the product he plans to promote or buying a specified amount of merchandise from the manufacturer during the current or previous year. Just read the literature provided by the manufacturer and you'll see the requirements very clearly stated right up front.
3) The amount of advertising expense the manufacturer is willing to reimburse will vary greatly, but it tends to average out at around 50% or the retailer's actual out-of-pocket cost for things like newspaper space, radio and television time, and sometimes Yellow Pages ads and direct mail costs. Some plans will occasionally offer as much as 100% reimbursement, but that's rare. And, since very few manufacturers have completely bottomless pockets, there will almost always be a "cap" or maximum amount of some kind imposed. Usually the cap is based on a percentage of your purchases and could range from as little as 1-1/2% to as much as 5%, with about 2-1/2% being most typical. Occasionally a co-op plan will make special concessions for brand new retailers who have no buying history from the manufacturer, by allowing a small advertising allowance based on a percentage of the initial merchandise purchase. However, new dealer allowances tend to be the exception these days rather than the rule.
4) Not all manufacturers offer cash reimbursement. Many reimburse by issuing credit memos for future merchandise purchases, but not to arbitrarily deduct from the retailer's regular invoices. That's not necessarily a bad deal, because extra merchandise still means cash in your pocket when it's sold. Just don't expect a fat check in the mail unless the co-op plan is structured for cash reimbursement. If it makes a difference to you, ask before you use the plan or before you file your claims.
5) All co-op plans include specific creative guidelines for use of the company's logo, product illustrations and product description. They also clearly list various media and other forms of promotion that are specifically allowed or disallowed. Certain supporting materials will also be required when you file your claim, like newspaper invoices and tear sheets, broadcast affidavits, and the manufacturer's own claim form. Be absolutely certain you adhere to every single one of the procedures, guidelines, prerequisites, and proofs of performance. Be sure to dot all the "i's", cross the "t's", and play everything exactly by the rules. If you try to bend the rules, cut corners or rewrite the manual, you can damn well bet you'll be getting your claim back unapproved. If the offense or omission is minor, you might be given a chance to resubmit correctly. But you can save yourself an incredible amount of time and aggravation by following the rules and just doing everything by the book the first time.
Like anything else new, your first attempt at using co-op might give you a slightly queasy feeling, just because it's something foreign and totally unfamiliar to you. But, believe me, it's worth your time and effort to learn the ropes. Because learning to use co-op advertising effectively is like finding a key to the bank. It will give you considerably more money to spend on advertising which, in turn, will increase your sales volume substantially. Although the shooting industry has notoriously lagged behind the rest of the business world in adopting concepts like co-op advertising, every year more manufacturers see the handwriting on the wall and announce brand new co-op programs for their dealers. If you attend the SHOT SHOW, ask the manufacturers whose booths you visit about the availability of co-op. Or, get on the horn and start making calls to determine which of your suppliers offer plans to help you promote and sell more of their merchandise. Here's just a partial list of manufacturers of shooting related products that currently offer co-op programs:
. Aladdin Industries
. Bob Allen Co.
. Buck Knives
. Burris Co., Inc.
. Carharrt, Inc.
. Caribou Mountaineering
. Casual Craft, Inc.
. Coleman Co., Inc.
. Browning Firearms
. Crosman Airguns
. Federal Cartridge Corp.
. Lyman Products Corp.
. Leupold & Stevens, Inc.
. Marksman Products
. Marlin Firearms Co.
. Omark Industries
. Remington Arms Co., Inc.
. Red Wing Shoe Co., Inc.
. Spectrum Sports, Inc.
. Springfield Armory, Inc.
. Stoeger Industries
. WD-40 Co.
. Wigwam Mills, Inc.
. Wells Lamont Corp.
. Wolverine Boots & Shoes
. Wood `N Stream
For more information on co-op advertising, ask your local media sales reps to help you locate co-op funds that might be available to you. Or contact any of these national organizations whose primary purpose is providing answers and assistance to retailers interested in locating and using co-op funds:
CO-OP NETWORK (NACON)
501 W. Algonquin Road
Arlington Heights, IL 60006-4411
CHECKING BUREAU, INC.
500 Fifth Ave.
New York, NY 10010
(212) 921-0080 RADIO ADVERTISING
485 Lexington Avenue
New York, NY 10017
Got questions about retail advertising, specific or otherwise? Write me c/o SHOOTING INDUSTRY. I'll do my best to answer your questions in future columns, or, at the very least, I'll point you in the direction of someone who might be able to help you even more.
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|Title Annotation:||firearms marketing|
|Date:||Jan 1, 1989|
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