Tops cashes in on giveaway

Tops Friendly Markets is wrapping up its Car-A-Day giveaway, a promotion that gives an interesting peek into the company’s marketing strategies.

Over 36 days, Tops chose one Bonus Card number from each day’s transactions and awarded a car to each day’s winner. The price tag of the prizes alone totaled $720,000. Add to that the cost of announcing winners every day in print, TV and radio ads, as well as publicizing and orchestrating the contest, and you’ve got an enormous investment of time and money.

How can a company in the low-margin grocery business afford such an undertaking? And will it pay off?

“They’re not dummies over there,” said Alan Dick, associate professor and chairman of the marketing department at the University at Buffalo School of Management. “I’m sure they did their research. They wouldn’t have gone ahead if there was any chance of a negative outcome.”

Tops said its research shows again and again what motivates its Western New York customers — hype.

“People love to get value back in the market. They love promotions, they love deals; we see it in our numbers,” said Diane Colgan, Tops vice president of marketing. “We try to create that excitement every week.”

So Tops has built its marketing strategy on making grocery shopping more exciting, whether it’s offering flashy bargains or sweepstakes with buzz. Often that means cutting prices or offering things such as its “family meal deals.” Last week for example, shoppers who bought a jumbo package of ground chuck received seven free items such as hamburger rolls and cheese singles.

But the majority of the car-a-day campaign was funded using market development funds—money manufacturers pay to retailers to help them market their products. That money can’t be spent to discount the retail price of an item, so Tops regularly uses it to offer promotions and contests, such as the Car-A-Day giveaway and its popular Monopoly collect and win game.

Shoppers who bought items from the brands providing the funding — including Pepsi, Jennie-O and Gillette — got additional bonus entries into the car giveaway drawing. That, in turn, gave those brands a sales boost.

As for ancillary advertising funding, Tops already devotes a large portion of its budget toward publicity, so it shifted some of those earmarked funds to the car promotion. The company will continue to get mileage out of the giveaway for the next two months, as spots advertise the contest’s winners.

Much research and debate went

into what the prizes would be. For the same cost, Tops could have offered one large cash prize, hundreds of thousands of very small prizes, or something in the middle.

“A lot of thought went into striking that balance,” said Colgan. “The prizes had to be meaningful enough that enough people would try to win.”

Giving such a big ticket item away each day gives customers the impression they truly have a shot at winning and are more motivated to participate, experts said.

“You have to reach a balance where there is a reasonable expectation to win, but you offer something worth winning,” said Dick.

Tim Hortons runs its “Roll up the rim to win,” contest each March, where each cup of coffee sold is a potential prize winner. The company gives away millions of prizes ranging from free doughnuts or coffee to cars and televisions. McDonald’s and Tops both run the Monopoly promotions, where players receive game pieces with each purchase and collect them to compete for big-ticket prizes. Pepsi has run promotions with bottle cap codes that net winning players Pepsi gear, Florida vacations or in two cases, $1 million in cash.

“Some people like the odds of a sure thing, but a very, very small reward like a free turkey won’t [spark much] interest. And the odds of one very big cash payout are so low people think, ‘That doesn’t have an effect on me.’” said Dick.

But having a pricey item up for grabs repeatedly over a small geographic area is a different story.

“Now you’re talking about giving a car away every single day? It seems the chances of winning are a lot higher,” said Dick.

When Tops researched which prizes customers would most like to win, cars were consistently a top response. So even though winners could opt for the cash value of the vehicle — which most did—Tops marketing materials focused on the cars. The 36 possible $20,000 monetary prizes just didn’t have the same tangibility as the prospect of a shiny, new automobile.

“When we let them know they won the car, initially it was, ‘Oh my gosh, wow!’” said Colgan. “But after we told them about the cash option and the reality set in it was, ‘Well, I do have this trip coming up and I could really use the money.’”

Winner Linda Durwald of Kenmore opted for the cash, which covered half the cost of a new travel trailer. Other winners paid off medical bills, gave gifts to grandchildren and donated to charity.

“My husband loves Pepsi. I usually do my shopping Wednesday or Thursday, but Pepsi was on sale so I went Sunday,” she said.

Durwald said she does “99 percent” of her shopping at Tops, but the promotion did bring her in more often.

That speaks to the big question— did the promotion work?

The Monopoly promotion — with its abundance of small $5 to $25 coupons and smattering of larger prizes — sought to drive up total sales. But the car promotion sought to increase the frequency of trips shoppers made to Tops stores. Tops heard anecdotally from customers that they were coming in more often to increase their chances of winning, and the company’s numbers backed that up, Colgan said.

Another goal was to update customer Bonus card information, much of which was 10 years old. That indicates just how valuable such tracking information is.

“It’s valuable enough that they’re willing to spend a lot of money on it,” said Dick. “Bonus card information helps them understand what customers want. Instead of providing everyone the same incentive, they can tailor it to what each particular customer wants.”

That mission was accomplished, too, with “tens and tens of thousands” of people viewing and updating their information. (One person didn’t, though — a winner who still hasn’t been notified).

Another goal met was Tops’ attempt to drive more Facebook users to “like” Tops’ page. Local charities have been competing to win a free car, with online users voting on Facebook for their favorite charity. Its Facebook page added thousands of followers, bringing its total today to 4,780.

In marketing expert Dick’s opinion, it’s a winning strategy that benefits consumers, vendors and Tops alike.

“I think it will generate buzz and get people talking about the store. It’s good for customers,” he said. “Both sides win.”

schristmann@buffnews.comnull

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