Product Managers Discover That The Circular Is Not Going Away

Paper based circulars are still important to retailers
Paper based circulars are still important to retailers
Image Credit: Pamela Machado

So if you are running a business and you’d like to keep your customers aware and informed about what products you are offering, what’s the best way to go about doing this? In our modern age, a lot of product managers would look at their product development definition and say that you need to update your web site and they’d be correct. However, what more and more store owners are discovering is that one of the oldest retailing tricks has somehow survived the arrival of the e-commerce wave – the paper circular.

The Power Of The Circular

No retailer ever wants to lose business. That’s why stores such as grocery stores have discovered that losing business is exactly what they are risking if they stop the flow of paper mailings that they send out to potential customers in order to get them to come into their stores. The power of the circular is so strong that even online business that don’t have any physical stores are starting to use circulars. The power of the circular comes from the simple fact that paper-based ads that arrive in consumers homes end up spurring more buying than either emails or text messages.

Email is a powerful way to get in touch with potential customers. However, product managers need to understand that customers are receiving so much email that it can be very easy for them to overlook the ads that you send to them. More and more firms are finding that they have started to once again spend more money on print advertising. This is starting to take up a larger portion of their marketing budget. Most retailers do see digital advertising as a growing area that will be taking up more and more of their spending over time. In order to fund their digital ads most firms are cutting back on their traditional print ads and any mailers that they may be doing. However, a number of firms are searching for new ways for them to send out deals on paper to their customers.

Firms are starting to combine their online and offline worlds. Firms are now using a customer’s online browsing and shopping data for brands and retailers in order to determine what coupons and ads they should send to them within a few days of a customer visiting a web site. As an example, a customer might receive an offer for free shipping if they were to visit a website, browse and then not buy anything. Online firms are dedicating up to 10% of their media budget and this can be a firm’s largest offline media expense. The firms find that this form of communication is effective in reaching both new and existing customers and can allow firms to attract more urban and affluent shoppers.

What’s Next For The Circular

The amount that firms spend on circulars was US$78B last year. This is up an amazing 85% since 2012. Now that’s something to add to your product manager resume. That amount that firms are going to be willing to spend on sending mail to customers is expected to decrease over the next few years as the U.S. postal service continues to raise their rates. What retailers have discovered is that their customers tend to ignore banner ads on web pages and often don’t read the email that the retailers send to them. However, customers do read the paper fliers that they receive in the mail.

In order to pay for the circulars, retailers often ask the manufactures of products that will be featured in a circular to to support the system by paying for the space in the circular that is dedicated to their product. At the same time, retailer product managers may ask suppliers to reduce the price of an item that is being featured in a circular and this acts as yet another source of income for the store. The circulars can be so important that if a retailer starts to send out fewer, they can see a direct impact on their bottom line.

As an example of the power of circulars, the warehouse club Costco sent out fewer paper circulars touting their deals and almost immediately saw their sales start to slow. Costco changed back to sending out paper circulars almost immediately and decided to offer deeper discounts on fewer items in order to get people to come back to their stores. Grocers determine the content of the circular that you will get based on past sales, any deals that they have been able to strike with suppliers, and their experience. Retailers are now trying use predictive analytics to design their circulars. The thinking is that customers will buy more when they receive circulars that that contain items that they may actually be interested in.

What All Of This Means For You

Product managers are always reviewing their product manager job description in order to find new ways to be able to get in contact with our customers. We want to let them know about our products and any special deals that we may be offering. Even as we look for new ways to get our customer’s attention in the digital age in which we are living, it turns out that an old standby just might do the trick – the circular.

Firms don’t want to lose business. What they have discovered is that circulars cause customers to come to their store and make purchases. Customers may ignore emails and texts, but they seem to still read circulars. Many firms are starting to spend more money on digital advertising, but at the same time other firms are increasing the amount of money that they are spending on print circulars. Some firms are starting to use their customer’s online browsing behavior to customer tailor what type of circular they will be sending to this customer. Spending on circulars has increased by 85% since 2012. Circulars are powerful because customers actually read them. Retailers get manufacturers and suppliers to pay to have their products promoted in circulars. Retailers are now trying use predictive analytics to design their circulars in order to present customers with products that they would actually want to buy.

The circular has always been a simple form of direct advertising. In the digital age in which we are all living, it turns out that the circular still has the best chance of being read by our customers. Product managers need to take the time to learn how to create circulars that will both grab and hold onto our customer’s attention. The circular is going to be both here today and here tomorrow.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How many pages do you think should go into a circular in order to make it as effective as possible?

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What We’ll Be Talking About Next Time

In the world of shopping in bulk, you have choices. Specifically, when you need a huge amount of toilet paper or paper towels, you can choose to go to either Sam’s Club or Costco.
Where do you choose to go? If you are like most people, if you have a choice you generally choose go to Costco. It’s not clear why we make this choice. I suspect that one of the reasons is because Sam’s Club is so closely tied to Walmart that most of us really don’t want to go there. You would think that the Sam’s Club product managers would have a real challenge on their hands when they went to China. However, it turns out that was not a problem.