Once used mostly to rescue companies from their mistakes, bartering is now seen as a sophisticated tool for building sales.
Every time someone in the Production Dept. shuts off an assembly line, it's a sales opportunity lost forever. So argue specialists in bartering, who are convincing corporations that often having too much product on hand can be a marketing plus.
Widely employed abroad by big industries, such as aerospace and chemicals, and by small retailers here at home, bartering, which is exchanging your products or services for someone else's, is catching on fast in Fortune 500 land. Just as important, companies are finding new uses for bartering in their marketing plans. Notes Jerry Jasinowski, executive vice president of the National Assn. of Manufacturers, "I'm struck by the number of firms that are turning to bartering and using it innovatively to add to their marketing capability. It's something in the nature of a bartering revolution."
Observers say that awareness of bartering widened because of Peter Ueberroth's enthusiastic use of it in connection with the 1984 Olympics.
Head of the U.S. Olympic Committee, Ueberroth bartered the promotional value of his Olympic logo for a mass of products and services needed by his staff and athletes. United Airlines provided free transportation, Buick the use of 500 autos, Fuji Film 250,000 rolls of film plus processing, and Levi Strauss and Converse clothing and shoes. Ueberroth even traded the logo for a swimming pool to be built by McDonald's. Bartering got more attention when Carl Icahn set up a deal to trade some $10 million of TV time he had acquired in exchange for products and promotions to aid his newly acquired but ailing TWA.
Sales & Marketing Management has identified a score or more of companies that have been experimenting with barter.
Included are After Six, MacGregor Sports Goods, and North American Refractory. Companies that have concluded barter major deals over the years are Goodyear, Cooper Tools, Martin Marietta, O.M. Scott & Sons, Simonds Cutting Tools, Amoco, Caterpillar, and Pfizer. Some have grown to the point that a staff and executive team work full time finding and executing barter opportunities including USX, 3M, Zayre, and K mart.
"Companies are using barter as insurance against something going wrong,... But more than that, they're using it to get a competitive advantage. And they're learning to use their production capacity, via bartering, as a 'plus business,' as a way of generating incremental business. Bartering is coming of age with the marketing heavyweights." Some examples:
When Wilkinson Sword drew up a marketing plan for its new disposable travel shaver, the plan called for bartering some of its knives to pay for advertising for the shavers. Wilkinson, says Pippert, whose company handled the barter, needed to add to the trade credits it was issued "only a little cash of its own" to meet the cost of its media buys for the new razors.
Marketers at Amoco saved the company's parent, Standard Oil of Indiana, the cost of steel piping, thanks to a carefully planned barter. They supplied the latter with chemicals, which were traded to Goodyear for rubber belting materials and later disposed of in another barter. Amoco was paid for the chemicals with trade credits, which Amoco passed up to Standard Oil. It used them in a cashless deal for the pipes.
The payoff for Thomas Industries, Newark, NJ, was entry for its products into a market segment it had not penetrated before. The company bartered $2 million worth of the lighting fixtures it manufactures, again for trade credits that it used to pay for shipping its other products to warehouses and its customers. The traded lighting fixtures landed up in a number of hotels, none of which had used Thomas Industries' line before.
At USX, bartering also has brought new business. "We thought that bartering would open new markets for us and might produce sales we couldn't make any other way," he says. "We use products for bartering that we make in our day-to-day operations. We've made a rational decision to barter for sales penetration, which has had long-range benefits for the company."
OPENING NEW DOORS
