Jerry Wilson's marketing strategy was based on a simple premise: When it came to looking at advertisements for his company's $625 home weight-training machine, potential buyers would have the same preferences and reactions as Wilson himself. Figure into this the fact that Wilson bought his family a videocassette recorder in 1981, and the result is a sales tool that one wonder-struck marketing analyst has pronounced "brilliant."
Wilson is the 41-year-old founder and president of $25-million Soloflex Inc., a home weight-training equipment manufacturer in Hillsboro, Ore. Since 1982, the company has used videotapes as demonstration brochures to sell its weight machines, on the theory that taped demonstrations are more accurate and effective than any live group of sales representatives. In addition, Wilson contends, video demonstrations are entertaining but not pushy, they disappear when the customer wants them to, and they never misrepresent the product.
Soloflex's 22-minute video, for example, features a former high school gymnast -- recruited by an ad in a Portland, Ore., newspaper -- running through 18 exercises on the Soloflex machine, a free-standing, single-frame unit that works with rubber resistance straps rather than weights. The routines show viewers how to use the machine properly, and the well-proportioned young model suggests that the machine can, in fact, allow users to achieve enviable results.
Wilson's video brochures were not an entirely novel idea.Videotapes have been an important selling tool within the business community for years: Start-ups use them to sell their companies to venture capitalists; private enterprises, on their way to going public, use them to attract underwriters and investors; and consultants use them to promote their expertise among prospective clients. Soloflex, Wilson believes, was the first product marketed this way to the consuming public at large.
Although Wilson can't be sure how many of his sales are a direct result of the videos, he does know that nearly half of the buyers for the month of January had seen one. And Wilson says that careful tracking of each sale indicates that three quarters of the videos are seen by more than one person, a sign that the demonstrations are being passed from friend to friend.
Wilson's creative marketing strategy, however, doesn't come cheaply. Back in 1982, the company hired an outside production house to produce the brochure, and a local advertising agency to polish the script. The bill was $150,000 -- at least five times the cost of the printed brochures that Soloflex still mails out to less electronically sophisticated customers. Beyond the initial production expenses, each video brochure costs the company another $6.50 for materials, dubbing, packaging, and postage. That is $5 more than the cost of reproducing and mailing each printed catalog. Put another way, since 1982, Wilson has mailed 60,000 videotapes to prospective customers at an annual cost of $200,000. The tapes, like the catalogs, are delivered free to anyone who calls the toll-free number featured in Soloflex's magazine and television ads.
But Wilson becomes impatient when questioned about the extravagance of this budget, except to say that since 1982, profit margins have increased by 10%. "You really shouldn't focus on the numbers," he says. "I didn't know what the numbers were going to be. All I knew was I could make the best presentation possible [with videotapes], and I was obliged to do that if I could. I thought the efficiency was too good to pass up."
Despite his disinterest in figures, Wilson has some pertinent numbers on his side. When Soloflex first began sending videos to potential customers, VCRs were owned by less than 5% of the population, according to the American Video Association (AVA). That number has grown to 18%, largely because most VCRs now cost less than color televisions, a factor that may soon make VCRs equally as prevalent. All of this means, of course, that each year there will be that many more consumers who could view video catalogs.
Yet, despite Wilson's success with this new direct-mail method, videotaped brochures have not caught on with other consumer manufacturers. One reason may be the relatively high cost of producing videos compared with print brochures. "[Video brochures] would really only be useful with high-ticketed products," says Richard S. Hodgson, a direct-marketing consultant for Sargeant House, in Westtown, Pa. "I doubt that they would have broad applications. As a novelty, they're fine. An individual might get one and show it to a friend, just because it's unique. The novelty would skew the initial response rate. Once these things became common, they would lose their effectiveness."
Another problem is the changing demographics of VCR owners. When Wilson first began sending videos out, VCRs cost from $600 to $1,200. This meant that those who owned the machines were also those who could afford Wilson's expensive Soloflex. "The person responding to a Soloflex ad," says Dick Damrow of Carmichael-Lynch Advertising Inc., in Minneapolis, "did not just tell you of his interest, but also that he had a certain income, spent considerable time at home, and would spend money to create a certain home atmosphere. So the market self-selected."
But now that VCRs can cost at little as $250, AVA president John Power predicts that consumers who own the machines will not always by those who have several hundred extra dollars to spend on discretionary purchases. This could eventually limit the effectiveness of Wilson's campaign, as well as the applicability of video mailers for other consumer products.
Wilson does have more optimistic boosters in the marketing community. Maxwell Sroge, president of Maxwell Sroge Publishing Inc., a Colorado Springs, Colo., recently conducted a study on the potential of video mailers. "The penetration," says Sroge, "is sufficient to recommend using live-action color presentations for demonstrable merchandise."
Damrow goes one step further, suggesting that videos could even be relevant to manufacturers who normally use retail channels. "I could see these working very well with cars," says Damrow. "People could get a demonstration right in their living rooms. They wouldn't have to travel all over town from dealer to dealer. Of course, you could only use videos for $300-plus products to pay off the cost of production on tapes. Snowmobiles could be sold this way, but you wouldn't want to use them to sell toboggans."
Wilson, not surprisingly, sees a great future for video in marketing. He envisions walking into a local videotape rental store and seeing entire walls full of product-demonstration tapes.
"You want to see a Ferrari?" Wilson begins his hypothesis. "You want to see the factory, you want to see how fast these things go, you want to see that car taken apart and get a real demonstration so that you know that car? The manufacturer himself will be able to show you. And you wouldn't be pressured. Any product that requires a demonstration could be sold this way."
In Wilson's enthusiasm to usher in the new video age, he may have moved too fast for some people's tastes. Last year, he sent Soloflex counter displays and 100 video brochures to 20 video stores in the Seattle area. Included with the packages were $250 checks to each retailer to cover the costs of renting the tapes. Retailers were simply asked to pass the tapes out, without charge, to interested customers. The idea bombed. Many retailers called the company, furious at the entrepreneur's audacity. They didn't want something they hadn't requested. Even those who weren't offended by the Soloflex overture received few requests from customers for the product videos. The brochures "were out of context," Wilson says now. Their appearance in the stores seemed to confuse retailers and consumers both, he adds. "I think we scared them."