Warehouse asks customers for money-saving tips

New Zealand's biggest bargain hunter is being sought by The Warehouse as it seeks to fortify its association with good deals.

In the largest promotion in its 23-year history, The Warehouse this week sent a mailer to 1.2 million homes headed "The Hunt is On" which asks customers to send in tips for making money go further.

The tips will be narrowed down to 200 regional finalists, with the top five competing for the title of New Zealand's bargain champion - and $50,000 to spend at The Warehouse.

Warehouse communications manager Cynthia Church said the company had never involved customers in a competition for marketing before, with previous competitions largely restricted to the sale of scratch-and-win cards for charity.

But the hunt for a bargain hunter falls into the realm of marketing, being designed to emphasise the association between The Warehouse and bargains.

"We decided to use a competition because it is more interactive than the usual advertising and it is something different we anticipate our customers will be likely to notice," said Church. "This is a cost-effective way of reaching our customers."

The competition will be followed by research into its effectiveness. One aspect of that will be to evaluate whether it lifts the perception of high-ticket items at The Warehouse.

"Which is the point of $50,000 - you can spend $50,000 at The Warehouse," Church said.

Auckland University of Technology senior lecturer in advertising and marketing Dave Bibby said the idea was a novel one.

"It has the makings of a reality TV show," he said.

He felt it was likely to be successful in getting The Warehouse noticed in a crowded market where a lot of brands were competing on price.

"Sweepstakes always work extremely well," he said.

"It underlines their positioning ... they could get a lot of mileage out of that."

The company is already one of New Zealand's largest advertisers, making liberal use of the press, television, radio and direct mail.

The concept of the bargain-hunter hunt was developed in-house, in conjunction with public relations firm Network PR.

But the competition has been backed by a controversial advertising strategy - the use of price comparisons with goods sold by major competitors, and the use of their logos in The Warehouse's latest brochure.

Jeremy Simpson, an analyst with Forsyth Barr, said the company was taking a more aggressive stance, but one which fitted with its price rollback strategy.

"They are trying to build a position in the market around the lowest price," he said. It could prompt other retailers to become more aggressive too, if they believed they had lower prices than The Warehouse.

Bibby said comparative advertising sometimes backfired.

"There's a general principle that if you're a market leader you don't, if you're No 2, that's a positioning strategy [you can use]," he said.

"If you are Coca-Cola comparing yourself to Pepsi there's a sense you're demeaning yourself by even giving them the time of day."

He said it also ran the risk of going against the advertising principle of "likeability".

"A lot of people operate on the concept that if they like the brand they buy the goods ... my reservation is what does this do to the brand personality of The Warehouse?" Some customers could see it as hard-nosed, he said.

In contrast the "price rollback" advertising that continued to be a clever move, he said.

"They set the benchmark, say it is the best price in the market, and when they then say they're rolling it back it underlines the value."

Church said the company was simply pointing out what smart shoppers already knew. "Our price position is pretty solid. This is just emphasising that."