School discount software

NATIONWIDE DSN REPORT -- The software industry is starting to grow up and become the mass market product many have always thought it should be.

In Discount Store News' Annual Productivity Report, published Aug. 6, computer software accounted for some $530 million in sales at full-line discount stores, the first time the category logged significant sales movement. And regional discounters like Caldor, Venture and ShopKo are now making substantial commitments to the category.

One key ingredient in the push for mass market acceptance is value, and many of the country's leading publishers are restructuring their offerings to make distinct value impressions.

In this context, value means much more than price. Brand name, ease of use, quality, synergistic bundles, customer-friendly packaging, product depth, customization for home use and many other attributes are as important as pure price.

Several of the industry's best-known names, like Broderbund, Microsoft, Disney, Sega and Davidson, as well as upstarts like Media Safari, are instituting value strategies that share several of these qualities.

Broderbund, with its signature Carmen Sandiego and Print Shop properties, this summer made a strong value statement when it introduced its Learning Pack series, four bundles of three or four hot products, including Carmen Sandiego titles, tailored to four different age groups. According to senior vp, sales and marketing Jan Gullett, "We saw the tremendous success of suites in the office product business, the efficiencies in packaging, marketing, shipping and advertising, and thought we could apply it to the kid's business."

While several companies produced kids' bundles, those products are generally multipublisher and include several filler titles--those that have disappeared as standalones after failing to sell.

Broderbund, by contrast, has packed its bundles with top Carmen hits, its popular KidPix Studio art title and various titles like The Amazing Writing Machine and Maps 'n Facts. But Gullett doesn't worry about cannibalizing his company's core products. "We really recommend that retailers stock the Learning Packs with the in-line products," he said. "Grouping leads to impulse purchases, and consumers will often purchase an extra piece either with or just after buying the bundle. And the presence of full-price products reinforces the value of the bundle. We saw business gains of up to 40% (with the first bundles), with the base skus still doing just as well as before. Some consumers are ready to make a suite commitment, but novices will generally try a single product first.

"The future in educational software is probably in suites, but while single skus won't grow as quickly as bundles take over, they will still show growth. It is leaving money on the table to cut them in favor of suites," Gullett said.

One of the real keys to Broderbund's success has been its almost universal compatibility. All discs will run on virtually any modern computer (486 or better), and are compatible with Macs as well.

"There's wide variation in quality," Gullett said, "and consumers tend to return to the same manufacturer that delivered quality and a product that ran smoothly on their computers."

Broderbund has also taken another approach to value, "right-sizing" products appropriately to consumer groups. For instance, its $80 Print Shop Ensemble, a professional-level graphics package, is now available as Print Shop Deluxe ($50) and Print Shop ($29), with the newer releases containing various levels of the premium package adapted for home use. "Five of the seven largest retailers in the U.S. bought pallet loads, and that resulted in Print Shop's highest unit shares [in the utilities category] ever," Gullett said.

The company also adapted its Family Treemaker Deluxe, which required up to 16 individual reference discs (sold separately) for true effectiveness. When retailers balked at the additional skus, Broderbund re-issued the title with four of the most popular discs at $79 and outsold the standalone version six to four.

Broderbund's major rival, Davidson, is taking a similar tack, releasing two five-disc bundles that retail for $60 or less. The first, called Davidson's Award-Winning Ready to Read and Write, includes some of the company's best-known titles, among them Reading Blaster Jr. and Kidworks Deluxe, which retail in the $35 range as standalones. The second compilation, Junior High Success Pack, includes Math Blaster Mystery, Spell It 3, Grammar Games and a new title, The Cruncher, an introduction to spread sheets.

According to associate product marketing manager Mark Polcyn, these packs will remain in-line staples for Davidson "as long as retailers keep ordering them. Cannibalization is a concern; some of these titles are only six months old. But so far we haven't seen any sign of that." He expects at least two strong selling seasons for both products this year--at Back-to-School and again at Holiday.

Media Safari, an offshoot of budget music label Priority Records, is turning hits into hits again. The company buys rights to titles that had some degree of success in the market, but have been pushed off-shelf by newer products. These include Accolade's Unnecessary Roughness, GTE Interactive's Jammit and major hits like Lawnmower Man and FX Fighter. Media Safari then repackages them in a jewel-box-only format, prices them at $9.99 and ships them out to both traditional and nontraditional outlets (convenience stores, truck stops, grocery chains).

To date, most software in this price range has consisted of generic titles, really old hits from the floppy disk era and marginal titles that never succeeded in the marketplace.

According to Lawrence Norman, vp, multimedia, the $10 strategy is aimed squarely at the family user, who will often purchase on impulse--if the price is right. And under $10 is the right price, Norman said. "Additionally, all 30 of our titles are recognizable brand names," he said. "From Liriq's Crosswords to Dr. Ruth's Encyclopedia of Sex, they're names consumers are going to know." Norman envisions the line, which will add and drop titles on a monthly basis, as developing its own following, with consumers checking out the section (Media Safari supplies and services its own spinners and counter displays) on a regular basis to see what's new.

Disney Interactive might not need the name recognition in the market, but like Broderbund, it plans to address the value market this fall with its Hot Shots program. These $15 products will be, at first, line extensions similar to the direct-to-video "Aladdin" video products, amplifying popular activities within two of its full-line titles, Timon & Poombah and The Hunchback of Notre Dame Topsy Turvy Games. Each Hot Shot title will offer 99 levels for each activity; the original titles generally offered 20 levels or so. For instance, a Poombah pinball game, part of the original title, will now inflate to about five times its original size--at about one-third of the cost of the full game.

The company is packaging the Hot Shots in thin, paper-back-sized packs to distinguish them from full-line products (and to provide retailers with better sales-per-square-foot performance and easier shipping). Six titles are due in mid-October, with three more in January 1997 and three all-new titles with original content due in mid-1997. According to Hope Neiman, vp of marketing for Disney Interactive's entertainment division, the company is specializing in games that are easy to learn and hard to master. "Our core audience is in the 7-to-15 age group, but younger kids and even adults can often find a game that appeals to them in the full titles. And if they do find one, we can offer them an expanded version at the price of a video."

Neiman would like to carry the video analogy further, establishing Disney Home Entertainment sections in mass retail stores that tie together video, audio and software--all at impulse purchase prices--into a single easy-to-shop environment. "That's not too far in the future," she said.

Other suppliers, like Microsoft, are lowering prices on many of their products, generally down to the $29.95 level, in an effort to appeal to the value-conscious shopper. Most say that hit games, premium utilities and specialized applications will continue to command $50 and up, but as the category becomes more mainstream, it will have to start looking more like the entertainment options with which it competes.

It may be more than slightly self-serving, but vendors with major consumer franchises note that grouping software by vendor, then by subject and category, adds value for the consumer. Computer City's new kids' section earns high marks from several vendors for taking just that approach.