'Apples for Students': Computers for Schools, Profits for Marketers

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As recently as three years ago, students at Our Lady of Good Counsel, in the Virginia suburbs of Washington, made only sporadic use of the handful of classroom computers available to them.

This school year, said Susie King, the parent of a 5th grader, the 550 students at the Roman Catholic K-8 school in Vienna, Va., regularly avail themselves of nine new Apple IIGs systems and accompanying software as well as a host of peripheral devices.

The school also has hired a computer teacher to ensure that the machines are used effectively and, she added, other teachers have begun taking classes to improve their computer skills "because now they can see kids actually using the [machines]."

Ms. King credits the turnaround to the efforts of parents and parishioners who exchanged millions of dollars worth of cash-register receipts for the equipment through a program called "Apples for the Students" offered by a local chain of grocery stores.

But what Ms. King, who coordinates the exchange for the school, did not know is that, while Apples for the Students appears to be merely a local effort at corporate altruism, it is in fact a highly successful, nationwide program that earns profits for the New York-based firm that devised and markets the concept.

But even when she learned of the profit-making behind the philanthropy, Ms. King remained impressed with the benefits of the program for students.

"I don't know that a school our size could have two or three computers in every classroom--and a computer lab--any other way," she said.

'Everybody Wins'

The enthusiastic support of Ms. King and hundreds of other parents and educators at 60,000 schools nationwide and abroad has helped make Apples for the Students a widespread success story, said George Pittel, the executive vice president of Service Marketing Group, the firm that created the program.

"There is a situation created where everybody wins," he said. "It creates a community spirit, we've found. And it also helps to enhance the computer literacy of children."

The program is perhaps the most widely known of a growing number of retail efforts designed to benefit the nation's schools.

Service Marketing Group began the program four years ago, Mr. Pittel said, in answer to President Reagan's call to the private sector to get involved in solving community problems.

Since then, a combination of aggressive marketing and word-of-mouth publicity has helped spread the program to nearly 4,000 grocery stores nationwide.

It also has spread as far afield as Puerto Rico, the U.S. Virgin Islands, and Australia, where its benefits have been publicly touted by that nation's prime minister.

And, while it is difficult to verify the figure independently, the marketing firm says that the program has placed more than $100 million in free computers, software, and other items in schools in its first three years.

A 'Noble Act'?

While industry observers agree that Mr. Pittel accurately describes the program's benefits, they also contend that he tends to gloss over some of its less altruistic aspects when he claims that participating supermarkets are engaging "in a noble act supporting education."

They note that Mr. Pittel's firm makes a profit on the program.

Service Marketing Group established the program and copyrighted its name, so that only participating stores can use it. The firm acts as a broker for the computer equipment, buying the items directly from Apple and reselling them to the participating supermarkets for "at or below'' retail cost for a profit.

Area schools then begin urging parents to save their checkout receipts and bring them to school. The receipts are totaled and returned to the participating retailer in exchange for the equipment, which is selected from a catalog of merchandise provided by the marketing firm.

For example, under exchange rates set by Mr. Pittel's firm, $160,000 in receipts will earn an Apple IIGs--reportedly one of the most popular items and a fixture in many pre-collegiate classrooms. A Macintosh Classic computer is valued at $100,000 in receipts, and $35,000 in receipts will buy a name-brand v.H.s. videocassette recorder.

Mr. Pittel defends both Apples for the Students as a private-sector solution to the needs of the schools and his firm's right to financial gain.

"Of course, it's profitable," he said. "If you don't make money, you can't perform the service."

He declined, however, to discuss how much profit the company has made on the promotion.

Analysts also note that, while the promotion often is characterized as a cost-flee means for consumers to support schools, grocery chains, like all businesses, pass along the program's expenses--including the cost of promotion and the staff time needed to check the incoming receipts--to the consumer through higher prices at the checkout.

Jackie Mansfield, the editor of "Food World" magazine, a trade publication, noted that chains have sometimes dropped the promotion because "it's very expensive to [operate]."

But, she added, most chains are attracted to Apples for the Students and similar programs by the "positive public relations" such efforts create.

A Competitive Business

Spokesmen for some of the participating grocery chains agree that the promotion has been beneficial in a number of ways, although not all will concede that they undertook it with an eye on the bottom line.

"It's basically our commitment to give something back to the communities in which we operate," said Joan Chase, who coordinates the exchange program for the California-based Vons Companies Inc.

She said the 324-store chain-which advertises itself as the largest in Southern California has spent $5.2 million to support the program in the past two years.

And while she conceded that the program may generate some "residual goodwill" in the community, Ms. Chase denied that it is a moneymaker for the stores. A spokesman for Giant Food Inc., a dominant chain in the lucrative Washington, D.C., market, however, did not discount the public-relations value of the campaign or its potential for attracting customers.

Giant, which has spent more than $15 million on the program in its first two years and placed some 30,000 items into schools in its market, had two goals in undertaking the programs, said Mark Roeder, a spokesman for the 155-store chain.

"We wanted it to be a community program that would help to counter all of the budget cutbacks in the school systems," he said. "But we're also hoping that the program will have long-term [benefits] for our company."

He agreed that the promotion might also lure shoppers over the short term, but noted that it was difficult to determine how effective the program had been in that regard.

A spokesman for the Eastern division of the national Safeway Stores chain, which ran the promotion in its Richmond, Va., area stores for two years, argued that it is unlikely to affect customer loyalty.

"The only monetary benefit would be if you're the only one in your market doing it," Jim Richards said.

But he noted that the grocery business is highly competitive and that, "if we attract people from other stores, that's O.K. with us."

But the program's expense led the firm to drop both Apples for the Students and a similar, in-house promotion offering credit toward computers made by the International Business Machines Corporation.

Mr. Roeder of Giant Food, Safeway's biggest competitor in the D.C. market, noted, however, that the company is well-satisfied with the concept and is offering an expanded version, under which register tapes may be exchanged for such items as softball bats, microscopes, and other, non-computer-related goods.

Meanwhile, Ms. Chase said the Vons chain is likely to continue Apples for the Students indefinitely.

"It's had such a good response," she said. "I don't know what better could come along to replace it."

'Avery Strong Program'

For Apple, industry analysts say, the program provides free advertising as well as revenue from the sale of the machines distributed in the promotion.

William Keegan, a spokesman for Apple Computer Inc., cited company policy in declining to discuss sales and revenue figures, but noted that the $100 million figure cited by Mr. Pittel is, "to our knowledge, a good estimate" of the amount of goods distributed by the program.

He also noted that the company rang up $5.5 billion in sales in all markets worldwide in the 1990 fiscal year, making Apples for the Students a relatively small revenue generator for the company.

Nonetheless, he said, "it is [our] largest single promotional program" and a "very strong program."

Market analysts also noted that the promotion may help Apple regain some of its share of the education market, which in recent years has been lost--particularly in some large urban districts-primarily to L.B.M. Supporters of the program say it helps give parents a concrete way to help improve their children's education.

Ms. King of Our Lady of Good Counsel also pointed out that it is a relatively painless route to school improvement that "costs us nothing."

Another benefit, others added, is the program's potential for helping parents provide amenities that local governments and school boards increasingly cannot.

For example, the program enabled the affluent and predominantly white parents at the private Flint Hill Elementary School in Vienna, Va., to expand their ongoing relationship with the Charles Ellis Montessori School, an inner-city public magnet school in Savannah, Ga.

Last year, Flint Hill parents traded $250,000 in receipts they had collected to buy a computer and peripheral equipment for their sister school.

The school is already well equipped with computers, said Linda L. Clark, Flint Hill's principal, "So we feel very comfortable in wanting to extend ourselves to the less fortunate."

Anne P. Monaghan, the principal at Charles Ellis and a former colleague of Ms. Clark's, said that, because the school is located in a poor neighborhood, "it takes us two, maybe three years to raise the same amount of receipts."

Vol. 11, Issue 08, Pages 10-11

Published in Print: October 23, 1991, as 'Apples for Students': Computers for Schools, Profits for Marketers
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