Aarons 2014 Annual Report Download - page 21

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11
Marketing and Advertising
Our marketing for store-based operations targets both current Aaron’s customers and potential customers. We feature brand
name products available through our no-credit-needed lease ownership plans. We reach our customer demographics by utilizing
national broadcast, cable television and radio networks with a combination of brand/image messaging and product/price
promotions. Examples of networks are as follows: FOX, TBS, TELEMUNDO, UNIVISION and multiple general market and
Hispanic cable networks that target our customer. In addition, we have enhanced our broadcast presence with digital marketing
and via social environments such as Facebook and Twitter.
We target new and current customers each month distributing over 29 million, four-page circulars to homes in the United States
and Canada. The circulars advertise brand name merchandise along with the features, options, and benefits of Aaron’s no-
credit-needed lease ownership plans. We implement grand opening marketing initiatives, designed to ensure each new store
quickly establishes a strong customer base. We also distribute millions of email and direct mail promotions on an annual basis.
Aaron’s sponsors a motorsports team and event broadcasts at various levels along with select professional and collegiate sports,
such as NFL and NBA teams, and SEC and ACC college athletic programs. We also began our 16th year as a sponsor of
Michael Waltrip Racing in the NASCAR Sprint Cup Series. From a meager, six-race, part-time sponsorship of Michael Waltrip
in the Xfinity Series in 2000, Aaron’s sponsorship and activity in the sport has grown every year. In 2014, we announced a full-
time sponsorship of the Michael Waltrip Racing No. 55 with driver Brian Vickers in the NASCAR Sprint Cup Series in the
2014 and 2015 race seasons.
All of our sports partnerships are supported with advertising, promotional, marketing and brand activation initiatives that we
believe significantly enhance the Company’s brand awareness and customer loyalty.
Our Progressive business executes its marketing strategy in partnership with retailers. This is typically accomplished through
in-store signage and marketing material along with the education of retail sales associates.
Competition
The rent-to-own industry is highly competitive. Our largest competitor for store-based operations is Rent-A-Center, Inc.
Aaron’s and Rent-A-Center, which are the two largest rent-to-own industry participants, account for approximately 5,300 of the
10,100 rent-to-own stores in the United States, Canada and Mexico. Our stores compete with other national and regional rent-
to-own businesses, as well as with rental stores that do not offer their customers a purchase option. We also compete with retail
stores for customers desiring to purchase merchandise for cash or on credit. Competition is based primarily on store location,
product selection and availability, customer service and lease rates and terms.
Although an emerging market, the virtual rent-to-own industry is also competitive. Progressive's largest competitor is
Acceptance Now, a division of Rent-A-Center. Other competition is fragmented and includes regional participants.
Working Capital
We are required to maintain significant levels of lease merchandise in order to provide the service demanded by our customers
and to ensure timely delivery of our products. Consistent and dependable sources of liquidity are required to maintain such
merchandise levels. Failure to maintain appropriate levels of merchandise could materially adversely affect our customer
relationships and our business. We believe our operating cash flows, credit availability under our financing agreements and
other sources of financing are adequate to meet our normal liquidity requirements.
Raw Materials
The principal raw materials we use in furniture manufacturing are fabric, foam, fiber, wire-innerspring assemblies, plywood,
oriented strand board, and hardwood. All of these materials are purchased in the open market from unaffiliated sources. We are
not dependent on any single supplier. None of the raw materials we use are in short supply.