CPG Brands and Retailers Focus on Shopper Marketing

Discussion
Sep 24, 2008

By George Anderson

A new study conducted by Deloitte for the Grocery Manufacturers Association finds that consumer packaged goods companies and retailers are rapidly ramping up shopper marketing efforts even as many acknowledge they are in the early learning stages around such initiatives.

The report, Delivering the Promise of Shopper Marketing: Mastering Execution for Competitive, found that 60 percent of brands and retailers say they have significant shopper marketing organizations compared to only six percent who gave a similar answer in 2007.

The report defines shopper marketing as “…the employment of any marketing stimuli, developed based on a deep
understanding of shopper behavior, designed to build brand equity, engage the shopper (i.e., an individual in ‘shopping mode’), and lead him/her to make a purchase.”

“Nearly every major manufacturer and retailer in the industry is dedicating resources to shopper marketing,” said Brian Lynch, GMA director of sales and sales promotion, in a press release. “This report outlines lessons learned to date and puts forth a game plan to help companies become more sophisticated in their operations and thus more fully realize the enormous potential of shopper marketing.”

According
to GMA and Deloitte, companies typically go through three stages as they develop
shopper marketing organizations and programs:

  1. Incubating – Beginning stage
    where some fall by the wayside by failing to develop the means to ramp up.
  2. Scaling
    – Ramping up to carry programs off on a larger scale.
  3. Embedding – Developing
    a culture of thinking and working around in-store marketing.

Only about 10 percent of companies involved in shopper marketing saw themselves as advanced in its practice.

Those who excel at shopper marketing have a clear competitive advantage, said Rob Holston, Deloitte’s shopper marketing practice leader. “Retailers and manufacturers who are embracing shopper marketing and executing against a core set of principles are growing 50 percent faster than the categories in which they participate.”

Retailers saw greater opportunities to drive return on investment (ROI) using shopper marketing. Nearly half of all retailers saw it as the most effective means for generating ROI while 19 percent of CPG companies agreed.

Discussion Questions: What do you see as the challenges and opportunities associated with shopper marketing? What types of in-store activity do you think are most effective in driving ROI?

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17 Comments on "CPG Brands and Retailers Focus on Shopper Marketing"


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Lisa Bradner
Guest
Lisa Bradner
13 years 8 months ago

I confess, I’m writing this before I read the whole study–although I’m looking forward to its insights. I think the accompanying article points out the biggest challenge: retailer/manufacturer collaboration around data sharing. The other issue not really discussed here is the competitive one: the retail environment pits competitors against each other (and increasingly, that competitor is the store brand). The challenge of shopper marketing is that potentially the brand may slit each others’ throats at POS trying to drive incremental sales. Retailers have done it before, merrily driving all the margin out of a category in order to be competitive with other retailers–now the potential for manufacturers to do the same is that much greater.

The opportunity for shopper marketing is to go beyond simple price promotions and dollars off and to see what other kinds of emotive and product benefits move the needle at the shelf. With some smart creative minds, it should be really fun to watch.

Michael L. Howatt
Guest
Michael L. Howatt
13 years 8 months ago

Contrary to what some of my constituents believe, technology is NOT the answer. Ever see a kiosk with all the bells and whistles last more than a week? Or break down due to kids playing with it? Self service checkouts were to enhance the customer experience and look where that got us. And I’ve never been a fan of subtlety. People don’t want to “read between the lines” when shopping.

Direct, to the point “here’s what we are offering” or here’s the benefit of buying” has always worked the best and will continue to do so.

Gene Detroyer
Guest
13 years 8 months ago
Sometimes I get the feeling shopper or in-store marketing is a Eureka. In fact, it is as old as are the first supermarkets. From the moment shoppers could reach for a product off the shelf, marketers have had to address graphics, point-of-sale material and product display. The difference today is that technology has provided the opportunities to focus messages and more importantly “prompts” directly to the shopper in the buying mode. Technology has provided the tools to accelerate the development of a marketing process that will continue to accelerate. The key to success in this area for the large CPG companies will be thorough analysis and research. No longer will an executive be able to say, “50% of advertising is wasted, I just don’t know which 50%.” The ability to determine the ROI on in-store activity (as well as internet promotional activity) will put great pressure on the traditional advertising mediums. If ROI can not be measured on traditional tools, those tools will slowly lose financial support. The key to success in this area for… Read more »
Brian Kelly
Guest
13 years 8 months ago

Typically the CMO owns marketing outside the store. While inside the store, merchants via vendor deals and operators with local needs manage the brand voice. The result is dysfunctional brand behavior.

Among the advantages of Shopper Marketing is collaboration among the three key retail brand shareholders: Merchants, Operators and Marketing.

Phil Rubin
Guest
Phil Rubin
13 years 8 months ago

The key to shopper marketing is messaging and the ability to either:
1) Focus messages based on merchandising priorities; of
2) Being able to variably deliver promotional messages to customers in order to avoid dilution.

Dilution is the most expensive promotional cost and one that retailers and marketers in general consistently fail to account for.

Dan Desmarais
Guest
Dan Desmarais
13 years 8 months ago

I think the biggest challenge with shoppers, as opposed to consumers, is figuring out what they didn’t buy and why. We know plenty about loyalty and buying behavior. We know very little about the ones that got away.

The good retailers teach their staff to ask, “Did you find everything you were looking for today?” Any shopper that starts a conversation should then be engaged in a discussion. The next challenge is how to compile that information into something that can be mined and then executed upon.

Ben Ball
Guest
13 years 8 months ago
Trade marketing. Field marketing. Regional marketing. Local marketing. Target marketing. Account marketing. Any of those terms ring a bell? All heralded as important strides in their time–and most rightly so. They all represent a step in the evolution of our CPG marketing efforts from mass-national consumer advertising to where we are today. Actually considering the brand’s interaction with the purchaser at the point of purchase as an important part of the marketing process. Well hurrah for us! It may have taken us a while to get here as a group, but at least we made it. Now the biggest question is–who will “we” be? Manufacturers? Retailers? Third party agencies like PRN? Sure, we will all play a part to greater or lesser degree, but who’s really going to run the show? One last point on the excellent work by GMA/Deloitte–the definition of shopper marketing offered seems just a bit tortured–kind of like something produced by a committee. We just call it “the manifestation of the brand positioning at retail.” Simple–but you don’t have to ask… Read more »
Nikki Baird
Guest
Nikki Baird
13 years 8 months ago

I think the biggest challenge is store execution. In-store marketing has enormous potential, that historically has been under-utilized (the stepchild of marketing). However, it is all for naught if the products being promoted aren’t on the shelf or at least easy to find.

This isn’t just a grocery problem, either–I see time and again in department stores where the mannequin is beautifully dressed–and those clothes are nowhere to be found on the rack. What’s the point then?

There is no point to in-store marketing, if you aren’t sure that the product is in stock, or that the display was set up properly, or that employees understand what the promotion is in case customers have questions….

Doron Levy
Guest
Doron Levy
13 years 8 months ago

The caveat with in-store marketing is the ease at which we can confuse and frustrate the customer. This holds true especially in the grocery industry. If a person comes in to buy a bottle of ketchup, what are the chances of them walking out empty handed if we continually bombard them with marketing messages while they are in-store? Subtle messages and relevant information probably work the best when it comes to in-store plays.

Creative messaging systems such as plasma screens always attract attention and are useful at conveying information. As well, high tech self service kiosks can be used give information as well as in store promos and specials. The theme here is ‘creative’ and ‘interesting’. Customers will listen as long as they are not bored.

Herb Sorensen, Ph.D.
Guest
13 years 8 months ago

After all the hoopla about “shopper marketing,” it is quite clear that at least 90% of the research is done by office people, over the internet, etc. I have taken the hard line that shopping is what happens in-store, primarily because so much of what is done, and labeled “shopper,” actually involves pre-store or post-store issues. This may be relevant to what happens in the store, but it isn’t really “shopper.” Asking shoppers about it, as if they knew what they and others were doing in the store, is really weak.

The significance of this is that in the store, only about 20% of the shoppers’ time is spent actually acquiring merchandise. I will wager that 99% of people talking about “shopper” think it is all about the relation of people to products/brands. Moreover, since their peer group thinks the same way, including their consultants, a massive amount of crippled information is continually recycled with great pride. Oh well!

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
13 years 8 months ago
The second most important retail truth (slightly behind buy-low-sell-high and well ahead of location-location-location) is that a customer in your store is the most valuable customer in the world. You could look it up (Y. Berra). But Yogi’s eyes would roll back in his head if he read the murky definition of “shopper marketing” with misplaced commas provided in the lead-in to this discussion. In fact, my eyes rolled back in my head (it’s just medication, officer). Hey, it’s the silly season, so party on, dude! (“Bill and Ted’s Excellent Adventure” for the uninitiated). This, by a fair stretch, is one of the most interesting exchanges I’ve ever seen involving the assigning of esoteric vernacular (shopper marketing) to a common occurrence (selling stuff to people already in the store) in order to peddle “intelligence” to unsuspecting retailers. “Hey!, let’s put on a show in the barn” has been replaced with “Hey!, let’s pretend to invent a new concept and put on a show in the store.” There are no new concepts here, only renamed ones.
Jerry Gelsomino
Guest
13 years 8 months ago

It is incredibly important that in-store media, shopper marketing becomes a way to better inform the customer. It can give advice, recommendations from other shoppers, and suggestions for use. It should not be intrusive, get in the way of the truth, or make false claims about performance and suitability.

Unfortunately, if the media used is controlled by agencies and individuals that perform puffery on the airwaves, our stores will be filled with so much nonsense, the customer will ignore these displays as much as they ignore TV. Agencies, marketers, retailers…it is your choice to use this extremely intimate relationship wisely.

Liz Crawford
Guest
13 years 8 months ago

To me the question is, where is retailing happening? Where will it happen in the future?

Most purchases are now “in-store,” meaning bricks and mortar. But as more and more purchases are happening online and via mobile, the idea of a shopping trip mission will morph. It is morphing right now.

Integration among all consumer touchpoints is the key, whether its a private label brand or national brand. In-store is only one touchpoint, and one that may be losing share to other purchase mechanisms. I wager that Holiday shopping this year will see big increases in online purchasing (again) while other channels are nearly flat.

Mike Spindler
Guest
Mike Spindler
13 years 8 months ago

Complimentary comments between Nikki and Gene as the critical issue here is execution and the MEASUREMENT of that execution so that ROI can be determined.

Today, we use POS and sometimes Loyalty data to try to tease out ROI for both traditional trade activities and for new brand marketing activities. POS and Loyalty data are artifacts of what happens in store and in-store is a data desert. Unless we measure what was executed and if the subject product was available…we understand nothing.

In-store shopper marketing is one of two big arenas to which traditional media dollars are flowing (the other is online). The flood is coming and our ability to understand our own, competitive and confounded impact will be determined by our ability to read execution and availability in ALL stores.

Luckily, some new tools are emerging to help with that task…but only just now!

Anne Bieler
Guest
Anne Bieler
13 years 8 months ago
Shopper marketing is game changing across the retail chain. And execution at every level will define success–or not. Collaboration with CPG companies, retailers and their partners is the critical first step. The marketing and merchandising have to work seamlessly: right products, presented in the right planogram, in stock. In-store media must be clear and well presented to shoppers, not intrusive. And the technology has to be simple and robust. In talking with retailers, they tell you the issues continue–displays arrive before or after the merchandise, special products are not in stock, some locations are working with out of date shelf sets or plans that won’t “fit” in some of the locations, and a big worry–systems that don’t function as intended or stop working in a few weeks. Some are still struggling with self-serve check out lanes that won’t work with reusable shopping bags, that can’t scan the produce, or aren’t accurate with payment. All the pieces have to fit together: brand message, merchandising across the channel, data collection and feed back, product positioning, and packaging… Read more »
Carol Spieckerman
Guest
Carol Spieckerman
13 years 8 months ago

These are exciting times for shopper marketing…Walmart’s Smart Network promises to finally quantify the impact of in-store digital media on purchases and to match messaging with product availability. My take is that Walmart is taking the first step in making technology seamless and integrated rather than cluttered, disconnected and downright annoying. Companies like dunnhumby (www.dunnhumby.com or see our blog on them at http://www.nmbblog.com) are redefining loyalty and transcending customer segmentation by analyzing the impact of consumer quirks and anomaly preferences on overall sales. Pure technology and/or data plays are a thing of the past; the key word going forward is “integration.”

Mike Romano
Guest
Mike Romano
13 years 8 months ago
In store marketing can be challenging in many way with costs, planning and resource requirements. The real problem, however, is that at the end of the day the retailer still has the inordinate need to want to be in control of the consumer. Unfortunately for the retailer, the world is changing and it’s the consumer who wants to be in control. The old traditional channels that retailers have become so dependent on- DM, newspaper, TV, radio etc, are rapidly declining and reaching fewer and fewer consumers. Consumers are blocking your traditional marketing with TiVo, DVRs, commercial-free radio and societal pushback of yesterday’s-news newspapers and mounds of junk mail. Your customers are are now living their lives increasingly on their cell phones, online and in the social networks of widgets, gadgets and “picka” space/face. There’s one blueprint for retailers but I am seeing the innovative retailers and grocers hiring people internally with the right skills to manage new media and new communication channels, and adopt using in-store, interactive cell phone communications that allow consumers to opt-in… Read more »
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