CPGmatters: Survey Shows CPGs to Focus More On Brand Building in Stores
By Lynne Cooke
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
Nearly seven of ten (68 percent) respondents to an Instant Poll on the home page of CPGmatters in December 2007 listed In-Store Marketing as their top area of focus in the New Year. Other areas of attention included Category Management (11 percent), Shopper Insights (10 percent) and Trade Marketing (10 percent). Nearly 400 executives took part in the poll.
“The results don’t surprise me,” said Alison Chaltas, principal of Interscope, LLC. “In-Store Marketing is very much the way category management was in the late ’80s and early ’90s where everybody was talking about it and everybody wanted to do it. It felt like the right thing to do.”
In recent years, the industry’s interest in in-store marketing – also referred to as at-retail media, shopper media, and shopper marketing – has been spurred on by two significant developments: one, Procter and Gamble’s well-publicized initiative called the First Moment of Truth, and two, the industry’s attempt at developing a metric for measuring in-store media.
Not long after P&G kicked off its Moment of Truth initiative, a group of prominent companies aimed to come up with a new yardstick for measuring in-store media audiences. In pilots, researchers use infrared sensors to track people’s movements past strategic locations within test stores, and converted the measurements into audience data. Experts say the new measurement tool has the potential to change the way brands allocate media mix spending between traditional ad media and in-store channels.
The effort, called Pioneering Research for an In-Store Metric (P.R.I.S.M.), initially involved six brand marketers, four large retailers, and one of the nation’s largest media buying firms in a study that measured consumer traffic in 64 retail categories in 10 food, drug and mass stores located in Atlanta and Portland, Ore. The Nielsen Company is now spearheading the research.
“That is adding some legitimacy,” said James Tenser, principal of VSN Strategies. “(In-Store) is not yet a measurable media, and it‘s not yet a media that’s easy for advertisers to buy. But manufacturers have decided that they’re going to shift money in this direction. It’s loud and clear: they’re moving dollars from traditional media and traditional types of advertising into the in-store environment. And the reason being is that the First Moment of Truth argument carries a great deal of weight.”
“Shopper marketing or in-store marketing is something we need to invent, so it’s getting a lot more attention and a lot more energy,” adds Ms. Chaltas. “Both manufacturers and retailers are struggling with how to invent the right approach to shopper marketing for their own store or category or brand. It’s creating a lot of buzz because it’s an unknown and requires a lot of energy and attention. And most organizations are going from a world of doing almost none of it to doing it for the first time.”
Discussion Questions: What do you think is driving the focus by the CPG industry on in-store marketing? What has been working in in-store media that could be built upon? What are the main hurdles impeding the CPG industry from improving in-store marketing?
If we believe the now-classic POPAI data that two-thirds of the product choices are made at the shelf, then anything a marketer can do to gain attention at the shelf is going to be important. The driving force is a combination of this desire to get the shopper at the decision point and the relative difficulty of creating strong brands. A product that lacks differentiation from its competitors or fails to have a defined brand position needs in-store marketing to spur that choice–otherwise, it competes (maybe on price) with everything else.
I’m hoping that some of the writers will tell us about in-store media effectiveness–there is not much evidence to date that in-store marketing is consistently effective in improving sales and that it pays out.
In-store marketing and communication represents an as yet untapped opportunity to drive both brand equity and ROI insights. The data now exists to target in-store communications based on geodemographics and shopper need states. Understanding specifically, what messaging activates shopper responses is still unclear. However, those manufacturers who take the time and effort to understand how to close the sale where the majority of brand decisions are made, will win big time!
With traditional advertising failing to deliver the results CPG companies need to grow their brands, it’s not surprising that they’re shifting their focus to in-store. If nothing else, at least by shifting their focus to in-store activities they’ll be reaching the consumer at the point of decision.
With broadcast television losing viewers, dual income households increasing, and online entertainment changing the way American consumers experience advertising, in-store marketing makes a lot of sense.
The last ten yards are more critical than ever before. Advertising that integrates broadcast messages with online programs and in-store merchandising will become the norm.
Consumers will want to experience the brand before making a purchasing decision. The experience has to travel with them from the first point of awareness to the retailer where the purchase is ultimately made.
There are many hurdles that need to be addressed all along the process; from advertising agency partners that lack the capabilities, to brand managers remaining fixed on decades old marketing axioms, to retailers not willing to try new in-store marketing programs. Progress always has hurdles.
Although it will require a paradigm shift from all the role players, there is too much to gain for it not to happen.
I agree with many of my peers, that there is a place for more aggressive in-store marketing. However, some of the numbers reported in the article are a bit circumspect since they only come from the people who replied, from the website. This is so subjective, and tilts the results of any survey, that we need to take the results with a grain of salt, and consider the source. Nonetheless, this is no great revelation, considering what is seen as you enter any top notch retailer.
New initiatives may be driven by the Moment of Truth approach and the new study. However, creating new ways of attracting consumers’ attention and stimulating purchases is not new. About 10 years ago a CPG company did a study in Latin America by putting a camera on the shelf to monitor consumers’ reactions when a puff of scent was expelled as they entered the space. The scent was associated with the advertising for a product. Results indicated that consumers stopped, looked at the shelf, and a good number purchased the product. Another company put a small display on the shelf that moved when consumers walked by. The movement caught consumers’ attention and again they stopped, looked at the shelf, and a good number purchased the product. These are not new studies.
Knowing where and when your consumers make decisions and knowing what is important to their choice should lead manufacturers and retailers to create communication vehicles that get the right message to the right consumer at the right time.
The worthwhile CPG brand media play ‘in-store’ must be keenly executed; big box retailers protect their isles–well!
Consumer user experience in-store is top of mind for retailers’ success. I have deep experience in this unique ‘retailer/CPG’ conundrum and have an unusual passion to suggest to retailers to create better marketing integration and execution of media offerings online and offline for CPG brand media campaigns. For example, an interactive media campaign could be offered to CPGs on the retailers’ site to ‘drive-to-store’ or buy online and the ‘in-store’ campaign could ‘drive-to-site’. The retailer could offer these multi-channel media offerings to CPG brands for better campaign results and consumer user experience.
The CPGs tapped interactive agencies and are trying to pour national dollars into better multi-channel media strategies. Retailers have a golden opportunity to provide a full service online/offline media platform that brings incremental revenue to their bottom line. Where else can CPGs advertise and get the best chance of a conversion? That’s right–on the retailers’ site or ‘in-store’.
The problem with the POPAI stat is that it is often misinterpreted. In the wrong hands, it gives the message that shoppers walk into a store with a virtually blank sheet of paper and are looking to the retailer to “sell” them stuff. The reality is that much of what we buy is driven by a predetermined need, “I’m going to the store because I need bread, spread, vegetables, meat, etc….” With the exception of a handful of categories–confectionery for instance–if that category isn’t on the list, in many cases no amount of in-store marketing is going to get the shopper to buy.
However, what I think is truly borne out by the POPAI stat is that when we visit a category, in many cases we do so with a salient set of products fixed in our subconscious. This is built through exposure to ATL and past consumption experience. In the time starved window of purchase opportunity (the first moment of truth) shoppers fall back on this salient set in order to allow an heuristic approach to making a purchase decision. It is in this context that in-store marketing can have influence, in order to get shoppers to choose one product over another from an already salient list.
However, price promotional activity can also have the same effect and arguably with greater efficacy. Clearly, price promotion leads to reductions in value growth so for the manufacturer, finding alternative ways to gain competitive advantage at retail may be attractive. Coupled with a fragmentation of traditional media, the store is becoming an increasingly important platform in the fiercely fought battle for market share.
I do wonder to what extent a lot of this is currently lip service, though. In my experience, recommending a move towards in-store marketing which is not based solely on price promotion, in order to protect and build value, falls on partially deaf ears. It is often perceived by manufacturers that price promotion, whilst largely resulting in purchases being brought forward by shoppers, also results in slight increases in consumption and as a result improvements in longer term market share, albeit at reduced margins.
In terms of how non-priced based in-store activity should be executed, I don’t think we are in a position to say as yet, but I would suspect it will vary by category. However since product saliency is manifest through “grab & go” behaviour, a measure of the level of such behaviour for specific SKUs could well prove to be part of the arsenal of tools used to evaluate the efficacy of promotional tactics.
If upwards of two thirds of purchase decisions are being made in-store, in-store media is a critical component of a CPG marketing/media plan. It is a facet of a plan, not the whole plan. Traditional media (TV, print, radio, etc.) and new media (primarily Internet) can help educate consumers before they arrive at their retail destination. Once inside, in-store media can help complete the purchase.
CPG marketing executives and retailers need to be concerned about the amount of clutter in the stores. One study I read indicated that the average consumer spends 22 minutes in a grocery store during each visit and dislikes 21 minutes of the experience. Many retailers feature aisles that cluttered with stand alone displays and therefore are difficult to navigate. The ongoing proliferation of brand extensions makes it difficult for consumers to find the products they are really looking for.
In order for in-store media to be most effective, retailers must offer inviting environments that allow consumers to find what they are looking for and check out easily and quickly. Then consumers will be more open to commercial messages in the stores.
A lot of renewed interest in In-store marketing is being driven by the P&G initiative and PRISM. We just concluded a massive analysis for a couple of our clients on effectiveness of in-store marketing.
In-store marketing could be very effective if it has a strong connection to a brand message or theme that consumers can readily identify. The advantage of in-store marketing vs. mass media like TV or Print is that consumers are exposed to it right before their purchase decision. The disadvantage is that mass media has a better share of consumer’s attention than in-store, so if in-store marketing is to be effective, then it has to have strong equity to capture the consumer attention. A combination of mass media to establish a brand theme and then using in-store marketing to leverage that theme at the point of purchase can be very effective.
One of the obstacles to effective measurement and development of in-store marketing is the limitation on methods of measurement. We leverage our audit data to measure execution of in-store marketing, but if in-store marketing has to be managed with the same efficiency and precision as traditional media, then measurement has to be standardized. An interesting study by POPAI and the Advertising Research Foundation suggests a methodology using Reach and Frequency metrics to accurately measure not only the breadth but also the depth of in-store marketing. Such standardization could put in-store media management on par with traditional media.
Technology innovation often drives in-store marketing. The proliferation of low-cost electronic media, with excellent personalization potential, gives marketers a much wider media menu. And it’s great to use point of sale info to easily measure in-store media’s impact. Test results are immediately available and alternative test marketing can be lower cost and very flexible. Messages, price points, calls to action can be tested quickly.
The above article points out a couple of interesting issues.
1) Conventional marketing efforts are no longer wholly sufficient in reaching the shopper (network TV, newspaper advertisements, etc.) when the eyeballs are not seeing it.
2) the definition of what it is we are talking about is very unclear. Within the article it bounces between in-store media, marketing, and other terms.
Therein lies the problem. Working with my clients, it has become clear that a better way had to be found to transition the efforts away from merely shifting funding from ads to in-store media and examine the environment and shopper behaviors in-store. Current tools (syndicated data specifically) can only measure WHAT was purchased, WHERE it was purchased, at what PRICE, and WHEN. It can only ASSUME the WHY of the purchase.
In-store media is a tool that is best used to accomplish in-store marketing. In-store marketing is a very different animal from “marketing in the store.” Capturing the nuances and place where the merging of shopper behavior, retail execution, brand messaging, and decisions are made goes well beyond the skills and tools that most brand marketers have access to currently.
It is one of the frontiers to be settled–but “you can’t get there from here” without some major rethinking of approach, responsibility, resources, and knowledge.
Aggressive in-store brand marketing is part of a cyclical trend that occurs every few years or so when the other options and alternatives are perceived to be losing focus and value. This is an excellent time for at-retail media if executed smartly to educate, excite, demonstrate, and to build incremental awareness that drives new sales and profits.
This article hits the drivers head-on but the main one is this: consumers are simply too hard to reach via the media that’s worked in the past so brands and Madison Avenue are looking for alternatives. So, the store just makes sense! But, to do so, first someone has to make the case (P&G) and then someone has to prove that media measurement can exist for the store (and a lot of folks are on this mission).
The question on what is working is the most common one we hear. And, as with any other media/marketing, there is NO golden answer! It depends on too many factors: the retailer, product, category, target audience, trends, time of year, type and quality of promotion, execution, etc. What does work, however, is having a water tight process to figure out the best strategy and execution for each promotion…and pushing all involved to ensure that measurement is possible to some degree.
It’s wonderful that this interest is finally here, as in the past only certain visionaries cared about building bridges between consumers in home, in life, in the store and down to the shelf. But, we need a lot more new constituents to realize that the store is NOT a traditional channel and they need to understand it before they can make new MAR strategies work for them. And, all involved have to play within the limitations of operational execution at the store level–whether we like it or not.
Dave is right–this is a fun, challenging place to be in and I do feel that 2008 will churn out many exciting case studies from brands and retailers willing to build off the media approach of the future. That is, approach MAR challenges not for the sake of grabbing eyeballs but for that of grabbing hearts via consumer relevance and generating measurable sales uplift!
We are huge proponents of in-store theater and truly delighting customers with a memorable shopping experience. In-store marketing should be the focus–and it needs to be accomplished in concert with a new approach to category management (driven by need states, not product).
Retail will forever be evolving…but it has never been so exciting–and challenging.