To maintain its growth and fulfill its promise, shopper marketing must evolve beyond its tactical practice and become a strategic capability that is better integrated with other major investments across the marketing and media ecosystem, according to a report released by Booz & Company.
The report, based on a survey of local and regional industry representatives, stated: “Shopper marketing has reached a major crossroads. It continues to be one of the fastest growing and most promising areas of marketing spending for consumer packaged goods (CPG) manufacturers and retailers.”
“For all its promise however, shopper marketing’s future remains uncertain because of three major obstacles. First, CPG manufacturers have not yet aligned shopper-marketing initiatives with other demand-generation capabilities such as advertising and promotions, along the path to purchase – that is, at home, on the go, in the store.
“Second, although CPG companies have the means to measure the effectiveness of shopper marketing programmes and continue to evolve their measurement capabilities, shopper marketing remains something of a black box. Last, retailers are seeking to further tap into manufacturers’ overall marketing budgets, pushing them to shift spending to retailer websites, in-store video networks and database marketing programmes.”
Keeping these dynamics in mind, the Grocery Manufacturers Association (GMA) Shopper Marketing 3.0 study focused on better understanding what works in-store, how in-store compares with out-of-store and how to bridge the measurement gap.
Among the survey’s insights and findings is the realisation that shoppers select 41 per cent of the brands they buy across categories before entering the store and select 59 per cent in the store. Thus, shopper marketers have many opportunities to influence the brands that shoppers have in mind when they enter the store as well as to increase trial and build repeat purchase sales using more effective in-store programmes.
Shopper marketing continues to be one of the fastest growing and most promising areas for marketing investment, accounting for approximately five to 10 per cent of total advertising and promotions spending, based on Booz & Company’s client experience.
Promising area for investment
Bejoy Thomas, Marketing and New Initiative Manager, said: “Shoppers are focused in their intention to shop and that’s the best time to engage them in brand recognition. We have regular price-buster booklets that drive the traffic to specific aisles and promote certain products and brands. This has picked up in the past few years, and I believe that it’s a maturity pattern of the market and has very little to do with the recession.”
Supporting in-store branding and promotions, he said: “This phenomenon is fast picking up pace and its return on investment (ROI) will contribute to making it a lasting branding exercise rather than a temporary exercise to lure additional customers during the current crisis.”
There are three major drivers of shopper marketing. First, the opportunity to reach shoppers all along the path to purchase: the fact that manufacturers and retailers are extending their shopper marketing investments beyond the store to a broader set of touch points is a reflection of the growing recognition that in addition to deciding where to buy, shoppers very often decide what to buy at home and on the go.
Second, the opportunity to create more collaborative trade relations: The rapid growth in shopper marketing has been fuelled by the growing realisation that it can be an effective platform for collaboration between CPG manufacturers and retailers. Last, the opportunity to better manage recession-driven price pressures: The recession, particularly its effect on consumer behaviour, has created a greater sense of urgency to unleash shopper marketing’s full potential, the report pointed out.
Although many shopper marketing programmes deliver a demonstrable ROI that is higher than other alternatives, the incremental profit impact of most programmes goes unmeasured and efforts to create accountability for shopper marketing investments remain ad hoc even for companies with greater commitment to measurable results.
The problem of measurement
However, the report also highlighted challenges in the current circumstances stating that there are several facets to the measurement problem. Foremost is the lack of clarity about how to measure and compare the value of various in-store shopper marketing elements, such as end caps versus in-store sampling. Second, the complexity and expense of building statistically valid models for measuring the incremental impact of shopper marketing programmes. Lastly, the misalignment between the objectives of manufacturers and retailers which gives rise to confusion about what to measure.
The current crossroads in the development of shopper marketing is defined by the need to impose order and consistency on its practice, to link it to and prioritise it within the marketing value chain and to build more effective collaboration between CPG manufacturers and retailers.
Building shopper marketing as a strategic capability requires focusing on four key pillars. First, being analytics, which enable manufacturers and retailers to collect data regarding the various marketing stimuli along the full path to purchase and measure the incremental profit impact and brand benefit of shopper marketing programmes.
Next is the process to create more effective integration and utilisation of analytics and decision support in the planning, execution and measurement of individual events and overall campaigns. Third, technology, which empowers shopper marketers by converting their analytical findings into routinised knowledge that is distributed throughout their organisations and applied to improve the results of in-progress and future events and campaigns.
Lastly, organisational alignment, which delivers the support, such as centres of excellence and creates motivation such as incentives, that shopper marketers need to staff and carry out their underlying processes. “We have realised the potential of parallel approach to reach out to our target audience and we are using many complementing platforms to communicate with them,” said Thomas.
Out-of-store shopper marketing is a growing opportunity. Shoppers are spending more time preparing for their shopping trips, making more than 40 per cent of their brand buying decisions before they get to the store. Moreover, even as media fragmentation grows apace, the growth in new digital touch points is providing a broader set of opportunities for shopper marketers and fuelling their interest in extending shopper marketing research and programmes along the full path to purchase.
The out-of-store factor
Almost all shoppers plan their purchases before entering the store. The out-of-store factors that influence shoppers’ list-making selections also clearly indicate their growing use of digital media. Online coupons, websites, blogs, e-newsletters, online ads and social media were all cited as influential factors in the survey.
Whereas the out-of-store environment is a relatively open frontier in which shopper marketers must often act as pioneers, the in-store environment represents a wholly different kind of challenge.
VLCC is one such brand that maintains continuous communication with their clients and uses web and social networking to convey its promotions and new services. Sanjiv Setia, Marketing Head, VLCC, said almost all its members are listed in a digital data bank and are constantly contacted. “We have almost 100 per cent digital contact with our clients and our e-newsletters and e-brochures are constantly e-mailed to them,” said Setia about the digitised approach of VLCC. “We are also thinking of coming out with a dedicated publication for our target audience, but the same will also be replicated in digital format also.”
“The findings of our shopper study confirm the opportunity in-store, even if this may seem a dauntingly steep hill to climb,” stated the report. A deeper dive into each of the four opportunities to influence brand selection reveals two significant findings. Firstly, in-store marketing elements are more influential than out-of-store elements. In three of the four selection categories, more than 85 per cent of shoppers cited in-store marketing elements as more influential to the ultimate brand selection than out-of-store elements.
Even in the “brand on list purchased in-store” category, there is still plenty of opportunity to reinforce purchase in-store: 29 per cent of shoppers cited in-store as more influential than out-of-store in this selection category. Lastly, although price is the most influential factor in each selection category, it is not the only influential factor, explained the communiqué supporting the study.
Role of CPG players
Effective in-store shopper marketing entails improving the shopping experience, choosing the equity messages that get beyond price and targeting messages to shoppers for maximum impact. The effectiveness of shopper marketing is being measured with varying degrees of sophistication, and there is room for improvement even among those CPG manufacturers and retailers who are leading the way.
There is no silver-bullet solution to the shopper marketing measurement challenge, but the data and analytics necessary to begin measuring the effectiveness of shopper marketing are available, and more sophisticated tools are continually evolving. Most fall into one of two broad categories, each with its own advantages and disadvantages. Foremost is market research, including such tools and techniques as control tests, panels, store intercepts, ethnography, virtual shopping and online testing, that helps determine the effectiveness of shopper marketing programmes.
Analytic tools and techniques such as marketing mix modeling are primarily focused on the quantitative evaluation of shopper marketing programmes.
With no silver bullet for measuring shopper marketing effectiveness, bridging the measurement gap requires a sustained effort by manufacturers, retailers and the industry as a whole. Moreover, it typically takes many months to implement marketing measurement systems and build up the data sets needed to optimise spending decisions and improve effectiveness.
The survey concluded that the future of shopper marketing was heavily dependent on the actions of CPG manufacturers and retailers today.
SHOPPER MARKETING
Shopper marketing’s potential is rooted in its focus on gathering insights about consumers when they are in shopping mode and applying these insights to influence their purchase decisions. From at-home research by shoppers to mobile devices that link the home, the store and the shelf, shopper marketing offers a means of building brand equity and sales lift.
Shoppers’ behaviour
Some of the key findings of the survey are:
- The majority of shoppers (77 per cent) enter stores without detailed shopping lists.
- Long-standing brand preferences are the most important influencing factor in determining the shopping list.
- More than three-quarters of shoppers conduct research before they shop, typically for an hour or more
- Most shoppers prefer a better brand to a better price, with many shoppers (58 per cent and 59 per cent in household products and health and beauty, respectively, and 48 per cent in food and beverages) using coupons or price promotions to justify buying the brands they want rather than as the key factor driving their decision-making.
- For the 59 per cent of items where brands are selected in-store, 85 per cent of shoppers perceive in-store factors as more influential than out-of-store marketing.
- There are some significant differences among product categories that make specific shopper marketing tactics more effective. For example, given the much higher incidence of impulse purchases in the food and beverages category (73 per cent of shoppers making at least one impulse
purchase per trip) as compared to the household products and health and beauty categories (41 per cent and 39 per cent respectively), shelf signage and end-cap displays are nearly twice as effective in the food and beverage category.
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