WINDOWS. on Shopper Insights. Explore the opportunities of Shopper Insights. The missing link in the marketing chain
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1 WINDOWS on Shopper Insights Explore the opportunities of Shopper Insights The missing link in the marketing chain Where to start gathering shopper insights How to use shopper insights to get retailers on your side 1
2 Welcome to Windows a retail report from Shoppercentric. In each issue we pick a hot topic of relevance to retailers and manufacturers and research the issues. In this issue we look at the opportunities offered by shopper insights. Our aim is to provide businesses with a clear view on where and how shopper insights could enhance relationships and performance. This ezine is designed to give you some of the overall themes and insights from our study. If you would like a presentation of the detailed results of our new research click here. To print the ezine click the print icon on the top right-hand corner of your web browser. Or just click the corner to turn the page and read on screen. 2
3 CONTENTS Why you need shopper insights page 6 How shopper insights give a different perspective page 8 The missing link in the marketing chain page 10 Overcoming the barriers 5 tips to getting shopper insights started page 12 3
4 Why shopper insights? With companies like Procter & Gamble, Coca-Cola and Kellogg spending increasing amounts on research in-store and at the point of sale, the news seems good for shopper insights. What is more, mounting evidence from McKinsey (1) among others, shows that higher performing companies spend twice as much gathering shopper insights as less successful organisations. It seems the marketing world has at last woken up to the need to understand shoppers as well as consumers. With this in mind we decided to talk to clients about their use of shopper research, to get a better understanding of how and when it can benefit them and how companies can use it more effectively. To help with our study, we carried out online interviews with 30 clients with positions ranging from insights manager to trade marketing manager from a range of manufacturing companies. In addition, six follow up depth interviews were conducted from the initial sample, and four further depth interviews were conducted with business consultants working in retail. (1) The McKinsey European Marketing Survey
5 What is shopper research and why is it different from consumer research? Before we start we need to establish what exactly we are talking about. Shopper insight is gathered specifically in relation to a purchase as opposed to the consumption or use of a product. Shoppers are not always consumers - for example when buying products for other family members, children or pets(!). Consumers are very often not shoppers - as any housewife will tell you. The experiences, views and behaviours of the two groups can be very different. 5
6 Why you need shopper insights at the heart of your organisation Brand owners and manufacturers simply cannot afford to base their marketing entirely on understanding what happens outside the retail environment. The need to understand shoppers is growing. Stores are changing. Not only does the average store have many more products on shelf but there are more offers, more categories and more point of sale materials to add to the chaos. According to POPAI the average store has 5,461 point of sale materials on site, 95% of which are temporary. We live in an increasingly fragmented and complex media and retail landscape. There are more types of shopping environment both on and offline than ever before and those environments often change on a weekly basis. Retailers and manufacturers now see the store itself as a form of media where the impact of communications can be at its most immediate. 1.14billion was spent on point of sale activity in 2007 (2), which makes the retail environment a larger medium than radio or cinema or outdoor advertising Standing out in this environment is increasingly difficult but increasingly necessary. In mature markets the balance of power has shifted considerably to the retailer, with huge profits and seemingly unstoppable success, they are more and more able to call the shots with suppliers. The retailer may own the space in which the manufacturer places its products, but the retailer s main concern is keeping its customers - the shoppers - happy. (2) POPAI:
7 Retailers now expect suppliers to understand shoppers almost as well as they do. One of the key reasons we need to get to grips with shopper insights is because our retail customers are demanding it of us, comments the insights manager of a paper goods manufacturer. Manufacturers who do this will not only support a successful on-going trading relationship with retailers but will also be able to benefit their own marketing by gaining broad learning across categories and identifying trends. By moving the customer relationship beyond the specifics of price and compliance and demonstrating a real understanding of its customers customer, a business can tailor its message to fit retailers needs, and so engage in more positive and forward thinking discussions than without the shoppers perspective. By demonstrating an understanding of the shopper and expertise in how to change shopper behaviour, the supplier becomes a trusted partner. 7
8 How shopper insights give a different perspective for marketing decisions These are just some examples of how integrating shopper insights will help improve a company s marketing and communications. 1 When in a coffee shop, mainstream confectionery brands would have the familiarity and credibility to appeal, but a typical coffee shop user is unlikely to want a full-sized bar. She will be looking for a smaller and more personalised format which is more in line with the immediate indulgence of the environment. Understanding this will lead a manufacturer to change products, pack sizes or formats to fit shopper needs in this specific environment. 2 Needs change in different environments Tailoring trends Insight into shopper behaviour will help identify which macro trends could and should be affecting a specific shopping environment. Part of the major current trend for environmental awareness is reduced packaging, but applying this to all products in a range could cause problems if part of the range is targeting gifting occasions. When purchasing a gift the packaging can be as important to the quality perception of the gift as the actual item itself, so wholesale reductions in packaging could undermine the gifting value of the brand. 3 For example, a very detailed message might work in environments where people spend a lot of time such as cafés or canteens, but it needs to be much more concise and full of impact in impulse outlets where shoppers grab and go. 4 Driving more efficient communications tailored to different outlets Clarifying which marketing to focus on Shopper Insights put changes to the brand mix in the wider context. Spending considerable sums on a pack design to achieve cohesiveness across a range is money mis- 8
9 directed if the retailers range by format rather than by brand. 5 Talking to shoppers shows what additional categories they would buy, or would like to buy, with a category. This means that manufacturers can offer ideas which will increase the amount purchased on that shopping trip if they are adjacent or placed together. The best example of this is the success of the meal deal offers which emerged in the early noughties. 6 Adding categories or creating solutions Understanding the relationship between products This can inform the way the category is laid out. An example here is the current dilemma for supermarket chains as to whether all the ethical products available in-store should be ranged in an ethical section, or among the individual categories to which they belong. It is easier for the shopper to consider the choices available alongside others in that category, so ethical products should be distributed with the non-ethical alternatives. Beyond communications and marketing issues, shopper insight can also help companies achieve broader business targets. Brands are able to achieve better sales and profit targets if they have focused on the retail environments where they have most to gain. In addition shopper marketing spend achieves better return on investment by communicating the right message in the right way to the right target market. Trade teams use their knowledge of shoppers to help buyers achieve their KPIs. And if new products which break ground by creating new sectors are launched with a shopper-based market model, they go into the position in-store which best fits how shoppers shop - and so achieve maximum impact. Finally, design solutions are grounded in the reality of the shopping process rather than intuition or supposition. 9
10 The missing link in the marketing chain Our research showed that there is a strong belief that shopper insights could valuably inform all kinds of business decisions. So if successful companies spend more on shopper insights and if, as we have seen, the benefits of integrating shopper in any marketing programme are clear, how come the vast majority of marketing activity focuses on understanding, targeting and influencing the consumer - not the shopper? Talking to clients we found two main reasons. 1 There is a limited understanding of what shopper insight is or what value it adds This has led to insight and marketing structures in companies that are not set up to include or integrate shopper insight. It has led to a lack of budget for shopper research, which in turn leads to few specialist shopper insight agencies. All but one of the 30 clients we spoke to agreed that a shopper research agency needed to be retail-literate And all of them agreed that the results of shopper research needed to be tailored to multiple audiences. We were driven to produce this report in part to create clarity around this area. As we have already seen, understanding the shopper is the key to getting a complete picture of how the brand performs at the point of decision where it really matters. 10
11 2 We live in a brand centric universe. The brand is king. Consumer research and marketing is run by the brand team. Distribution is often based on the brand s needs rather than shoppers needs, with the typical strategy being to get the product into as many stores as possible, rather than identifying which store formats the product might best suit. There is an assumption that retailers are only interested in how much the brand spends on advertising said one management consultant we spoke to. Yet retailers have moved on from that. Brand teams also seem to assume retailers will adapt to their plans and not the other way around. Shopper research, when it is done, is run by the category or trade teams. In many companies, this is a side of the business separate from marketing and the two are not connected. The category team often has little influence over how the brand is marketed, distributed or developed. it s incredibly frustrating seeing new product pack designs go in to store that either don t fit the standard shelves for that category or don t reflect the way people make their decisions at the fixture - I keeping asking for shopper insight to be involved in the pack design process, but nothing changes! commented a shopper insight manager we interviewed. Finally, the senior boards of manufacturing companies are typically made up of people with finance or marketing backgrounds - it is very rare to find trade or customer marketing experience at a senior level. So seniors understand brand marketing and how powerful it can be. But they are missing the link between that and shopper, they often haven t been exposed to shopper insight, have yet to see evidence of its value and in turn are reluctant to invest in it. 11
12 Overcoming the barriers - 5 tips to getting shopper insights started Start small, get some convincing examples of the benefits to the business, and build from there Use shopper insights to build bridges between category management, trade and marketing by getting input from the different teams and exposing all audiences to the results When the audience is most likely to be cynical, use a workshop approach to share learning, so that attendees reach the insights collectively 4 5 Go shopping! So teams learn how to look at their category as shoppers not as brand owners Build up shopper insight expertise at one defined point in the business, and work with agencies with real shopper expertise, who can properly support the development of this knowledge area in your business 12
13 This ezine contains the themes that came from our research. To get the maximum value from shopper insights we hope you will be interested to see a full presentation of the results. Please us at: shopperinsights@shoppercentric.com Contact: Alice Woodcock Marketing and operations manager: alice.woodcock@shoppercentric.com mobile: shopperinsights@shoppercentric.com or visit our web site at: Online questionnaire administered by: Market Measures Ezine designed by: Keen as Mustard Marketing 13
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