Shopper Mrketing: Cpturing Shopper s Mind, Hert nd Wllet
Shopper Mrketing: Cpturing Shopper s Mind, Hert nd Wllet Key Insights: The Store Is Compelling nd n Idel Mrketing Cnvs With 70 percent of purchse decisions being mde in-store 1 nd 68 percent of in-store purchses being impulse 2, mrketers hve tremendous opportunity to rech consumers, build brnd equity nd stimulte consumption through effective shopper mrketing. Mny Definitions Exist, However Only One Mtters Despite industry debtes nd differing opinions, shopper mrketing should be consistently defined from the shopper s point-of-view. It should include ll mrketing stimuli, developed bsed on deep understnding of shopper behvior, designed to build brnd equity, engge the shopper (i.e., consumer in shopping mode ), nd led him/her to mke purchse. The Industry Is Believer With respect to shopper mrketing, compnies re mking rel chnge hppen in their orgniztion bcking it up with projected increses in funding (21 percent nd 26 percent CAGR 2004-2010 estimte for mnufcturers nd retilers, respectively) nd considering shopper mrketing competitive differentitor well into the future. Trnsformtionl Chnge Is Required, nd It s Quite Complex Building shopper mrketing cpbilities will require significnt trnsformtion of the sttus quo in mrketing nd sles orgniztions. This trnsformtion will include, but is not limited to, how insights re generted, how much is spent on insight genertion, how segmenttion is performed, how budgets re developed, how tems re structured, wht skills re required, nd how execution hppens in-store. Retilers Are Incresingly Defining the Agend Retilers re becoming more sophisticted nd demnding mrketers. Leding mnufcturers re succeeding by becoming expert dvisors to their retil customers. Compelling insights nd effective collbortion will drive competitive dvntge for consumer product mnufcturers well into the future. Five Things Differentite Mnufcturers in the Eyes of Retilers Retilers view leding mnufcturers s those: Who re best ligned with their mrketing plns nd strtegies; With whom they hve highly productive nd cohesive reltionships; Who possess dvnced shopper mrketing competence; Who develop unique nd exclusive progrms; nd Who cn deliver powerful insights on the consumer nd the shopper. It Doesn t Need to Be the Cdillc Version Shopper mrketing is not n ll or nothing proposition. Brnd strtegies nd positioning should define the most pproprite role of shopper mrketing nd the specific in-store nd out-of-store tctics tht yield the most effective results. 1 Consumer Buying Hbits Study, Point-of-Purchse Advertising Institute nd Meyers Reserch Center, 1995 2 Point-of-Purchse Advertising Institute (POPAI)
Study Overview nd Report Structure Objectives nd Methodology To better understnd the emergence of shopper mrketing nd its impct on consumer products mnufcturers nd retilers, the Grocery Mnufcturers Assocition (GMA) Sles Committee engged Deloitte Consulting LLP to reserch nd identify: The industry definition of shopper mrketing; The stte of shopper mrketing in the consumer products industry; Leding prctices employed by retilers nd mnufcturers; nd Go-to-mrket strtegies for shopper mrketing. In-depth surveys nd interviews with leding consumer products mnufcturers, retilers nd service providers 3 were conducted from June through September 2007. In ddition, this report drws upon publicly reported compny dt nd other published mterils. Report Structure This report is orgnized into the following three sections: Section 1: The Cll for Shopper Mrketing. This section focuses on tody s mrketing complexities nd the emerging opportunity of the store s n effective mrketing medium. Section 2: Stte of Shopper Mrketing. This section outlines the findings of the study. It describes the definitions of shopper mrketing, the extent of industry doption, nd the trnsformtionl efforts nd essentil tctics necessry to succeed. Section 3: View of the Future. This section discusses our predictions for the future of shopper mrketing in the consumer products industry. Acknowledgements Deloitte Consulting would like to thnk the GMA Sles Committee for providing us with the opportunity to ssist in developing this in-depth report on such strtegic nd importnt topic for the industry s shopper mrketing. Thnks to Grnt LMontgne, Vice President, Sles, The Clorox Compny, nd GMA Sles Committee Chir, nd the entire GMA Sles Committee for supporting our efforts. We would lso like to recognize the GMA Shopper Mrketing Steering Committee. Specificlly, the following individuls provided significnt insights, guidnce nd support throughout the project. Their input plyed mjor role in the depth nd qulity of insights contined in the report. Skip Aldridge Executive Vice President, Chief Customer Officer GMA Sles Committee Vice Chir Phrmvite, LLC Tim Cole Executive Vice President, Sles Del Monte Foods Joe Crfton President, Strtegic Allinces CROSSMARK Don Hurrle Vice President, Sles, Grocery Mrket The J. M. Smucker Compny Jck Lurendeu Vice Chirmn Acost Sles & Mrketing Compny Trcy VnBibber Senior Vice President, Sles GMA Shopper Mrketing Steering Committe Chir The Dil Corportion Deloitte Consulting nd GMA would lso like to thnk the mny individuls from consumer products mnufcturers, retilers nd service providers who supported our reserch by providing interviews nd/or completing the extensive survey. Finlly, we extend our specil thnks to the GMA, specificlly Stephen Sibert, Brin Lynch nd Troy Beeler who provided project oversight nd fcilitted the study for the pst severl months. 3 Given the confidentility ssurnces mde with survey nd interview prticipnts, their nmes nd the nmes of their compnies will not be disclosed in this report.
Section 1: The Cll for Shopper Mrketing The Cll for Shopper Mrketing Where There Are Chllenges, There Are Opportunities Connecting with consumers nd shoppers nd creting loylty is s chllenging s it hs ever been for consumer products mnufcturers nd retilers. Consider the following profile of tody s consumers nd shoppers: 68 percent re brnd switchers 4 Only 5 percent re loyl to one brnd 5 73 percent shop in five or more chnnels 6 Only 26 percent re loyl to n verge retiler 7 These sttistics re lrming, given the fct tht mrketers re mking every effort to crete the exct opposite effect. Consider for moment, the impressive depth of mrketing penetrtion, convenience, choice, nd innovtion creted by svvy mnufcturer nd retiler mrketers: Rech: 3,000 mrketing messges dy rech the verge consumer 8, Convenience: The number of retil chnnels hve more thn doubled in just 50 yers, Choice: Over 45,000 SKUs wit the consumer in the verge supermrket 9, nd Innovtion: 32,624 new products were introduced in 2006 lone 10. Given this substntil mrketing effort, one would think the forementioned loylty sttistics would be ltogether different. Unfortuntely, they re not. This hs cused the industry to question nd re-think whether the right mrketing messges re delivered to the right consumer, t the right time, in the right plce, nd with n impct tht cretes incrementl consumption nd loylty. Indeed, mrketers re buzz with re-focusing their efforts on mrketing to the consumer in holistic nd integrted mnner, sometimes referred to s 360-degree mrketing. However, in doing so, they re quickly concluding tht there re mny blind spots cross the 360-degree view of the consumer. One such blind spot is perhps one of the most compelling mrketing mediums the retil store. The Store s Mrketing Medium The store is criticl nd highly ttrctive touch point to rech nd influence consumers. 70 percent of ll purchse decisions re mde in-store 11, nd 68 percent of in-store purchses re impulse driven 12. The potentil of the store to crete impressions nd build brnd equity is tremendous, nd it should be thought 4 Nielsen Medi Reserch: http://www.medibuyerplnner.com/2006/08/29/nielsen_instore_ds_swy_68/ 5 POPAI Consumer Buying Hbits Study: http://www.ogilvyction.com/pges/shoppermrketing.spx ccessed 7/2/07. 6 IRI Time nd Trends: Chnnel Migrtion 2007 7 Generl Mills Best-In-Clss Shopper Loylty 8 Mritz Loylty Mrketing: http://www.mritzloylty.com/consumer_loylty_progrms.html 9 http://www.fmi.org/fcts_figs/superfct.htm 10 IRI Reserch: CPG New Product Trends 2004 11 Consumer Buying Hbits Study, Point-of-Purchse Advertising Institute nd Meyers Reserch Center, 1995 12 POPAI 3
Section 1: The Cll for Shopper Mrketing of like ny other mrketing medi. Ech week, 127 million customers visit Wl-Mrt lone 13 compred to 68 million people who wtch ABC, CBS or NBC evening news on verge 14. The store is filled with engged consumers in shopping mode, lredy thinking bout nd pre-disposed to mking purchses mrketer s drem come true. The store s venue to convert consumers into buyers is not new concept. Sles orgniztions hve been utilizing the store for quite some time through rther substntil trde promotion progrms nd investments. Brnd mrketers hve only been trgeting consumers outside of the store, leding them to the store but leving them t the front door. They hve been neglecting n importnt moment in the consumer s decision mking process, The First Moment of Truth. 15 In order to execute holistic 360-degree mrketing, mrketers cn no longer overlook the store or the consumer-turned-shopper. The Shopper Is Not Necessrily the Consumer Along with the store, the consumer s shopper hs been n evolving concept. Mrketers, who trditionlly focus on consumers, re relizing the opportunity to ddress consumer needs in-store, in other words, shopper needs. When plnning or engging in purchse, consumer-turned-shopper my hve different needs nd different behviors. Consider the following exmples of two different shopping occsions: Pntry Restocking: A womn restocking her pntry for her fmily my purchse lrge product sizes on sle, mking pckge size nd vlue pricing importnt considertions in influencing her purchse decision. Grb-nd-Go: The sme womn, rushing to grb bite before meeting, my purchse pricey sndwich nd drink from the prepred foods deprtment, mking convenient store lyout, fst service nd product ssortment the most criticl mrketing vribles. In ddition to shopping occsions, the industry hs come to relize tht the consumer who uses the product my not be the one purchsing it (e.g., mother buys the cerel tht her children consume). Some compnies refer to this s the chooser (shopper) nd the user (end consumer). In some instnces these re different humn beings, in other instnces they re the sme person. Understnding this differentition enbles mrketers to develop pproprite strtegies with the most effective mix of medi nd messging to trget the right segments of consumers nd shoppers. Shopper Mrketing Is Born Retilers nd mnufcturers relize the store s potentil s strong mrketing medium, nd re now trgeting shoppers in n effort clled shopper mrketing. The next sections of this report will focus on defining shopper mrketing, investigting its penetrtion within the industry, understnding retilers nd mnufcturers perspectives, nlyzing the brriers to implementtion, nd highlighting successful go-to-mrket strtegies. 13 http://www.wlmrtfcts.com/rticles/5274.spx 14 http://www.stteofthemedi.org/2007/index.sp 15 The Hub, My/June 2007
Stte of Shopper Mrketing Stte of Shopper Mrketing Key Tkewys: 1. Confusion Trumps Clrity 2. The Trin Hs Definitely Left the Sttion 3. The Sttus Quo Won t Do 4. Lerning The New Tricks of the Trde 5. You Don t Need to Do Everything, Just Something 1. Confusion Trumps Clrity Industry Definitions Vry Widely One would think defining shopper mrketing would be firly strightforwrd. There is shopper, you mrket to the shopper nd therefore, mrketing to shopper is shopper mrketing if only things were so logicl nd simple. Wide rnging debte exists cross the industry on wht comprises shopper mrketing. Most industry prticipnts gree tht the dimensions of shopper mrketing rech, ctivities/tctics nd progrm inititor should include the following components: Rech: In-store mrketing (e.g., point-of-sle mrketing mterils) Activities/Tctics: Brnd-building promotions (e.g., promotions dvertising product brnd for mnufcturers) Progrm Inititor: Both mnufcturer nd retiler (i.e., progrms developed through mnufcturer/ retiler collbortion) However, mny rgue whether the scope of shopper mrketing lso includes the following mrketing ctivities: Rech: Out-of-store mrketing (e.g., direct mil, rdio cmpigns, Internet cmpigns) Activities/Tctics: - Trde promotions (e.g., buy 2 get 1 free on-shelf promotion) - Product modifictions (e.g., modifiction of product or pckging to stisfy shopper needs) Progrm Inititor: - Retiler (e.g., privte lbel mrketing, store bnner promotions) - Mnufcturer (e.g., product pckging innovtion) Compnies, industry thought leders nd ssocitions clibrte within these dimensions to crete their own definitions of shopper mrketing. Upon exmintion, we found six prevlent definitions of shopper mrketing.
Stte of Shopper Mrketing For exmple, the Mrketing Ledership Council defines shopper mrketing s: 1. Shopper Mrketing In-store dvertising, promotion nd design inititives tht lign with nd extend supplier equity-building objectives while simultneously creting source of differentition for prticipting retilers through tilored executions tht ddress specific shopper need-sttes nd ctivte purchse t the point-of-sle. 16 Oftentimes, shopper mrketing is being used synonymously with other mrketing concepts. For exmple, retilers use the term customer mrketing interchngebly with shopper mrketing. 2. Customer Mrketing In retil terms, shoppers re retilers customers. Therefore, shopper mrketing is wht retilers hve lwys been doing, but t more sophisticted level. Nowdys, they re investing in gthering more informtion nd generting deeper insights (e.g., behviorl studies) to develop progrms trgeted t specific customer segments. They re redesigning their stores nd developing innovtive in-store events to crete unique customer experience tht leds to differentition. Sfewy is one notble exmple of this growing level of sophistiction: Sfewy Customer Mrketing In 2005, Sfewy introduced its Lifestyle Store in more thn 400 loctions The stores fetured wrmer lighting nd more redble product lbels centered round the concept tht there is high importnce in the wy merchndise on the shelf touches the customer Sprinkling its tgline, Ingredients for Life, liberlly throughout the store nd its products, Sfewy hs focused on engging the customer s purchse interest by delivering consistent brnd messge through every vilble communictions chnnel Source: Grocery Hedqurters Trde Journl Mnufcturers lso use the term shopper mrketing interchngebly with other mrketing concepts. To complicte things further, mnufcturers dd nother dimension to their definition focus. Some compnies re more focused on retiler stisfction, others on shopper stisfction. The terms they use interchngebly with shopper mrketing re: 3. Account/Retiler/Customer Specific Mrketing customized mrketing progrms for key retil customers. 4. Retil Mrketing ll mrketing ctivities contined in retil environment or specificlly t the moment of contct. For some compnies this includes trde promotions. 5. Shopper-Centric Mrketing stisfying shoppers need-sttes (i.e., mrketing to consumers when they re in the shopping mindset to stisfy the need tht drove them to the store). 6. Commercil Innovtion ny innovtion developed bsed on shopper insights tht does not require significnt pckging or product chnge. 17 16 MLC, Assessing Shopper Mrketing, July 2005 17 The HUB: My/June 2007
Stte of Shopper Mrketing The following illustrtion summrizes the six bove-mentioned shopper mrketing definitions, relizing there could be more. Shopper Mrketing = Customer Mrketing 2 RETAILER Account/Retiler/Customer Specific Mrketing Retil Mrketing Shopper 4 Mrketing 1 3 Shopper-Centric Mrketing 5 Shopper Commercil Innovtion 6 Mnufcturer Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results Rech Activities / Tctics Progrm Inititor Focus Shopper Mrketing Definitions 1. Shopper mrketing (Mrketing Ledership Council) 2. Customer mrketing (Retilers) 3. Account/retiler/customer specific mrketing (Mnufcturers) 4. Retil mrketing (Mnufcturers) 5. Shopper-centric mrketing (Mnufcturers) 6. Commercil innovtion (Mnufcturers) In-Store Out-of-Store Brnd Activities Trde Promotion * * * * Product Modifiction Both Mnufcturer nd Retiler (through collbortion) Mnufcturer ONLY or Retiler ONLY Shopper Stisfction Account Stisfction NA * My or my not include Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results We hve considered the merits of the six definitions of shopper mrketing nd hve concluded tht none truly cptures the complete essence of shopper mrketing. One Definition Shopper-Centric The term shopper mrketing is bsed on the underlying ssumption tht the consumer nd the shopper re the center of the universe. Din Howell, Procter & Gmble s shopper mrketing chief, puts it best, It doesn t relly mtter wht we think; it only mtters wht the shopper/consumer thinks. 18 Shoppers do not cre whether the mrketing stimulus they re receiving is n dvertisement, consumer promotion, trde promotion, product pckge, or store plcement. They do not ctegorize these stimuli, they do not cre wht the industry clls them nd they certinly do not cre who funds them. They just wnt relevnt informtion, plesnt store experience nd n esy purchse. Shoppers my be pre-disposed to mke purchse not just within store environment, but on the wy to the store nd from the store t ny point they re thinking bout the purchse. Therefore, they re receptive to messges bout the product outside the store. 18 The HUB: My/June 2007
Stte of Shopper Mrketing After positioning the shopper t the center of the universe nd identifying wht mrketers need to trget the shopper holisticlly, we significntly broden the perture of the lens through which we think the industry needs to view shopper mrketing. We define effective shopper mrketing s: All mrketing stimuli, developed bsed on deep understnding of shopper behvior, designed to build brnd equity, engge the shopper (i.e., consumer in shopping mode ), nd led him/her to mke purchse Shopper Mrketing Stimuli Any mrketing effort tht builds brnd equity nd hs the potentil to engge or influence n individul to shop or mke purchse. Some exmples of shopper mrketing stimuli include: Product stimuli, such s the size, shpe, color, mteril nd pckging of the product, nd the messges, grphics nd lnguge conveyed on the pckging Price stimuli, such s price promotions conveyed in circulrs, shelf signs, coupon dispensers, nd personlized check-out coupons Plce stimuli, such s store design, lyout, lighting, music, scents, nd isle, shelf, nd disply loctions Promotion stimuli, such s smpling, demonstrtions, displys, floor dvertisements, kiosks, instore visul or udio, intelligent shopping crts, nd digitl signge PRODUCT PRICE PLACE Pckging Size Lnguge Personl Check-out Coupons Circulr Personl Check-out Coupons Circulr Coupon Dispenser Music Lighting Disply PROMOTION Smpling Demo In-Store TVs Floor Ads Intelligent Crt Shelf Signs Disply Not everyone grees tht ll of these stimuli should be considered shopper mrketing. However, from the eyes of shopper, price discounts, store design nd product pckging is mrketing to the shopper. Shopping Mode A person is in shopping mode when he/she is contemplting buying product or service whether the person is in-store or outside the store. For exmple, person is in shopping mode when he/she is mking shopping list, driving to store, reserching informtion online, or browsing the isle in store. A typicl thought process of n individul in shopping mode my include: Do I need this? Where should I buy? How much should I py? Wht re the choices? Note: The definition of effective shopper mrketing stted bove ws formulted s conclusion of this study. This definition ws not used in the shopper mrketing survey conducted for the GMA/ Deloitte Consulting LLP 2007 Shopper Mrketing Study. Survey prticipnts responses were bsed purely on their compnies own definition nd understnding of the concept of shopper mrketing. Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results
Stte of Shopper Mrketing Key Tkewys: 1. Confusion Trumps Clrity 2. The Trin Hs Definitely Left the Sttion 3. The Sttus Quo Won t Do 4. Lerning The New Tricks of the Trde 5. You Don t Need to Do Everything, Just Something 2. The Trin Hs Definitely Left the Sttion So fr, we mde the rgument tht shopper mrketing is compelling concept. However, the question remins if the industry hs embrced this concept nd is mking it relity. The nswer, bsed on our reserch, is resounding yes. Irrespective of the confusion or interprettion of shopper mrketing, compnies re investing in it nd mking chnge hppen 19. Compnies consider shopper mrketing competitive dvntge nd mrket leders hve strted mobilizing their shopper mrketing efforts by llocting more funds, restructuring their orgniztions, investing in technology nd resources, nd re-evluting their collbortion efforts with prtners nd service providers. Shopper Mrketing Drives Competitive Advntge Both mnufcturers nd retilers believe tht by executing shopper mrketing properly, they cn gin significnt competitive dvntge in the next 3 to 5 yers. Effective Shopper Mrketing s Competitive Advntge Averge Score (1 - No Advntge; 5 - Significnt Advntge) 5 - Significnt Advntge Mnufcturers Retilers 3 - Some Advntge 1 - No Advntge Tody In 3 Yers In 5 Yers Note: N=19 Mnufcturers, 8 Retilers Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results Follow the Money It Tells the Story! Recognizing the opportunity to gin competitive dvntge through shopper mrketing, mnufcturers nd retilers re incresing their shopper mrketing budgets. While overll mrketing budgets re growing t 2 percent CAGR, shopper mrketing budgets re growing t 21 percent nd 26 percent CAGR for mnufcturers nd retilers respectively. Note tht the 1 percent CAGR decrese in trde promotion spending is not directly relted to the increse in investments in the online or shopper mrketing budgets. According to mnufcturers, they re criticlly evluting the effectiveness of trde promotion spending nd re optimizing investment effectiveness. Retilers, on the other hnd, re investing more in redesigning their stores nd improving their customer experience s prt of their shopper mrketing inititives. 19 The findings in this nd subsequent sections re bsed on ech compny s own definition of shopper mrketing.
Stte of Shopper Mrketing Mrketing Budget Alloction, by Mrketing Mix Element Mnufcturers Retilers 3% 4% 3% 20% 6% 6% 4% 19% 8% 9% 4% 17% 4% 3% 7% 9% 5% 7% 7% 9% 4% 12% 11% 9% 34% 30% 28% 76% 72% 65% 35% 36% 33% 2004 2007 2010 Estimte 2004 2007 2010 Estimte Mrketing Mix Element Shopper Mrketing 21% Internet 15% Co-Mrketing 6% Consumer Promotions (Incl. FSI) -1% Trde Promotions -1% Trditionl (TV, Rdio, Print) 1% OVERALL Mrketing Budget CAGR (2004-2010 Est.) = 2% CAGR (2004-2010 Est.) Mrketing Mix Element Other 2% Shopper Mrketing 26% Internet 9% Consumer Promotions 0% Trditionl (Print, TV, Rdio, Circulrs) -1% OVERALL Mrketing Budget CAGR (2004-2010 Est.) = 2% CAGR (2004-2010 Est.) Note: N=19 Mnufcturers, 8 Retilers; The height of the brs represents the sum of estimted mrketing budgets (bsed on sles figures nd survey responses) of ll respondents. Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results Both mnufcturers nd retilers re lso plnning to increse their resources devoted to insights genertion over the next three yers. Shopper Mrketing Insight Genertion Resources over Next Three Yers Percent of Totl Respondents 61% 57% Mnufcturers Retilers 43% 28% 12% 0% Sme or Decrese Increse Somewht Increse Significntly Note: N=19 Mnufcturers, 8 Retilers; Percentge figures indicte portion of respondents who selected prticulr metric Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results 10
Stte of Shopper Mrketing Mke Wy for Shopper-Centricity Compnies re lso chnging their orgniztionl structure to support shopper mrketing. In ddition to llocting dedicted resources, compnies re creting specific groups or deprtments within the sles or mrketing orgniztions to focus on reserch, progrm development, reltionship mngement nd the execution of shopper mrketing inititives. The mjority of shopper mrketing deprtments contin one to five full-time-equivlents. However, leding mnufcturers re creting more prominent shopper mrketing functions tht re fully responsible for shopper mrketing processes, from insight genertion to shopper interction t point-of-sle. Number of Full Time Equivlent Resources Working in Shopper Mrketing Percent of Totl Respondents 53% 50% Mnufcturers Retilers 38% 21% 11% 13% 16% 0% 1-5 6-10 10-20 21 or more Number of full time equivlent resources Note: N=19 Mnufcturers, 8 Retilers Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results Jump on the Bndwgon In ddition to mnufcturers nd retilers, other industry plyers re rushing to ssist compnies with their shopper mrketing efforts. Mrketing gencies nd other service providers re creting new shopper mrketing methodologies nd pproches to help mnufcturer nd retil clients develop their presence in the field. In order to sty relevnt nd competitive, dvertising nd medi gencies re creting dedicted tems with required skills to support shopper mrketing. Exmples include: At Stchi & Stchi X, we understnd the difference between consumers nd shoppers nd how best to crete effective communictions in the retil spce. We believe tht tlking to shoppers in the right wy will hve the single biggest impct on client s business. Source: Stchi & Stchi Ogilvy Shopper Mrketing division believes there re severl moments of truth leding up to the purchse decision, or wht Ogilvy hs termed the Lst Mile. Ogilvy Shopper mrketing will therefore strt the process off with Lst Mile Workshop where sles people, brnd mrketers nd Ogilvy Shopper mrketing work together to nlyze the shopper sitution. For winning t the Lst Mile is criticl to brnd s success... where we move people from ttitude to ction, sy Couzyn. Source: Spotlights on the shopper, Mrketing WEB Arc Worldwide hs nnounced tht Comcst Corportion, the ntion s leding provider of cble, entertinment nd communictions products nd services, hs selected the compny s mrketing prtner in its efforts to expnd its presence t key retil outlets. Source: Mrketwire CBS sid it would buy SignStorey, US compny tht brodcsts dvertising-supported television in retil outlets, for $71.5m. The cquisition is evidence of the burgeoning populrity of in-store dvertising, which llows compnies to trget shoppers just s they re bout to mke purchses. Source: MSNBC 11
Stte of Shopper Mrketing Shopper Mrketing Pys Off Compnies tht hve invested in shopper mrketing re seeing the benefits. Leding mnufcturers nd retilers who re pursuing effective shopper mrketing strtegies nd tctics hve witnessed incresed sles, shopper loylty nd ROI. For exmple, Kroger s Customer First focus incresed its sles by 6.8 percent. Kroger Customer First Focus Kroger s Customer First focus incresed its sles by 6.8 percent versus the 3.4 percent (non fuel) for its competitors using the following tctics: Prtnered with Dunnhumby, dt nlysis firm to refine its mrketing strtegy Hrnessed dt, integrting rich trnsction dt with customer reference dt Conducted nlysis nd segmenttion of dt, identifying nd segmenting best customers Developed nd executed loylty mrketing strtegy nd delivered specific offers to trget segmented customers Developed colition loylty offer by prtnering with MsterCrd to crete loylty crd tht hs multiple uses Source: Forrester Reserch, Inc. Best Buy s sles gined 8.4 percent fter expnding its customer-centric progrm to 110 US stores from 32 pilot stores. Though consumer electronics is n djcent industry, its retil environment utilizes innovtive shopper mrketing prctices nd further illustrtes tht shopper mrketing is rel nd beneficil. Best-Buy Customer-Centricity Best Buy expnded its customer-centric progrm to 110 US stores fter 32 pilot stores showed sles gin of 8.4 percent compred to the 2.3 percent for the non-pilot stores. Best Buy hs chnged its one-size-fits-ll pproch to dopt principles of customer experience bsed retiling through: Development of unique customer segmenttion strtegy enbling the customiztion of stores round specific segments Anlysis of ltent customer dt tht identifies their most profitble customers nd enbles the customiztion of store loctions Use of nlysis in progrm development to increse the effectiveness of pricing nd promotions Source: Forrester Reserch, Inc. nd www.money.cnn.com Shopper mrketing hs rrived nd is driving significnt chnge in the industry. Rther thn being just nother gret ide, shopper mrketing is lso demonstrting impressive tngible results. A new world of chllenges nd opportunities wits those compnies tht cn successfully deploy their resources ginst this new strtegic impertive. 12
Stte of Shopper Mrketing Key Tkewys: 1. Confusion Trumps Clrity 2. The Trin Hs Definitely Left the Sttion 3. The Sttus Quo Won t Do 4. Lerning The New Tricks of the Trde 5. You Don t Need to Do Everything, Just Something 3. The Sttus Quo Won t Do To sy tht it is chllenging for consumer products compnies to implement shopper mrketing is mssive understtement. Building shopper mrketing cpbilities nd competence into the orgniztion is mjor disruption to trditionl mrketing nd sles orgniztionl constructs, budgets, funding structures, processes, metrics nd incentives, nd mny other foundtionl res within consumer products compnies. Our survey dt confirm tht on their wy to effective shopper mrketing, mnufcturers fce considerble brriers tht, if not ddressed correctly, cn hinder overll shopper mrketing success. These brriers re: 1. Inconsistent understnding of shopper mrketing progrms in the orgniztion; 2. Lck of shopper mrketing cpbilities nd skill sets; 3. Lck of lignment nd support by necessry functions; 4. Lck of funding for progrms nd infrstructure; 5. Lck of performnce metrics nd/or mesurements; 6. Inbility to consistently execute progrms in store; nd 7. Lck of bility to generte specific consumer insights. The good news is tht mnufcturers consistently sy tht ledership understnds the importnce of embrcing shopper mrketing (42 percent of respondents strongly greed). However, ledership buy-in is necessry but insufficient to perform such mssive trnsformtion. Dy-to-dy execution excellence in setting up new orgniztion structures, new roles, new processes, nd new cpbilities is necessry to chieve success. Shopper Mrketing Opportunities Addressed Percent of Totl Respondents Who Answered Strongly Agree Mnufcturers 53%% 42%% Identified Shopper Mrketing s Strtegic Enbler of Growth Supported by Executive Ledership Ledership Support 32%% Allocted Dedicted Resources to Support Shopper Mrketing Progrms 21%% Actively Mesured nd Evluted Shopper Mrketing Progrm Performnce 16%% Supported by All of the Necessry Functions 16%% New Orgniztionl Structure nd Processes Built 5% Clerly nd Consistently Understood by Relevnt Functions Note: N=19 Mnufcturers Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results 13
Stte of Shopper Mrketing Why Is This So Complex? Through shopper mrketing progrms, mnufcturers wnt to chieve purely mrketing objective rech shoppers nd win their shre of wllet. However, historiclly, retilers nd mnufcturers mrketing deprtments hve not been connected. The mnufcturers sles orgniztion nd retilers merchndising function hve controlled the store domin, while the retilers mrketing deprtment hs owned the connection with the shopper. Thus, it would tke four communiction links (i.e., mnufcturer mrketing to mnufcturer sles/trde to retiler merchndising to retiler mrketing) to rech the shopper. The most importnt link in this picture is missing mnufcturer nd retiler mrketing deprtments need to collborte to convert the shopper to loyl buyer. Trditionl Retiler nd Mnufcturer Orgniztions RETAILER 4 MARKETING? MANUFACTURER Mrketing Shopper 3 1 MERCHANDISING 2 sles/trde Communiction Step Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results Nevertheless, numerous brriers exist to getting mrketing orgniztions to tlk, including: Sles nd merchndising hve reltionship tht they hve been cultivting for yers; Since mrketing mngers hve trditionlly been involved in ntionl mrketing, it is chllenging for them to lso tke on the intriccies of the retil store; Mrket reserch hs trditionlly been bout collecting informtion on consumer segments. With shopper mrketing, they hve to develop cpbilities to perform shopper segmenttion nd nlyze shopper dt by store, cluster of stores nd ccount n exponentil increse in the complexity nd grnulrity of insights required; Retilers mrketing deprtments hve trditionlly hd closed door policy for mnufcturers; nd Retilers processes (e.g., new product introductions, trde promotions, nd in-store mrketing ctivities) re not ligned, prtilly becuse responsibilities for these ctivities reside within different functions nd deprtments. 14
Stte of Shopper Mrketing Leding mnufcturers hve mitigted these chllenges by developing cross-functionl customer business tems for their key retil customers. These cross-functionl customer business tems consist of experts within such res s merchndising, mrketing, sles, supply chin, IT, nd finnce. They work with customers to ddress issues within ech of their respective functions. However, even those tems my t times lck the expertise nd knowledge required to ddress shopper mrketing. A New Approch Mrketing nd Sles Integrte Shopper mrketing clls for structurlly different pproch tht requires the tight integrtion of mrketing nd sles. To chieve this integrtion, mnufcturers hve been nesting the shopper mrketing function somewhere between mrketing nd sles, depending on wht works most effectively for their orgniztions. Primry Responsibility for Shopper Mrketing Function Percent of Totl Responses Mnufcturers Combintion of sles nd mrketing Other 5% 5% Mrket reserch, nlytics nd insights 15% 45% Sles Brnd/mrketing mngement 30% Note: N=19 Mnufcturers Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results We found tht mnufcturers tht define shopper mrketing s ccount specific mrketing tend to include their shopper mrketing function within sles (45 percent of survey respondents). The other 30 percent include shopper mrketing within mrketing/brnd mngement, nd 15 percent within mrket reserch, nlytics nd insights. All these compnies dmit tht even though shopper mrketing personnel report to one orgniztion, they meet with the other on regulr bsis to lign objectives. The mjority wish such interctions were more semless nd better defined. Only 5 percent of mnufcturers hve shopper mrketing function led by both mrketing nd sles. Lck of Shopper Mrketing Skill Sets All compnies interviewed concur tht shopper mrketing resources require both mrketing nd sles experience nd skills. About 54 percent of survey respondents reported tht lck of shopper mrketing skills nd experience is still brrier to shopper mrketing doption. Shopper mrketers need to be ble to communicte using retiler nd mnufcturer terminologies (e.g., metrics, segmenttion, objectives) interchngebly. Thus, this would require speking two lnguges (i.e., sles/merchndising nd mrketing) nd two dilects (i.e., retiler nd mnufcturer). 15
Stte of Shopper Mrketing Lck of Strtegic Alignment Brnd Mrketing, Trde Promotion nd Shopper Mrketing To successfully perform holistic 360-degree mrketing, compnies should include shopper mrketing into the overll spectrum of mrketing ctivities. However, our surveys confirmed tht shopper mrketing ctivities re not ligned with other ntionl/consumer mrketing ctivities. In fct, survey respondents indicted tht their shopper mrketing ctivities re not well coordinted with trditionl mrketing progrms (i.e., received n verge score of 2.3 on scle of 1 to 5, with 1 being not coordinted t ll nd 5 being extensively coordinted). Alignment of shopper mrketing ctivities to ntionl mrketing ctivities cn be cumbersome process due to difference in pproches ntionl mrketing uses one clendr, one pln, one segmenttion model, wheres shopper mrketing utilizes mny ccount clendrs nd plns, nd mny segmenttion models employed by different retilers. It is lso extremely difficult to coordinte the timing of ntionl mrketing progrms with shopper mrketing progrms since retiler plnning processes nd clendrs differ. It is lso importnt to integrte mrketing nd trde promotion ctivities. Trde promotion is just nother mrketing lever tht influences the consumer in the store. Mrketing nd sles should be ligned with trde promotion s purpose, plns nd tctics. Therefore, when mrketing to shoppers, compnies need to blend trde mrketing with shopper mrketing, or t lest be very involved in wht the trde mrketing orgniztion does with trde promotions. Sles owns the trde mrketing function, which oversees trde promotion budgets nd controls wht hppens in store. They typiclly do not seek input from mrketing. According to one respondent, I hve worked in five compnies, nd mrketing never hd sy in sles. Blending trde promotion with other in-store mrketing ctivities nd ligning strtegy nd tctics cn be very pinful process. However, it hs to be done to chieve consistent shopper experience tht chrcterizes successful shopper mrketing. Leding compnies such s Procter & Gmble re lredy trnsforming their orgniztions: Objective: Procter & Gmble Alignment of Trde Mrketing with Brnd Mrketing Align Trde Mrketing ctivities with dvertising nd consumer promotion ctivities to crete more genuinely discipline-gnostic Procter & Gmble Current Sitution: Trde dollrs nd in-store dollrs re mnged by the sles deprtment Trde mrketing is often overlooked by mrketers who set brnd strtegy Approch: Move retil-mrketing strtegy group to the brnd group from the sles function Move retil-mrketing to the sme budgeting, oversight nd return-on-investment criteri s the rest of the mrketing mix Align decision mking process It represents Procter & Gmble, nd to lesser extent the industry, coming full circle bck to dys when brnd mrketers controlled the whole mrketing budget. Source: Advertising Age Lck of Funding Shopper mrketing does not typiclly hve n estblished, dedicted funding structure. Over 67 percent of respondents reported tht funding is significnt brrier to the doption of shopper mrketing. In some cses, shopper mrketing reports to sles but is funded by mrketing. At some emerging orgniztions, funds come from both mrketing nd sles. Since the funding structure is not clerly defined, shopper mrketing resources typiclly hve to beg for dditionl funds. Without cler funding structure, two problems rise: How is the shopper mrketing budget llocted nd controlled, given the multitude of funding chnnels? How to lign the trde mrketing spend with shopper mrketing objectives? 16
Stte of Shopper Mrketing Inconsistent Execution According to mnufctures survey responses, execution is considered to be one of the key brriers to shopper mrketing doption 58 percent of respondents consider it significnt brrier. As opposed to trditionl medi, which is being closely monitored to ensure ccountbility, retil execution hs very few, if ny, wys to verify performnce other thn smll, smple udits. Ironiclly, this is n re where retilers believe collbortion between them nd mnufcturers will grow the lest. They cknowledge this is problem, but unfortuntely: They often lck resources on the ground to ensure complince; nd The resources responsible for plnning shopper mrketing ctivities re different from the ones responsible for executing. Tody s dt suggest tht the simplest of displys funded through trde promotion only gin 60 percent complince rte cross retiler stores. You cn pprecite how chllenging it will be for more complex shopper mrketing progrms to be executed flwlessly. Lck of Performnce Metrics Trditionlly, mnufcturers mrketing mngers hve been using such metrics s frequency, rech, impressions, nd gross rting points (GRP) to mesure their ntionl progrms. The stndrd mesurements for the sles deprtment hve been revenue, volume, distribution, return on investment (ROI), nd incrementl sles generted by trde promotions. Tody, since shopper mrketing involves both orgniztions, there is little clrity on how to mesure the effectiveness of in-store mrketing progrms. An industry-wide metric is yet to be estblished to mesure impressions, the purpose of the P.R.I.S.M. inititive (see below). Most compnies we interviewed primrily use sles-relted metrics to mesure shopper mrketing performnce. In fct, 59 percent of respondents reported tht lck of performnce metrics nd/or mesurement is brrier to shopper mrketing success. As one survey respondent puts it, Sles performnce metrics re reltively strightforwrd to mesure. Brnd equity metrics re much more difficult to mesure for shopper mrketing progrms. Moreover, mnufcturers now need to embrce nd use retilers performnce metrics (e.g., conversion impct) to ensure tht the progrm lso stisfies retilers objectives. The P.R.I.S.M. Inititive Pioneering Reserch for n In-Store Metric Bckground: Objective: To rech stndrdized, syndicted mesurement model to evlute in-store consumer rech Leders: In-Store Mrketing Institute, Nielsen In-Store nd consortium of mnufcturers, retilers, medi nd promotion gencies Concept Lunch: Dt is expected to be vilble in 2008 Objectives: Confirm tht in-store consumer rech cn be mesured nd predicted Assist mrketers in understnding which consumers re exposed to their in-store messges nd promotions, nd how often Support retilers in understnding how effectively their in-store medi cn convert shoppers to buyers, by ctegory Allow mnufcturers nd retilers to effectively improve the shopping experience for consumers Provide the dvertising, medi nd retil industries with the mens to increse the efficiency of the medi buying nd selling process Source: Nielsen In-Store 17
Stte of Shopper Mrketing Inbility to Generte Specific Shopper Insights Historiclly, consumer products mnufcturers hve been investing their time nd budgets in consumer reserch understnding consumer behvior, likes nd dislikes, usge ptterns, nd consumption ptterns. Unfortuntely, such informtion is not sufficient to understnd the shopper consumer in shopping mode (i.e., consumer thinking bout the purchse, mking the purchse or evluting the choice fter the purchse). Specific informtion on shopper behvior in-store, shopper need-sttes, shopping occsions, nd rection ptterns to prticulr in-store stimuli cn help compnies be effective shopper mrketers. While leding compnies hve strted to focus on this re, the mjority still hve long wy to go before it becomes their competitive dvntge. For exmple, dt collection for shopping occsions, one of the criticl components of generting shopper insights, is triling tht of generl consumer trends : only 36 percent of mnufcturers collect shopper insights dt on regulr bsis compred to 75 percent who collect generl consumer trends reserch. Frequency of Shopper Mrketing Reserch Percent of Totl Respondents Mnufcturers 80% 60% 56% Continuously At regulr nd frequent intervls 40% 12% 20% 19% 24% 0% Generl consumer trends Shopping occsion/ mission Note: N=19 Mnufcturers Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results The key resons cited for such low doption of shopper insights dt re their grnulrity nd complexity, the difficulty of turning dt into insights nd, of course, cost. Grnulrity nd Complexity: If compnies think tht deling with consumer reserch (e.g., focus groups, surveys, intercepts) is difficult, then deling with shopper insights cn be nightmre! Due to the incresed grnulrity of shopper dt, which cn be vilble by shopper segment, by shopping occsion, by region, by store cluster, nd by dimension (e.g., shopping in store, price sensitivity, occsions, needs), it is extremely complex to structure nd nlyze such dt. As one prticipnt puts it, The number of permuttions is overwhelming. In ddition to the level of grnulrity of the dt, there is little lignment cross retilers nd mnufcturers s to the pproprite shopper segmenttion models. Mnufcturers hve to collect shopper dt seprtely for ech retiler. Ech retiler hs its own segmenttion model nd expects mnufcturers to be knowledgeble nd insightful bout its segments. This requires significnt investment from the mnufcturer s side nd cler understnding nd prioritiztion of how mny shopper insight genertion resources should be llocted to ech ccount. In some cses, the dt do not exist to probe the insights t the level the retiler desires. 18
Stte of Shopper Mrketing Moreover, integrting shopper mrketing dt with other mrketing informtion is complex process. Mny mnufcturers dmitted tht they do not mke ny connections between their consumer dt nd shopper behvior dt. The next level of complexity comes when shopper segment dt needs to be combined with forecsting, new product pipeline nd sles plnning. Difficulty of Turning Dt into Insights: Rw dt does not gurntee insight. The Nielsen Compny sys, Dt only gets you prt of the wy there, s you still need to hve the knowledge nd skill sets to find nd cull the most importnt fctors from the informtion nd mke decisions on wht to do from strtegic nd tcticl stndpoint. Since dt involves mny components, it is extremely difficult to nlyze nd turn into credible insights. Oftentimes, behviorl dt is being collected in qulittive form. It is extremely difficult to connect nd compre qulittive insights with the quntittive dt to get to credible conclusions. Most ethnogrphers estimte tht nlyzing the dt consumes 70% to 80% of their time. After ll, single trip my yield severl thousnd photos nd hundreds of pges of notes, sys Jn Chipchse, n ethnogrphic specilist with the communictions firm Noki. Source: Executive Secrets, Redefining Reserch HEM, Spheresmgzine.com Insights Are Expensive! Due to the number of specific dimensions nd permuttions, dt becomes incresingly expensive to collect, mnge, nlyze, nd trnslte into insights. Most compnies hire third prty dt-providers, such s Nielsen or IRI, to collect nd nlyze dt for them. The cost increses with the number of customers/segments/store groups nd the nlyticl services provided. In ddition, leding compnies hve their own employees conduct some ethnogrphic studies to get feel of their shopper which is significnt investment of time nd resources. Clerly, shopper mrketing is not esy to implement. While ech of these brriers cn impede successful shopper mrketing execution, it is importnt for compnies to keep their eyes on the prize. As shopper mrketing continues to evolve, leding compnies will mster the proper techniques to overcome these chllenges, nd become successful. 19
Stte of Shopper Mrketing Key Tkewys: 1. Confusion Trumps Clrity 2. The Trin Hs Definitely Left the Sttion 3. The Sttus Quo Won t Do 4. Lerning The New Tricks of the Trde 5. You Don t Need to Do Everything, Just Something 4. Lerning The New Tricks of the Trde Retilers Are Becoming Highly Effective Mrketers Collbortion is Key Retilers re turning into more sophisticted mrketers, thereby incresing their lredy high levels of influence nd power with consumer products mnufcturers. They re becoming much more knowledgeble, demnding nd selective. Compred to only decde go, retilers hve rised the br in terms of both understnding nd stisfying their shoppers nd leverging their suppliers to chieve their gols. As result, significnt chnges hve occurred in the following res of mrketing: Investments in Shopper Insights. According to the survey, 89 percent of retilers collect shopper occsion nd need-stte dt, loylty dt nd customer experience dt on regulr bsis. Retilers cknowledge tht shopper insights give them n dvntge in steling mrket shre nd customers from their competitors nd other chnnels. According to The Nielsen Compny, Retilers recognize tht there is much spending tht occurs outside of prticulr retiler tht represents the opportunity to close the gp with competition. Shopper insights lso enble retilers to develop trgeted progrms tht delight customers in-store, increse shopper s bsket size nd cross-sell nd up-sell to shoppers. Retiler Benefits from Understnding Shopper Gin complete picture of the whole perimeter of store Mesure wht their shoppers spend in the most criticl differentiting retil sectors Understnd wht CPG items cn be leverged to increse bsket size Optimize djcencies for perimeter deprtments such s prepred mets, Rx or film processing The Nielsen Compny Appliction of Shopper Insights to Strtegy. Retilers ddress shopper mrketing opportunities by focusing on developing comprehensive segmenttion models nd pplying segmenttion insights to their strtegies. In fct, ll leding retilers (e.g., Sfewy, Wl-Mrt, Kroger, Sm s, CVS, Best-Buy) use segmenttion models to understnd the different types of customers tht they re trgeting, nd develop strtegies to ppel to them. 20 Use of Segmenttion by Leding Retilers A multi-lyered segmenttion pproch provides new views or lenses to understnd households. These lenses dd insight into customer thinking, current purchsing hbits, spending levels, household dynmics or motivtion to respond to promotions. Within retilers tht hve lredy dopted this pproch, their tems spek in terms of rel people every dy becuse their segmenttions describe customer groups in sufficient detil to chnge fceless dt into dynmic view of customer behvior. Retilers even lbel their segments either by nme or by shopping ctivity to reflect idelized customers. They report on customer segment mesures on regulr bsis to show where they re over nd underperforming t store, ctegory, nd product level. The knowledge gined drives remedil or opportunistic mrketing ctivities trgeted effectively t the most pproprite customers s opposed to costly mss mrketing chnnels. The Nielsen Compny
Stte of Shopper Mrketing Stricter Requirements for Mnufcturers. Focusing on improving shopper experience, bnner loylty, brnd consistency, nd overll look nd feel, retilers strted to introduce new requirements for mnufcturers enforcing clen store policies, bnning promotion tctics nd plcing restrictions on certin types of dvertising. For exmple, the number of displys in grocery stores continues to decline. At mid-yer 2007, displys were down 4.4 percent versus 2006 nd 9.1 percent versus 2005. 20 To mke mtters worse, retilers llow mximum of two to three shopper mrketing progrms per ctegory t ny given time (see exhibit). Mximum Number of Shopper Mrketing Progrms t Given Time t Retil, by Ctegory Averge Response Fresh Food 2.1 Helthcre 2.3 Beverges 2.5 Household Pckged nd Processed Food 2.6 2.6 Personl Cre 3 Note: N=8 Retilers Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results Retilers hve become very selective nd extend the most vluble offers to their dimond vendors (e.g., certin fvored mnufcturers re ble to plce their displys, end cps, nd bnners in-store in spite of clen store policies). Some mnufcturers will likely be excluded or crowded out. Unless CPG mrketers find new wys to re-estblish relevnce in stores where fresh, prepred foods reign supreme, they will find their products shunted to the lest desirble section of the store, doomed to miniml in-store exposure nd lethrgic turnover. In-Store Mrketing Institute So wht cn mnufcturers do to join the coveted inner circle? Wht cn differentite them from competitors? Gme Pln for Mnufcturers There re number of fctors tht cn help mnufcturers effectively work with retilers. According to retilers, the top five items tht differentite mnufcturers from their competitors in reltion to shopper mrketing re: 1. Alignment with retiler s overll mrketing pln 2. Reltionship depth nd qulity 3. Shopper mrketing cpbilities nd skills 4. Customized nd innovtive shopper mrketing progrms 5. Qulity of consumer nd shopper insights 20 IRI, Times & Trends, CPG Merchndising Trends 2007 21
Stte of Shopper Mrketing Given these fctors, the implictions for mnufcturers re fr reching. To effectively collborte with their retil customers, mnufcturers should: 22 Know Your Retiler. It would do no good for mnufcturer to pproch retiler with proposl focused on meeting the mnufcturer s objectives lone. Any progrm, clendr or promotion proposl hs to be relevnt to the retiler s overll mrketing pln nd shopper bse, nd be ligned with the retiler s corporte objectives. Retilers vlue mnufcturers bility to understnd the issues from the retilers point of view nd find wys to solve them. This is not new ide leding sles executives hve been doing this ll long with how they showcse trde promotion impct on growing the overll ctegory nd not just optimizing their own brnds. Now it is time to do the sme with shopper mrketing. Build Reltionships. No mtter how much mnufcturer understnds its retil customer s strtegy, it is difficult to get set t the tble without strong reltionships. Ltely, shopper mrketing/segmenttion experts tend to reside within the retiler s mrketing deprtment, ccess to which historiclly hs been closed to suppliers. It is extremely importnt to develop reltionships with retiler s mrketers s some merchndisers still lck the skills to mke effective decisions on shopper mrketing progrms. To build these reltionships, mnufcturers hve to think beyond their own brnds. They should bring insights nd progrms tht will increse store trffic, lift entire ctegory sles nd increse bnner loylty. Mnufcturers in effect should become expert dvisors to retilers. An innovtive exmple of such n dvisory pproch is Generl Mills strtegy in helping retilers build store bnner loylty (see the cover of the brochure developed for http://www.generlmills.com/bic/bestincls Source: retiler by Generl Mills). Retilers re welcoming such dvisory BestinClssShopperLoylty.pdf sshopperloylty.pdf services ccording to the survey, 100 percent of mnufcturers expect collbortion in the re of strtegy development to increse over the next three yers. Be n Expert. Leding retilers re becoming extremely dept in segmenttion, trgeted mrketing nd customer experience strtegies. They wnt to tlk to mnufcturers who hve the sme level of expertise nd understnding. Other retilers, for whom shopper mrketing is still in the embryonic phse, need to be educted by mnufcturers on how to better trget their shoppers. In fct, 100 percent of retiler respondents greed tht hving shopper mrketing cpbilities nd skill sets will differentite mnufcturers from others. Hence, the skills of the shopper mrketing ccount mnger re extremely importnt. They should be ble to: - Spek Two Lnguges nd Two Dilects. They should be ble to communicte using mrketing nd sles terms, nd retiler nd mnufcturer terminologies (e.g., metrics, segmenttion, objectives) interchngebly. - Think Strtegiclly. A retiler-mnufcturer meeting is not n verge vendor sles meeting nd it is no longer just bout pushing products, getting shelf spce nd trcking merchndising. Account mngers should be dept t strtegic discussions bout how to chieve retiler objectives. Crete Customized Solutions. Retilers vlue shopper mrketing progrms tht re specificlly tilored to their business objectives nd improve their competitiveness. A common complint from retilers is tht mnufcturers bring generic progrms to the tble. The one-size-fits-ll pproch does not work. Retilers re under intense competitive pressure nd they im to outrun competition by incresing shopper conversion, improving the store s bnner mrketing nd mintining consistent store strtegy (e.g., fresh nd helthy foods, best vlue nd clen store). Thus, ech retiler needs unique shopper mrketing progrm customized to fit its needs. More retilers tend to develop strtegies specific to cluster of stores or to store formts. According to the survey, on verge, 33 percent of ll retiler progrms re customized for specific store formts nd 32 percent re customized for regionl clusters of stores. Currently, ll mnufcturers do customize
Stte of Shopper Mrketing t lest prt of their progrms for specific retilers. However, only 50 percent of mnufcturers customize progrms for clusters of stores nd they customize, on verge, only 21 percent of progrms. Customiztion to the store cluster level requires dditionl time, resources nd investment. Mnufcturers need to think crefully bout the upside benefits from delivering ginst such detiled nd exclusive level of progrms. In order to crete customized solutions for specific stores or clusters of stores, mnufcturers should hve ccess to store level POS dt. Store level POS dt is criticl to understnding the shopper nd the effect of shopper mrketing progrms on specific stores or cluster of stores. Compnies cn use store level POS dt to clculte return on mrketing investment nd develop scenrio testing models to nlyze performnce of different promotionl tctics. This issue is recognized opportunity; in fct, leding sles gencies such s CROSSMARK hve been investing quite significntly in cquiring nd mking vilble store level POS dt for their customers. Innovte, Innovte, Innovte. Innovtions in progrms, products, experience nd services will not only help mnufcturers differentite themselves, but lso help retilers become relevnt to their shoppers. However, ccording to the survey, trditionl tctics (e.g., demonstrtions, smpling, loylty, shelf signs, coupons) seem to be the norm. Frequency of Tctics Usge Percent of Totl Respondents Mnufcturers Frequently/Continuously 71% 71% 59% 50% 50% 29% 29% 65% 71% 12% 76% 56% 31% 65% Occsionlly/Infrequently 29% 41% 50% 18% 25% 50% 53% 6% 6% 29% 29% Smpling/Demo Shelf Signs Displys Personlized Mil/E-mil Floor Ads Smrt Crts Loylty Progrms Coupon Dispensers In-Store Visuls/Audio Checkout Coupons Interctive Kiosks SMS Promotions Note: N=19 Mnufcturers Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results More innovtive tctics such s floor dvertising, interctive kiosks nd smrt crts re still rrely used. The risk nd cost seem too high only hndful of mnufcturers venture into new tctics tht they believe grner both reltionship nd shopper premiums. Most compnies fll into the I m doing well enough, why chnge? trp. Unfortuntely for them, the industry is evolving rpidly. Retilers re embrcing new digitl medi nd innovtive methods of in-store dvertising (e.g., Wl-Mrt in-store network). Offer Sound Shopper Insights. Retilers control the store domin nd, therefore, own the dt on their shoppers. Leding retilers hve strted collecting nd utilizing shopper insight dt. Mny mnufcturers would consider this thret retilers owning the dt puts them t disdvntge t the strtegic negotition tble. However, our study found exmples of mnufcturers who hve conducted their own independent sophisticted reserch on the retiler shoppers. This helped them shift the power t the negotition tble nd differentited them from competitors. Mnufcturers should remember tht lthough retilers hve ccess to the dt, two problems exist: shopper dt is expensive, nd conversion of dt into insights is even more expensive. 23
Stte of Shopper Mrketing Therefore, retilers seek mnufcturers who cn dd to the knowledge bse of shopper in-store behvior nd shre experiences on successful shopper progrms nd products. Qulity shopper insights should differ by region, by store cluster, nd sometimes even by store; they should lso outline compelling business cse on the retiler s benefits nd costs. Leding mnufcturers hve been using insights to trnsform their ctegories nd improve ctegory sles. Procter & Gmble, for exmple, significntly improved shopper experience by redesigning shelf lyout within the pet food ctegory: Insights: Procter & Gmble Using Shopper Insights to Improve Shopper Experience Buying food for pets is s importnt in the minds of their owners s buying food for children The ctegory is confusing dry/wet, type size nd ge of pet, dditives, pckge size Solution: Arrnged the isle ccording to how the shopper thinks bout shopping type of pet, wet/dry, ge of pet, pckge size Provided informtion t the shelf on product performnce nd usge Results: Retilers implementing this pproch hve incresed ctegory sles by 15 percent Source: D Mrketing Code Conference, Philippine Mrketing Assocition, My 2007 Since it is very costly for mnufcturers to generte unique shopper insights for ech specific retiler, mnufcturers should segment their customer bse nd develop their respective investment strtegies by tier of retiler. They should strive to be included s prt of the retiler nnul plnning process to be ligned with the retiler s shopper segmenttion strtegy nd understnd which insights they should collect to help retilers better meet their gols. Think Corporte Priorities. Retilers hve number of corporte priorities tht my hve significnt impct on the future of mrketing. Bsed on Deloitte s study Sustinbility: Blncing Opportunity nd Risk in the Consumer Products Industry, retilers re incresingly becoming environmentlly responsible. Also, ccording to the survey, sustinbility comes s the third priority to retilers fter privte lbel development nd supply chin mngement. Therefore, mnufcturers need to be prepred to offer, for exmple, environmentlly sustinble displys to ddress retilers priorities. Environmentlly Sustinble Disply Bold 4-sided dvertising grbs consumer s ttention Brndlifter four rt grphic pnels use less thn 3% of verge disply mteril t totl weight of 1.65 lbs - Pre-built displys cn use in excess of 100 lbs. of corrugte - The verge pre-built module uses 33 lbs. of excess corrugte Reduces between 1 to 3 tons of net corrugte wste per store per yer Elimintes the look of sold down pre-built pllet module t retil Shoppers see high impct dvertising on ll four sides Weight of product suppresses the pllet tble to 14 bove the floor Lyers re fed to top by hydrulic spring lift system Consumers shop from top lyers cusing tble to lift Pllet tble stops s lst lyer is exposed Source: Brndlifter LLP (www.dotsink.com) 24
Stte of Shopper Mrketing There re lso number of other considertions tht my not necessrily be t the top of the retilers gend, but tht crete residul effect improve progrm efficiencies nd shopper stisfction. Ensure Execution. One of the mjor chllenges mnufcturers experience in the shopper mrketing field is inconsistent execution. Even though it is impossible to completely eliminte this brrier, in-store execution is n re where mnufcturers cn improve the sitution. For exmple, they cn collborte with retilers to include merchndisers in upfront strtegy meetings to mke them understnd the rel implictions (finncil nd strtegic) for retiler s business resulting from non-complince on shopper mrketing progrms nd overll in-store execution. Follow One Strtegy. Mnufcturers should not put strict boundries between trde promotions nd shopper mrketing progrms. Both re stimuli tht influence shoppers in the store. First, mnufcturers should strt ligning trde promotion with shopper mrketing progrms. Then, they should pproch retilers with one pln/clendr tht hs ll the progrms tht influence specific shopper segment. Evlute Performnce. Even though industry-wide shopper mrketing metrics hve not been finlized, mnufcturers should strive to evlute every progrm bsed on the vilble metrics nd shre results with retilers. Leders in Shopper Mrketing Since shopper mrketing is n emerging field, there re hndful of mnufcturers nd retilers tht re considered industry leders. Retilers identified the following mnufcturers s industry leders in developing effective shopper mrketing progrms: Overll Mnufcturers Identified by Retilers s Leders in Developing Effective Shopper Mrketing Progrms* Krft Foods P&G PepsiCo Unilever Coc-Col Fresh Foods Hormel Foods Fresh Express Dole Tyson Pckged nd Processed Foods (incl. Pet) Beverges Helthcre Personl Cre Household Krft Foods P&G Cmpbell s JM Smucker Generl Mills PepsiCo Coc-Col Anheuser-Busch Cdbury *N = 7 retilers; compnies re listed in decresing order of cited frequency Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results P&G McKesson Johnson & Johnson (J&J) Phrmvite Leiner P&G Neutrogen (J&J) Unilever Kimberly-Clrk P&G Unilever SC Johnson Clorox Dil These mnufcturers hve utilized shopper mrketing to differentite themselves from their competitors. Some exmples of leding prctices include: Retiler-Specific Strtegies. Developing retiler-specific strtegies nd collterl tht explin to retilers how to grow their businesses using mnufcturer s products. Demonstrting Impct. Presenting progrm results nd demonstrting credible effects on retiler s business. Innovtion. Constntly identifying new ides to delight consumers nd shoppers nd, t the sme time, differentite their compnies in the mrket. For exmple, prtnering with Ahold s Stop nd Shop, Unilever developed highly innovtive shopper mrketing progrms to increse shopper trips, ctegory purchses nd sles yet, nother exmple of tngible results stemming from effective shopper mrketing. 25
Stte of Shopper Mrketing Unilever The 2007 CPG Awrd for Innovtion nd Cretivity Unilever ws wrded the 2007 CPG Awrd for Innovtion nd Cretivity by the Grocery Mnufcturers Assocition (GMA) in conjunction with its Associte Member Council (AMC) After prtnering with Ahold s Stop & Shop, Unilever drove center store sles by incresing conversion from food to helth nd beuty cre It executed its progrm with three-pronged pproch tht used: 1. Co-mrketing promotions to incent consumers to mke lrger shopping trips 2. In-store progrmming to increse purchses by shoppers cross ctegories 3. Simplified nd enhnced low-trffic isles to ese the shopping experience Unilever reported outstnding results: shopper trips to the store up by 90 percent, multiple ctegory purchses up by 80 percent, sles per trip incresing by 25 percent, nd totl store sles up by 138 percent Source: Grocery Mnufcturers Assocition Shopper Insights. Continuously lerning bout shopper behvior, shopper needs nd shopper likes nd dislikes. This knowledge is being ctively used not only in the mrketing orgniztion, but lso by other functions (e.g., new product development, supply chin, forecsting). Business Model Flexibility. Re-ssessing the business model nd progrm results on n on-going bsis nd developing plns to close the gp. In turn, mnufcturers identified the following retilers s industry leders in successfully plying in the shopper mrketing ren: Retilers Identified by Mnufctures s Leders in Developing Effective Shopper Mrketing Progrms* Overll Grocery Drug Mss Club Convenience Dollr Wl-Mrt Kroger Trget Kroger Sfewy Publix CVS Wlgreens Rite Aid Trget Wl-Mrt Kmrt Costco Sm s Club BJ s 7-Eleven Circle K Exxon Dollr Generl Fmily Dollr Dollr Tree Publix Wegmns Meijer Food Lion Eckerd Longs Drug Meijer WinCo Sheetz Hess *N = 14 mnufcturers; compnies re listed in decresing order of cited frequency Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results According to mnufcturers surveyed, the following fctors significntly differentite these retilers from others: Ability to consistently execute in store; Recognition of shopper mrketing s strtegic priority; Clerly defined nd formlized shopper mrketing objectives; Avilbility of dt; nd Qulity of consumer/shopper segmenttion (see the Food Lion exmple below). Food Lion Meeting Shopper Needs Insights: Through its segmenttion nlysis, Food Lion found tht 30% of customers were retired customers on fixed income. Solution: In order to cter to this segment, the compny mde chnges to meet customers needs: Chnged the product ssortment nd vriety; Added in-store senior seting re with free coffee nd helth informtion; Introduced smller grocery crts. Results: Sles incresed by 8.8 percent; Trnsctions incresed by 6.2 percent; Items incresed by 10.7 percent. Source: ECR Europe Forum & Mrketplce, Stockholm, 2006 26
Stte of Shopper Mrketing Key Tkewys: 1. Confusion Trumps Clrity 2. The Trin Hs Definitely Left the Sttion 3. The Sttus Quo Won t Do 4. Lerning The New Tricks of the Trde 5. You Don t Need to Do Everything, Just Something 5. You Don t Need to Do Everything, Just Something Shopper Mrketing Is Not Just for the Big Guys It s for Everyone If you conclude from this report tht only conglomertes like Procter & Gmble nd Unilever re tckling shopper mrketing, you would be wrong. Our survey dt hve proven otherwise. The mturity of shopper mrketing 21 efforts hs lmost no correltion with the size of the compny. Therefore, given tht shopper mrketing is moving hed with full speed, ll compnies, regrdless of size, should strt thinking bout how they cn ply in the shopper mrketing field. Mturity of Shopper Mrketing Efforts vs. U.S. Sles 25,000 2006 US Revenues (US$ million) 20,000 15,000 10,000 5,000 0 Bsic Intermedite Advnced Mturity of Shopper Mrketing Efforts Note: Ech dot represents survey compny respondent Bsic: Shopper Mrketing Poorly Defined; Orgniztionl Alignment None to Minimum; Resources Limited; Insight Genertion Limited Intermedite: Shopper Mrketing Somewht Defined; Orgniztionl Alignment Some; Resources Shred; Insight Genertion Averge Advnced: Shopper Mrketing Well Defined; Orgniztionl Alignment Fully Aligned; Resources Dedicted; Insight Genertion Advnced Source: GMA/Deloitte Consulting LLP 2007 Shopper Mrketing Study Results One Size Does Not Fit All Although the need for nd benefits of shopper mrketing re very pprent, mnufcturers should not fll into the trp of shopper mrketing s pnce syndrome. They hve to crefully clibrte their shopper mrketing strtegy cross multiple dimensions. Successfully implementing shopper mrketing my or my not men tht compnies hve to utilize the most dvnced in-store progrms nd tctics. A compny s strtegy for prticulr ctegory of products, region, consumer/shopper segment, nd mrket should define the pproprite shopper mrketing pproch. 21 To define mturity of shopper mrketing efforts, Deloitte developed the Shopper Mrketing Composite Score bsed on responses to survey questions in six key res: Self-Assessment Compred to the Industry, Strtegy, Orgniztionl Structure, Shopper Insights, Progrm Evlution, Prtner Collbortion 27
Stte of Shopper Mrketing For exmple: A price plyer should not wste its resources on improving the shopper experience or on tctics like in-store kiosks. However, it could benefit from shopper nlytics nd insights to better understnd the price points nd price promotions tht re most effective with shoppers. They cn lso engge in shopper mrketing by utilizing relevnt smrt vlue propositions in ll messging. A premium brnd cn improve its imge by using the most stte of the rt tctics, such s in-store TVs, nrrowcsting displys nd smrt shopping crts. This brnd cn lso significntly benefit from shopper nlytics in order to understnd the behvior of their shoppers in-store nd how to influence them in certin need-stte. In order to id compnies in thinking through how their product nd brnd strtegy cn define their shopper mrketing pproch, the following Shopper Mrketing Sophistiction Model highlights key decision points. The key is to clibrte within the dimensions of the model to find the right set of strtegy nd execution levers tht crete differentiting competitive dvntge for n individul mnufcturer. Deloitte Shopper Mrketing Sophistiction Model TM Lowest Level of Shopper Mrketing Sophistiction Highest ADVANCED Intermedite BASIC Nonexistent/Bre minimum Holistic 360- degree nd integrted mrketing to shoppers in-store nd out-of-store In-store nd out-ofstore brnd mrketing nd trde promotions Some dhoc brnd mrketing in-store in ddition to trde promotions Trde promotions Shoppers segmented by behvior for ccounts / regions / cluster of stores / individul stores Shopper segmented for ccounts / regions / cluster of stores Account / retil customer shopper segments No shopper segment trget identified Innovtive progrms utilizing the most effective combintion of tctics Combintion of trditionl nd stte-ofthe-rt tctics Combintion of trditionl tctics A few trditionl tctics (e.g., displys, signge, coupons) Advnced grnulr behviorl segmenttion; dvnced nlyticl cpbilities Shopper segmenttion; shopper behvior insights; nlyticl tools Some bsic shopper insights nd nlytics No shopper insights Estblished function nd opertions tht re fully ligned nd coordinted with the entire orgniztion Estblished function nd some processes integrted with other deprtments Group of personnel focused on opportunities in shopper mrketing No personnel dedicted to shopper mrketing Institutionlized use of consistent, holistic in-store nd out-ofstore metrics (including P.R.I.S.M.) Regulrly used set of in-store nd out-ofstore metrics Trcking of some bsic metrics (e.g., sles lift) No mesurement of progrm results Collbortive development of strtegy, objectives, insights, progrms nd metrics; collective ccountbility Shring of strtegy, objectives, insights, dt, nd results, nd some collbortive development of progrms Minimum shring of strtegy, objectives, insights, dt, nd results Minimum interction (e.g., regulr sles nd merchndising meetings) Approch/ Strtegy trget progrms & Tctics shopper insights & nlytics orgniztion & structure performnce mesurement prtner collbortion Source: Deloitte Consulting LLP Strtegy Considertions Execution Considertions 28
Stte of Shopper Mrketing The following steps outline the thought process mrketers should go through when deciding on their shopper mrketing pproch. Step 1. Strtegy Considertions Mrketers should ssess their product nd brnd strtegy bsed on the following ttributes: Product ctegory Type of product commodity vs. differentitor Brnd prolifertion nd strength eponym (e.g. Bnd Aid, Xerox) or regulr brnd Premium brnd vs. verge brnd Mrket shre / position within ctegory Additionl considertions include: Relevncy of retiler shopper bse to product/brnd portfolio Retiler vlue proposition Corporte priorities These ttributes, long with others, define how compny plys in the overll mrketing spce. The brnd/product my be price plyer (i.e., mostly competing on price) or brnd differentitor (i.e., competing on certin differentiting fctor). Therefore, in order to define shopper mrketing, the compny should decide on the following strtegic considertions: Strtegy: Is the brnd or product price plyer or brnd differentitor? Trget: How grnulr should I pproch segmenting my shopper/consumer? progrms & Tctics: Which tctics should my compny use to support the strtegy? Which tctics would better communicte the brnd strtegy nd convert shopper into buyer? Would my ctivities include out-of-store tctics or just in-store? Step 2. Execution Considertions Once the compny hs decided on these three strtegic considertions for the overll product portfolio, it should develop infrstructure to support these strtegic considertions. Tht infrstructure should include: Shopper Insights & Anlytics: In order to support the trget, which types of dt does my compny hve to collect? Orgniztionl Structure: How mny resources should my compny commit to support this function? Performnce Mesurement: Which performnce metrics should be utilized? prtner Collbortion: Which retil prtnerships should be leverged to ply in the chosen shopper mrketing strtegy? For ech of the seven dimensions of the sophistiction model, compnies need to find their idel position to support the strtegy they pursue nd execution tctics they choose. There is no one nswer tht fits for ll compnies. Compnies must thoughtfully consider wht strtegies will work best for them to fully cpitlize on the opportunities shopper mrketing presents. Given the complexity of dopting shopper mrketing, mnufcturers should follow step-by-step pproch. They should tke smll steps to slowly embrce chnge nd cpitlize on short-term opportunities, but t the sme time hve longer-term vision for where they would like to be in the future. 29
Section 3: View of the Future View of the Future Bigger, Better nd More Shopper mrketing is phenomenon tht is quickly penetrting the consumer products industry. We predict tht in five yers shopper mrketing will become bigger, better nd more. Bigger within the Industry nd Mrketing Shopper mrketing is going to penetrte the industry nd the mrketing world. 30 Bigger within the Industry: Shopper mrketing will spred its roots throughout the consumer products industry. It will be pssword to join the gme. Retilers will define more nd more of the prmeters for the strtegy nd execution of shopper mrketing progrms. Mnufcturers need to ggressively invest to prepre themselves nd ern set t the tble. Bigger within Mrketing: Shopper mrketing will become much more prominent prt of the mrketing mix, new mrketing medium, joining the rsenl of trditionl vehicles tht re now used to holisticlly trget the consumer nd shopper. It will be s significnt s mss-mrketing used to be nd s online mrketing hs become. Better Infrstructure We forecst tht compnies will employ better collbortion, insights, trgeting tctics, mesurements, nd technology s shopper mrketing grows. Better Collbortion: It s win-win gme for mnufcturers nd retilers. As opposed to trditionl trnsctionl reltionships such s you py more, I will provide more shelf spce, mnufcturers nd retilers will depend on ech other to effectively rech their shoppers. Due to growing costs nd complexity in understnding the shopper, prtners will need to shre insights nd ides, nd develop synergies to more effectively trget the shopper from insight genertion to progrm performnce evlution. Mnufcturer-retiler reltionships will become more stremlined nd orgnized in the wy they interct. They will crete esier processes to shre insights nd progrm evlution results. Better Insights: The industry will develop nd refine methods of collecting primry informtion on shoppers, resulting in higher qulity insights. Compnies will be offered rich vriety of informtion nd will even become selective. Retilers will be ble to gther more dt themselves given better technology. Prioritiztion nd scoping of reserch nd nlytics re going to be key. Better Trgeting: Trgeted mrketing will evolve. Compnies will keep finding new wys to trget individuls in-store bsed on comprehensive shopper dt. New wys of using these dt will emerge (e.g., utomtic customiztion of screen messges bsed on the shopper profile). Store, product nd medi solutions will dvnce. Compnies will constntly be looking for innovtive solutions to delight the consumer (e.g., scn product for recipe recommendtion) nd to stisfy the retiler (e.g., sustinble displys). Better Plnning: Mnufcturers nd retilers will find wys to fine-tune the plnning process of ll progrms (including trde promotions, in-store dvertising, ntionl mrketing, consumer nd shopper promotions) to crete holistic, 360-degree, integrted mrketing. They will crete promotionl clendrs tht re consistent, coherent nd ligned with their consumer-centric strtegy.
Section 3: View of the Future And More Better Mesurements: Store-mesured medi will develop. The impct of store dvertising nd mrketing will be possible to mesure, just like the TV nd rdio impcts hve been mesured over the pst 50 yers. The P.R.I.S.M. methodology will become widely used nd ccepted s the industry stndrd. A common lnguge will be dopted by the industry nd llow compnies to relly understnd wht works for ech customer nd ech shopper (e.g., wht is most profitble, wht increses volume, wht mximizes sles). Better Technologies: Improved technology will smooth out the process. Technology will improve significntly nd llow collection nd nlysis of rel-time dt. Retilers will be ble to utomticlly collect better dt on their shoppers nd shopper behvior (e.g., utilizing RFID), nd shre the informtion with their prtners, enbling retilers, mnufcturers nd service providers to crete better insights. We forecst tht shopper mrketers will become more knowledgeble, which will result in more benefits to shoppers nd consumers. More Power to Retilers: Retiler s mrketing progrms will trnsition from consumer product mnufcturer-initited offers to retiler-initited ones (sking prticiption from CPG compnies). One exmple of the emergence of this trend is the Meijer mss mrketing progrm. Meijer is now defining consumer trgets, offering strtegies nd soliciting vendor prticiption. Meijer New Mss Mrketing Progrm Bckground: Meijer introduced new progrm to offer mnufcturers n opportunity to dvertise in its stores nd outside of the stores with the Meijer brnd. It offers: A wide vriety of opportunities to fit lmost ny budget nd mrketing needs Pckges vilble for bigger promotions New item introduction pckges designed to rech millions of customers for super lunches In-store dvertising opportunities, such s floor grphics, wy finders, demonstrtions nd much more Multimedi dvertising, including in-store rdio nd video displys Web site promotions on meijer.com web site Conclusion: Meijer is moving wy from mnufcturer offered dels to structured solicittion of vendor prticiption. Meijer More Internl Expertise: Retilers nd mnufcturers will build their knowledge bse. Retilers will become even more sophisticted mrketers. Mnufcturers will become shopper mrketing expert dvisors. Both will seek new innovtive ides on how to grow their respective businesses nd ctegories. More Third-Prty Support: The service industry will mture nd step in to help. Dt providers, service providers, mrket reserch gencies, nd dvertising gencies ll will become more proficient in shopper mrketing. Competition will foster further pursuit of knowledge nd insights, higher quilty of dt, better usbility of dt nd insights, nd stronger consumer nd shopper focus. More Complexity: With more types of consumers/shoppers included in the picture, more mnufcturers nd retilers joining the gme, more dt being collected, nd more insights generted by ll industry prticipnts, it will become n incresingly complex environment. Compnies will need to prioritize nd filter the flood of informtion in order to focus on their business gols. 31
Section 3: View of the Future More Investments: Better technology, better insights nd the need to be in step with the growing demnd for new innovtive products, will require significnt finncil nd resource commitment from ll industry plyers. And More Benefits to the Consumer nd Shopper: The consumer will receive relevnt customized messges nd will enjoy better shopping experience. Shoppers will be delighted. Conclusion Tody s mrketing world is s complex s it s ever been. With 68 percent of consumers being switchers 22 nd only 5 percent remining loyl to one brnd 23, mrketers must im to deliver cler nd consistent messge throughout every consumer touch point. The focus on in-store mrketing hs begun to increse s compnies hve relized tht shopper mrketing cn generte competitive dvntge. Lerning bout intricte detils of shopper behvior is helping compnies send focused nd trgeted messges to shoppers nd consumers. More importntly, compnies re leverging these insights to improve their existing reltionships with retilers/mnufcturers. Mrket leders hve strted mobilizing their shopper mrketing efforts by restructuring their orgniztions, investing in technology nd resources, nd re-evluting their collbortion efforts with prtners nd service providers nd they re chieving results! Whether you re redy or not, shopper mrketing is here to sty. The rce is on cn you fford to stnd on the side lines? 22 Point-of-Purchse Advertising Institute (POPAI) 23 POPAI Consumer Buying Hbits Study: http://www.ogilvyction.com/pges/shoppermrketing.spx ccessed 7/2/07. 32
For more informtion, plese contct: Nick Hndrinos Principl nd Mrketing & Sles Prctice Leder, Consumer Products Deloitte Consulting LLP 203-905-2723 nhndrinos@deloitte.com Dve de Roulet Principl nd Consulting Leder, Consumer Products Deloitte Consulting LLP 908-673-5227 dderoulet@deloitte.com Pt Conroy Vice Chirmn nd Ntionl Sector Leder, Consumer Products Deloitte & Touche USA LLP 317-656-2400 pconroy@deloitte.com Stephen Sibert Senior Vice President of Industry Affirs Grocery Mnufcturers Assocition 202-337-9400 ssibert@gmbrnds.com
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