Last issue we shared some of the results of Australia’s first Shopper Marketing Industry Benchmark Survey from POPAI / ShopAbility and supported by TorchMedia.

Some compelling results show that Shopper Marketing is definitely on the rise, supported by 70% of business leaders with one third of companies actively increasing people and budgets. The Shopper Marketing Train is leaving the station.

A snapshot recap from last time:

* Nearly 7 in 10 said that Shopper Marketing is supported by Executive Leadership. One third plan to increase their program budgets and/or people budgets in the next two years. Just under 40% are currently measuring their Shopper Marketing programs
* 60% are engaged in Shopper Marketing activities
* 65% are undertaking category level and retailer initiatives
* Two in five are engaged in trials, whilst nearly three in five are not, due to a lack of one or more of resources, retailer engagement or lack of co-funding (budget)
* Almost half have undertaken shopper research of some sort
* A primary issue is lack of resource allocation to Shopper Marketing. Only 4 in 10 respondents are satisfied overall with focus, expertise, and people. All respondents are least satisfied with budget (23%)
* How Shopper Marketing is defined and what is included varied among respondents. A point of consensus is that Shopper Marketing targets shoppers at multiple touchpoints using and leveraging insights

The focus of our article this time is on who is best practice and what they are doing.

So, who is on the Shopper Marketing train and where is it heading?

The USA and UK were commonly nominated as international best practice by survey respondents, with participants typically perceiving Australia to be 8-10 years behind in activations. However, momentum is gaining.

In-store ‘theatre’ was a big indicator of best practice for survey respondents. Overseas retailers believed to be doing this well included Whole Foods, Trader Joe’s “making private label cool and branded”, WalMart for its WinPlayShow strategy and digital on shelf media.

Leveraging loyalty programs to inform the in-store offer was another biggie, with survey respondents citing Tesco for their Club Card program, ability to mine their shopper data and provide tailored offers, and in-store occasion based executions. Similarly Boots received honourable mentions for their loyalty program, understanding of multiple occasions and marketing to impulse.

Apple received top marks for its total experience including store staff, and totally different model of sales based on shopper experience rather than price or offers.

Marks & Spencer and Sainsbury were seen to be leaders in marketing successfully to shopper occasions (such as the M&S “Dine in for two for £10” campaign).

Global manufacturers rating most mentions included P&G for its ‘last 3 feet’ and ‘shelf back’ approaches, and Pampers World 4 Kids program; Coca-Cola for its understanding of tailoring pack and product sizes and formats to channels and occasions; and  Unilever for its Dove real beauty campaign with WalMart, which was subsequently taken global.

In Australia, quoted leading retailers included: Apple, McDonalds, Priceline, and JB HiFi (for its performance and results, although its methods polarised opinion). Improvements in the Health & Beauty departments of both Coles and Woolworths were frequently mentioned.

Manufacturer P&G came up trumps for its shopper understanding and seamless ATL/BTL/in-store execution as well as retailer collaboration.  As with their global counterparts, Coca-Cola was mentioned for its understanding of occasions and packs per channel, and its ability to change messaging consumers vs. shoppers. Unilever also rated highly for its “seamless integration and customer specific activations”. Colgate made the list for its engaging activations.

The common thread running through all organisations considered at the forefront of Shopper Marketing is their understanding of shopper behaviour, types and needs; their ability to execute against this consistently with tailored and customized programs; and their willingness to innovate and trial new concepts.

What makes Best Practice?

The intent of this first study was to provide an initial benchmark (with future studies aimed at measuring specific best practice activities now that we have a benchmark), so we have defined Best Practice by a certain set of overarching areas:

What this indicates is that while Shopper Marketing is still in relative infancy in Australia, 60% are engaged in Shopper Marketing activities (and 40% are not). Whilst 2 in 5 are engaged in trials, nearly 3 in 5 are not, due to a lack of one or more of resources, retailer engagement or lack of co-funding (budget).  There were relatively more category level and retailer initiatives, at around 65% each.

When it comes to Shopper Insights, around half have been or are involved in research programs, and most are using sales and/or store data regularly. For the half that are not researching, budget and resources constraints (including lack of co-funding) were nominated reasons.

Defining and executing best practice measures for Shopper Marketing is also a huge opportunity,
with under half of respondents using shopper metrics (AWOP, frequency, basket and household penetration, spend, traffic etc) with regularity – either due to a lack of awareness/understanding of what these are and how to apply them, or cost of buying the data.

Similarly, achieving best practice retailer / manufacturer collaboration is an area for growth. Whilst nearly 70% say they have joint category discussions and have identified initiatives, fewer have actually conducted joint initiatives. 1/3 either don’t have or only infrequently have joint category level discussions or have identified joint initiatives to try. Shopper insights can be used as a jumping off point for collaboration between retailers and manufacturers at category level, a reason to increase shopper insights resources on both sides.

Implications and Opportunities for Retailers

Retailers cited a number of challenges to progress, including a lack of expertise, resources and people, how to differentiate low growth categories, gain store compliance and get suppliers to think in categories not brands.

Manufacturers, on the other hand, were hitting hurdles with retailer’s clean store policies and lack of willingness to innovate and trial new ideas and their expectation that suppliers should fund all Shopper Marketing initiatives for their stores.

Both sides have called for more effective collaboration in order to improve the experience for shoppers (and therefore optimise sales).

In the USA some manufacturers have set up cross functional retail customer specific business teams to achieve more holistic points of contact between retailers and manufacturers (not just via sales teams/merchant buyers).

What needs to happen in Australia:

* Retailers’ marketing teams need to start to establish links with brand manufacturer marketing teams and vice versa, in order to create broad joint programs of activity.
* Mutual understanding of objectives
* Mutual data sharing and shopper insights provision from both sides
* Customised programs per retailer and category
* Co-funded trials and insights programs.

Study respondents identified a number of areas for improvement, opportunity and sources of future growth.  These opportunities exist at a number of levels, so for ease of reading we’ve divided these into Engagement, Activities, Processes and Tools.

Engagement and Education:
* Closer Sales & Marketing team collaboration in manufacturers (e.g. alignment on trade promotions, price, retail customer specific campaigns on specific brands) to achieve a consistency of shopper experience in-store
* Raising the profile and value of the Shopper Marketing function: Internal education (particularly of brand marketers in manufacturers) to understand the role of, and see the value in, Shopper Marketing and the benefits of truly integrated consumer/shopper in-store and pre-store campaigns
* Closer retailer and manufacturer collaboration, as discussed above.

Activities:
* Utilising pre-store touchpoints: creating awareness and consideration of not just brand but retail offers pre-store. Understand the role of all touchpoints, which ones need to be activated for your objectives and how best to activate them based on shopper behaviour
* Tailoring and targeting: Programs targeting specific occasions, shopper segments, store types, retailers. Data mining and segmentation via research and loyalty programs. Related to occasions, day-part and seasonal marketing, and better Shopper Marketing leverage of major events
* Occasion based solutions: cross category and cross supplier
* In-store theatre: The store is considered a marketing medium – take advantage of this with ‘theatre’
* Interruption: there is a perception that shoppers are becoming increasingly habitual and that the game is becoming about interruption. Trials of new mediums to interrupt shoppers
* Increasing channels of activation: much interest was expressed in online retailing/e-commerce and the related ability to market to shoppers via online, email, mobile marketing and social media.

Resources:
* People: dedicated Shopper Marketing people, ideally in a team that reports into Executive Leadership rather than into Sales or Marketing
* Budget: dedicated Shopper Marketing budgets, in particular dedicated shopper research and shopper data budgets.

Processes and Tools:
* Development of a suite of measures customised to different activity types and mediums
* Shopper budgets and headcount built into the annual planning and budgeting process and into operating costs.

You don’t need a first class ticket to get on board

Evidence points to a Shopper Marketing industry that, while currently relatively new, is gaining momentum quickly on the back of international successes.

In most cases there is (passive) executive leadership support in Australia. The challenge – and opportunity – is in making that support active to actually generate operational change.

In looking at international examples, it is clear that best practice Retailers have not been trying to be expert at everything. They’ve picked one thing – one area of priority in Shopper Marketing – and tried new things. With Tesco it’s loyalty. With Whole Foods it’s theatre. With Marks & Spencer it’s occasion-based marketing.

The lesson is – don’t wait until the Wizard or Witch of Shopper Marketing comes along to wave their magic wand and make it all happen for you. Just get started.

“Shopper Marketing: The Journey Begins” report is available from POPAI for $495 plus GST.
A survey findings workshop will be held on September 22 as part of the Retail and Marketing at Retail Expo, for those interested in making most use of the survey findings and implications.
Go to www.popai.com.au for more information, to purchase the report or to register for the workshop.

ABOUT THE SURVEY

The POPAI/ShopAbility Shopper Marketing Industry Benchmark Survey, supported by TorchMedia, involved depth interviews with leading companies (n=19) and an online survey (n=134) with a representative sample of company sizes and roles across the industry.

The resulting report, entitled “Shopper Marketing – The Journey Begins” outlines a comprehensive overview of Shopper Marketing in Australia – attitudes, status, activities, successes and roadblocks. It is available for purchase at www.popai.com.au Findings workshops will be conducted on Sept 22 in Sydney and tickets are also available at www.popai.com.au

ABOUT NORRELLE GOLDRING
Norrelle Goldring is joint director of ShopAbility. She is a category and channel strategy specialist with 20 years’ experience on both the manufacturer and retailer sides of the fence with companies such as Diageo, Coca-Cola and Vodafone.  Call Norrelle on 0411 735 190 or email her at norrelle@shop-ability.com.au.

ABOUT SHOPABILITY
ShopAbility helps improve manufacturer and retailer thinking and doing capabilities for increased sales in category and channel. Our offers span Research & Insight, Strategy & Planning, Activation & Implementation, and Capability & Training. We work with senior executives, sales departments, category/customer/trade marketing departments, insights people and brand marketers for an integrated 360 degree picture. Call us on 1300 88 56 44 to discuss your needs.

Although still in its relative infancy, the Shopper Marketing discipline is gathering pace in Australia, with 60% of our recent survey participants implementing Shopper Marketing activities.

Back in January in our Retail World article ’Where to Shopper Marketing?’, we outlined some overseas status and practices in Shopper Marketing. Now that the first POPAI/ShopAbility Shopper Marketing industry study (supported by TorchMedia) is complete for Australia, we have a number of points of comparison. And there are some striking similarities – both opportunities and challenges – to overseas markets, particularly the USA.

Here we’re going to look at some of the key findings of the Australian study, extracted from the report ‘Shopper Marketing – The Journey Begins’ (© ShopAbility 2010). In the followup articles in subsequent issues of Retail World we will look more specifically at the implications for both retailers and manufacturers.

Survey Sample

The survey comprised 19 in depth interviews and an online survey completed by 134 respondents (66% brand manufacturers, 10% retailers, 8% POS/production agencies, 16% other agencies).
Online survey participants’ roles were represented across senior executive, sales, brand marketing, category and channel management, trade marketing/customer marketing, activations/in-store presence/merchandising, and shopper insights.
The sample achieved for this first Australian industry study into Shopper Marketing not only equalled that of the first similar American GMA/Deloitte Shopper Marketing study in 2007, but surpassed it.

Theme 1: Shopper Marketing is broad, resulting in ‘lots of homes’

It is commonly understood that Shopper Marketing targets shoppers at multiple touchpoints using and leveraging insights. The where (at what point) is up for debate. A summary of participants’ Shopper Marketing definitions might be: “The application of shopper insights across the marketing mix, using multiple touchpoints along the path to purchase, to engage shoppers and increase sales”.

The scope of what is considered included in Shopper Marketing is broad, and includes ‘traditional’ category management (see Figure 1 below). As mooted in our article in January Retail World, Shopper Marketing includes activities currently falling under the current labels of Customer/Account Marketing, Trade Marketing, Retail Marketing, Merchandising, Activations and Instore Presence.

So rather than being a new discipline in and of itself, Shopper Marketing is in essence an amalgam and evolution of shopper and retailer facing functions already in existence, albeit with some broader marketing elements thrown in.

The inclusions are not limited to traditional executions, with in-store media the third most cited activity type and ambient/sensory in-store experience coming in 8th. This is indicative of the ‘emotional , not just rational’ line we took back in January, underscored by nearly all survey participants’ identification of ‘instore theatre’ as an area of opportunity.

Retailer clean store policies notwithstanding, the above demonstrates that companies are broadening their perspective on what Shopper Marketing activities are, even if they are not yet actually trialling or implementing some of the ‘newer’ forms.

The flipside of this breadth of inclusions and amalgamation of more traditional fields is that there are too many different activity types to have a natural home in one place (or that ‘one home’ would need to encompass ‘everything’). This, combined with the fact that Shopper Marketing is considered a new discipline, is leading to it having ‘too many homes’.

This in turn is impacting resourcing – both people and budget – as we shall see.

Theme 2: Shoppers start before the store

The idea of marketing to shoppers outside of store/pre-store is not new. Major retailers like Target have been doing it for years, advertising their ‘20% off’ department sales. However, among manufacturers, perceived wisdom had traditionally held that Consumers and Consideration were pre-store, where Shopper and Conversion were in-store.

The survey indicates this notion is changing, alongside the broad definition of Shopper Marketing. Over half (52%) agreed that shopper is a mindset and/or shoppers can be influenced at any point between home, work and the store.  A further 26% considered Shopper Marketing to be activities inside and immediately outside the store. Only 22% believe that Shopper Marketing is limited to what is done inside the store.

This has positive implications for ‘above the line’ media traditionally used by marketers in consumer awareness and brand building. It indicates that the industry thinks there is a shopper messaging role for touchpoints outside of retail environments for activities including, but not limited to, major promotions. A further implication is that some Shopper Marketing messaging and activities will then fall under the remit and budgets of brand marketers – which means that brand marketers will need to start to understand and apply Shopper Marketing thinking.

Theme 3: Mind the gap – between Thinking and Doing

The good news is that nearly 7 in 10 said that Shopper Marketing is supported by Executive Leadership. This figure did not vary much between the retailers and manufacturers. A further 56% said that Shopper Marketing has been identified as a priority and source of growth.

90% have recognised and/or defined Shopper Marketing in some way and identified priorities and support required, even if 30% think they’re still at basic level.

40% said they have dedicated resources for shopper programs. However, only 1/3 plan to increase their program budgets and/or people budgets in the next two years.  A lack of Shopper Marketing people and expertise, and particularly budgets, were the two most common issues identified by both retailers and manufacturers, as Figure 2 indicates.

Very few had a sizeable or dedicated Shopper Marketing budget, with most shopper marketers going “cap in hand to marketing or sales in order to get stuff happening, and even then we have to justify ourselves a lot”, as one interviewee put it.

There was concern that other departments internally do not understand or support Shopper Marketing, with less than 30% saying they have internal understanding or support outside of the Executive Leadership. This problem was common to both retailers and manufacturers, and for manufacturers it is specific to brand marketing teams. There is a significant education opportunity in getting other areas of each business to understand and engage in and see the value of Shopper Marketing so that appropriate budgets can be released to support it.

Given the opportunity, more than half would put more Shopper Marketing resources underneath shopper insights and research programs as their first priority.

Theme 4: One third plan new directions for the train; the other 2/3 watch it leave

The gap between thinking and doing is demonstrated in changes to planned activity types, with the 1/3 planning more or different Shopper Marketing activities behind the small changes to percentage splits. Although there is an interest in pre-store Shopper Marketing, this is not yet reflected in wholesale changes to planned activities. However, some increases in Social Media, Loyalty Programs and Digital/Online are expected.

N = 134

The changes to planned activity types were mirrored in planned budget changes.

Theme 5: Measurement – The Great Unknown & Opportunity

Inability to, or not knowing how to, measure was identified by participants as one of the greatest sources of dissatisfaction as can be seen in Figure 4. The three areas relating to measurement and effectiveness added together equal the single largest area of dissatisfaction.

N = 129

Just under 40% are currently measuring their Shopper Marketing programs.  However, the forms of measurement are rudimentary, based around hard measures (sales data), with little recognition of the role of softer measures e.g. attitudinal, behavioural, influence and impact.

N = 134

Note that which types of activities being employed is reflected in the effectiveness rankings for activity types. The less utilised activities rate lower in effectiveness as fewer are using them and thus fewer understand their impact.

Unsurprisingly, sales is the number 1 way in which measurement is applied, and likewise ROI is mostly being measured on spend/cost vs sales. However one of the challenges of Shopper Marketing is that it is difficult to prove that which specific type of execution is responsible for what % of the sales increase. There is therefore a role for softer measures (attitudinal, behavioural, influence, impact, reach) as drivers of the result (as opposed to sales – the result itself). As yet, this role is not broadly understood nor applied, with 30% or under using measures that do not directly relate to sales, ROI or executional compliance.

The Shopper Marketing needle will move faster around the dial once a comprehensive, and easily comprehensible, suite of measures is developed covering the scope of Shopper Marketing activities and embedded in organisations’ sales, shopper, category, and marketing functions.

So that’s some of the initial findings. Next time we’ll look at who is considered to be best practice, what they’re doing, some of the key opportunities in the Australian market and what retailers and manufacturers need to do differently to get the Shopper Marketing train to the next station quicker.

“Shopper Marketing: The Journey Begins” report is available from POPAI for $495 plus GST – click here
A survey findings workshop will be held on September 22 as part of the Retail and Marketing at Retail Expo, for those interested in making most use of the survey findings and implications. register here
POPAI can help you with  more information, to purchase the report or to register for the workshop.

The first Australian industry benchmark study into the Shopper Marketing function, conducted recently by POPAI and ShopAbility with the support of TorchMedia, highlighted the recognition of and growth in the discipline, and impediments to its acceleration.  Summarised below are some of the key themes for retailers, extracted from the report ‘Shopper Marketing – The Journey Begins’ (© ShopAbility 2010). These will be explored in more depth in the September issue of Inside Retailing.

Shopper Marketing is broad, and is not limited to in store

The scope of what is considered included in Shopper Marketing is broad, and includes ‘traditional’ category management, as indicated in Figure 1. Shopper Marketing includes activities currently falling under the current labels of Customer/Account Marketing, Trade Marketing, Retail Marketing, Merchandising, Activations and Instore Presence.

Rather than being a new discipline in and of itself, Shopper Marketing is in essence an amalgam and evolution of shopper and retailer facing functions already in existence, albeit with some broader marketing elements thrown in.

The inclusions are not limited to traditional executions, with in-store media the third most cited activity type and ambient/sensory in-store experience coming in 8th. Underscoring this, nearly all survey participants identified ‘instore theatre’ as an area of opportunity.

Retailer clean store policies are considered one of the major barriers to truly engaging with shoppers. Notwithstanding, both manufacturers and retailers are broadening their perspective on what Shopper Marketing activities are, even if they are not yet actually trialling or implementing some of the ‘newer’ forms.

Whilst the idea of marketing to shoppers outside of store/pre-store is not new for retailers, it is for manufacturers, who had traditionally held that Consumers and Consideration were pre-store, where Shopper and Conversion were in-store.

The survey indicates this notion is changing, alongside the broad definition of Shopper Marketing. Over half (52%) agreed that shopper is a mindset and/or shoppers can be influenced at any point between home, work and the store.  A further 26% considered Shopper Marketing to be activities inside and immediately outside the store. Only 22% believe that Shopper Marketing is limited to what is done inside the store.

Retailers prepared to recognise that clean stores are a hygiene factor and not an end in themselves, and to explore new shopper instore and out of store marketing alternatives with manufacturers beyond traditional catalogue and pallet/gondola displays, will find a willing audience.

Struggle for resources is slowing the pace of growth, even for retailers

Support for Shopper/Customer marketing is there, but it’s passive. Whilst 7 in 10 said that Shopper Marketing is supported by Executive Leadership and a further 56% said that Shopper Marketing had been identified as a priority and source of growth, only 40% have dedicated resources for shopper programs and only 1/3 plan to increase their program budgets and/or people budgets in the next two years.

Less than 2 in 5 retailers were satisfied with their overall shopper marketing resources, driven by a low 37% satisfaction with number of people/roles and organisational focus. A lack of Shopper Marketing people and expertise, and particularly budgets, were the largest areas of dissatisfaction, with less than 25% of retailers happy with their Shopper Marketing people’s expertise, and under 10% satisfied with their Shopper Marketing budget.

Smaller retailers are less likely to have any Shopper/Customer marketing capabilities, where larger retailers may have a larger Shopper/Customer Marketing department (generally reporting through to Marketing) but it competes for funds, resources and air time both with brand marketing and with Operations.

The lack of resources was mirrored in manufacturers, with only 35% happy with their people/roles and under 1 in 4 happy with their budget.

The struggle for resources (both people and $ for programs) to increase growth stems from several key obstacles:
* The role, scope and value of the Shopper Marketing function is not understood internally
* Shopper Marketing is still largely tactical and isolated rather than strategic and integrated, and sometimes viewed as an add-on
* Measurement of Shopper Marketing activities and impacts is piecemeal, inconsistent, and based around hard measures (sales/ROI), with little understanding of appropriate ‘soft’ measures (impact, awareness, influence, attitudes, behaviours etc). The range of appropriate measures is neither understood nor developed, leading to a difficulty in justifying spend.

Inability to, or not knowing how to, measure was identified by participants as one of the greatest sources of dissatisfaction outside of resource and funding competition.

Given the opportunity, more than half would put more Shopper Marketing resources underneath shopper insights and research programs as their first priority.

There is a significant opportunity in:
a) getting other areas of each business to understand and engage in and see the value of Shopper Marketing so that appropriate budgets can be released to support it
b) developing a suite of appropriate measurement tools and techniques that recognise the role of differing activation types, shopper behaviours, and touchpoints along the path to purchase, and understanding measurement of inputs versus outcomes
c) Retailers and manufacturers co-funding category level shopper research and trial programs. The current paradigm where retailers are looking to manufacturers to fully fund these activities isn’t working, as manufacturers don’t have sufficient resources either.

Opportunities, Directions & Trends

Based on what and who were identified as best practice, and understanding that Australia is broadly considered to be 8-10 years behind the UK and USA in Shopper Marketing activations, the future interest and energy in the Shopper Marketing space is behind:
* Dynamic and interactive POS, rather than static
* Understanding the role of each touchpoint on the path to purchase, and appropriate activation of each
* Digital, online and social media uses to drive traffic and sales conversion
* Cross category and cross-manufacturer occasion based promotions and programs
* Target market segmentation and data mining using loyalty programs to provide pinpointed offers to specific shopper segments
* Multichannel retailing and ecommerce
… based on a sound and consistent understanding of shopper attitudes and behaviours via insights and research.

Implications

From the above discussion, the following opportunities and implications apply to retailers:
* Closer collaboration with manufacturers (particularly those manufacturers who are ‘with’ the shopper marketing program – increasing the points of contact so marketers and category/shopper marketing people connect; co-funding programs and initiatives)
* Increasing dedicated Shopper Marketing budgets and people resources. Smaller retailers who don’t have budgets could potentially band together to syndicate for research and certain activities to achieve economies of scale
* Developing a comprehensive suite of Shopper Marketing measures and metrics (ideally in collaboration with manufacturers; this would require more collaborative data sharing)
* Broadening the scope of what Shopper Marketing activities and programs could include, both instore and prestore (particularly prestore media use)
* Mining market, retailer and manufacturer data to develop specific, tailored and customised programs and offers for differing shopper segments.

These and other elements will be discussed in more detail in the next hard copy issue of Inside Retailing.

The Shopper Marketing train is at the platform, ready to leave. What will you do to reach the next station faster?

*    *    *    *    *    *    *    *

About the POPAI/ShopAbility Shopper Marketing Industry Benchmark Survey

METHODOLOGY & SAMPLE
The survey comprised 19 in depth interviews and an online survey completed by 134 respondents (66% brand manufacturers, 10% retailers, 8% POS/production agencies, 16% other agencies).
Online survey participants’ roles were represented across senior executive, sales, brand marketing, category and channel management, trade marketing/customer marketing, activations/in-store presence/merchandising, and shopper insights.
Retailers taking part included some of Australia’s largest grocery, and mass merchant and convenience retailers as well as a number of small and medium specialty retailers.
The sample achieved for this first Australian industry study into Shopper Marketing not only equalled that of the first similar American GMA/Deloitte Shopper Marketing study in 2007, but surpassed it.

SHARING THE FINDINGS
A half-day findings workshop where participants will discuss and work through the survey outcomes and implications is being held on September 22 at Darling Harbour as part of Retail2010 conference and Marketing At Retail Expo. Participants will receive a copy of the full report valued at $495, a sector specific summary valued at $95, and a copy of the workshop outputs. Go to www.popai.com.au to register.
‘Shopper Marketing: The Journey Begins’ full study report is available from POPAI for $495 plus GST. Go to www.popai.com.au to purchase your copy.
Sector specific summaries (retailers, manufacturers, agencies) will be available from September from POPAI for $95 each plus GST. Email popai@popai.com.au with ‘Shopper Marketing Survey: Sector Summary’ in the subject heading to purchase a sector summary.

The first Australian industry study on Shopper Marketing involved depth interviews with leading companies (n=19) and an online survey (n=134) with a representative sample of company sizes and roles across the industry. This sample exceeded that of similar international research studies, so  thanks go to all the participants.

The resulting report, entitled “Shopper Marketing – The Journey Begins” outlines a comprehensive benchmark of Shopper Marketing in Australia – attitudes, status, activities, successes and roadblocks.

“Shopper Marketing – The Journey Begins” outlines robust research findings, along with the industry’s take on key opportunities and future directions.

The Survey  will be activiely discussed in industry media in forthcoming weeks.

The report can be purchased on the POPAI website via the following link http://www.popai.com.au/Market-Intelligence/documents/DocumentDetails.aspx?GUID=3c4d80e0-d802-4978-9264-c2b9aae21cdf

Workshops on the findings of the report will be held as part of the Retail and Marketing at Retail Expos at Sydney Convention Centre on Wednesday 22 September. Details at http://www.popai.com.au/Events/September-2010/Shopper-Marketing-Research-Findings-Workshop.aspx

Shopper Marketing: The Journey Begins

POPAI / ShopAbility Shopper Marketing Industry Benchmark Survey 2010

Supported by TORCHMEDIA

• Leverage the learning from Australia’s first Shopper Marketing Industry Benchmark Survey
• Harness the findings with implications and actions to move forward
• Participate in the industry discussion as solutions and frameworks are canvassed
• Be at the forefront of developments

If you want to know about the state of play in Shopper Marketing, please join us for this key industry discussion and applications workshop on the findings of the first Australian Shopper Marketing Industry Benchmark Study.

This workshop is designed for people working in FMCG, retail and related agency suppliers with responsibility for, alliance to or interest in Shopper Marketing.

It has also been developed for participants in the Survey who want to gain the most out of the summaries they have received.

On the agenda:

• The scope of possibilities emerging from the findings, including implications, opportunities, plans to move forward, and some initial solutions and frameworks development
• Discussion of results for those who did not participate in the survey
• Group / industry workshop of findings implications and applications

$395 standard price

$325 for POPAI members and Survey participants (individuals, not companies)

Includes:

• Copy of the full report, valued at $495 (emailed in pdf format along with workshop outputs)
• Sector specific (manufacturer, retailer, agency) report summary valued at $95
• Presentation and groupwork of implications and opportunities
• Summary of workshop outputs (to be emailed subsequent to workshop)
• Refreshments.

• Wednesday 22 September, 2010
• Half day seminar/workshop
• 9am – 12 noon
• (8.30am for 9am start)
• Bayside Terrace Room,
• Sydney Convention & Exhibition Centre
• Darling Harbour
• Held as part of the Retail and Marketing at Retail Expos

RSVP by emailing popai@popai.com.au with “Shopper Marketing workshop RSVP” in the headline

Or

Book online  - http://www.popai.com.au/Events/September-2010/Shopper-Marketing-Research-Findings-Workshop.aspx

One of the findings of the Shopper Marketing Industry Benchmark Survey (findings to be published in Retail World in August) was that most companies, if they had more shopper marketing resources, would devote them first to shopper insights and shopper research.

So there is a common understanding of the NEED for shopper insights, but less understanding of the scope of them or how to use them. One of the most common questions clients ask us when discussing shopper research is ‘how is it being used – do you have any case studies?’

So we’ll remedy that here with a bit of an overview of what shopper research encompasses, how it works and how to use the results.

INFORMATION VS INSIGHT

First, let’s clarify what is merely information vs what’s an insight, because the terms seem to be used interchangeably but they’re not actually the same thing.

Information is simply that. Often quantified. Eg, ‘40% of shopping trips in Category X in Retailer Y are Stock Up shops’.

So what?

The insight is what you infer from that information (which may be added to other information for the purpose of deriving insights). Insights will often be the ‘why’ behind something. Eg, ‘so what’s really going on here is …’.

Shopper data (such as Homescan – basket penetration, AWOP, spend etc) and shopper research (attitudes and behaviours) will yield information, but it’s your job and the research agency’s job to figure out the insights – and implications (‘so what this means is … ‘).

Not all information will yield an insight (some information is just background information), although all true insights SHOULD yield an implication.

Don’t feel you have to mine every data point for an insight, you might be looking for things that aren’t there because the shopper behaviour ‘just is’.

SHOPPER DATA AND RESEARCH SCOPE

Shopper research is attitudinal as well as behavioural, where shopper data is behavioural and/or the outputs of the behaviour. Shopper insights are most powerful when attitudes and behaviours are married to behavioural outputs. Ie, when you blend together

It’s even more powerful when you marry your shopper data and research with your consumer research (particularly usage occasions). There’s not a clear cut line from when the consumer becomes the shopper. The Shopper Marketing survey highlighted this, with 75% of respondents believing that shopper starts outside of or before the store, not just in it.

We look at shopper research as covering a mix of what we call the ‘5Ws and 5Hs’: Who, What, When, Where, Why, How, How Often, How Many, How Much, and How Long. See Figure 1.

Fig 1: The Shopper Research 5Ws and 5Hs. © ShopAbility 2009.

Some of the 5Ws and 5Hs will yield tactical insights and others will provide more strategic direction. As a general rule, the Hows tend to be tactical and the Ws are strategic. This varies depending on the category and channel.

What shoppers can tell you – and what they can’t
Shoppers can tell you about what they think now – what they like, don’t like and why. They can tell you about things they prefer or would like to see (different category layouts etc).
What they can’t do is forecast the future or tell you what the category or channel drivers are. That’s your and the research agency’s job to figure out.

SHOPPER RESEARCH AND INFORMATION METHODS

Good, holistic shopper research combines exploratory (qualitative) and evaluation (quantitative) methods. It combines both ‘claimed’ (what they say they do) and actual (‘what they do do’) behaviours.

This is because just running instore components won’t tell you Whys or Hows in depth (particularly in a 5 minute instore interview where you’re  in a chilled area and shoppers don’t want to hang around), and just running qualitative interviews or focus groups won’t give you How Manys, for example.

Claimed methodologies will give you things like perceptions and attitudes, why they behaved that way, frequency, trip type, who buying for, purchase and usage occasions, and intended vs actual purchase.

Actual behaviour capture methodologies will provide you with things like where they go instore (navigation), how many go where (traffic), how long they take (duration), what they do (interactions – browse vs buy), and who they are (gender, age).

Figure 2 is an outline of what types of major shopper research methodologies answer which of the 5Ws and 5Hs. (Note that it’s not exhaustive, rather it’s indicative). Quantitative methodologies like instore interviews and online surveys can be used to put numbers around what comes out of the qualitative depth interviews, particularly for Hows and Whats, so it’s not completely clear cut.

Fig 2: The Shopper Research Methodology Matrix © ShopAbility 2010.

Instore observations (as opposed to interviews) do not interact with the shopper. At the other end of the spectrum, techniques such as instore workshops and instore focus groups can be used to get shoppers to perform tasks and exercises – and gather perceptions and experiences from these – in real time and in more depth than an instore interview would normally yield.

Where there’s not scan data, home scan or actual data available, if you have to you can run with claimed behaviours (eg online surveys and omnibus) for things like frequency, AWOP, and spend.

Techniques like Eye Tracking, which are essentially a form of video footage taken from the shopper’s point of view so you can see exactly what they are looking at (or what they aren’t) are normally a part of a broader methodology like Accompanied Shops or Shopper Diaries. This is because just looking at the footage in isolation without commentary around what they were there to buy or what they are thinking isn’t particularly useful in itself, for how much it costs (except perhaps maybe for quantified category layouts).

THE NEED TO BE CHANNEL AND RETAILER SPECIFIC

Shopper behaviour and perceptions changes by retailer, and individual retailer objectives and priorities vary.

Whilst some findings will be common across similar retailers in the same channel, not all of them will be. And they certainly vary by channel, starting with who the shoppers are, to what trip type they are on (shopper mission) and degree of planning/openness to impulse, among other things.

An example of channel variation is grocery (Coles, Woolworths) vs mass merchants (Big W, Target, Kmart). In grocery around 30% of shopping trips are stock up shops. Stock up shops largely don’t exist in mass merchants, as evidenced by the small number of trolleys employed in mass (outside of Christmas). Where grocery the majority of grocery trip types fall into the Stock Up, Top Up or Dinner Tonight categories, mass merchants skew more to shopper missions like Destination, Gifting, Entertaining and Leisure/Browsing.

Within channel, behaviours also change. An example is IGA vs Coles and WW in grocery. IGA shopping trip dwell times are around only half the average trip time in Coles and WW because IGA shoppers are doing more Top Up, Dinner Tonight and Entertaining shopping trips than they are Stock Up. The trip time, missions and shoppers all skew differently.

If you do research specific to each retailer you can blend together brand supplier and retailer objectives, hypotheses and priorities. These all vary by retailer and by supplier so you need to cover all bases, yet with a tailored methodology.

The other benefit of this is that all parties are engaged upfront ,and can be confident that the results that come back will answer the key things they are interested in.

What we haven’t discussed here is specific types of shopper research based on a specific brief, eg price and promotional modelling and choice modelling, which can get pretty technical. If you’re interested in these let us know and we can discuss in subsequent articles.

APPLYING THE FINDINGS

So now you’ve done a piece of research answering your 5Ws and 5Hs. Now what do you do with it?

First off, do the insights derivation exercise where you look at all the data that’s come back and ask – ‘What’s really going on here?’

Then you need to determine what the implications (‘What this means is …’) arising from the insights. A good screener question to ask here is ‘Do we care?’ to make sure you’re focussing on the big hits rather than sweating the small tactical stuff.

Lastly, you need to turn the implications into an action plan (‘What are we going to do about it?’), with priorities, and allocate who is responsible for what actions. Then you and the relevant retailers/manufactures need to get together to discuss what is going to go into market, either as a trial or as an initiative that is rolled out on scale.

Sounds easy, doesn’t it?!

So, we hope that helps clarify a few points and shopper data, shopper research and shopper insights.

In our next contribution we’ll walk you through some of the key findings from the Shopper Marketing survey … interesting stuff!

Until then.

Rather than my usual ‘how to’ focussed pieces, your friendly Drinks Trade editors have asked me for an opinion piece on the impact of increasing the amount of imported beers made locally. I welcome your comments and points of debate, as what follows is simply ‘sample of one’ – albeit through the shopper’s eyes rather than mine.

Opinions are widely divided on the ‘locally made imports’ topic, ranging from the usual bland and commercial corporate standpoints of the big brewers, to highly emotional rants from some of the smaller suppliers looking for an opportunity to stick one up the ‘big boys’.

So let’s get back to shopper reality, shall we?

If a shopper/consumer finds out that the imported beer they usually drink is now being made locally, their first reactions are likely going to be:
* Do I care? (So what?)
* Should I care? (Why would I care?)
* Are they ripping me off, or can I get it cheaper because of this?

And the answers to all of the above are, it depends. On who I am, and why I’m drinking that particular beer in the first place, and what I’m paying for when I buy the beer – Name? Recipe? Taste? Tariffs?

If I’m drinking the Corona, Peroni or whichever locally made import, based on image and fitting in with my mates, then I’m less likely to care about where it’s made because it’s the badge/brand that’s important.

If I’m drinking it because I specifically like the taste, I would need to be assured that the recipe was the same and that the overall taste/quality hasn’t changed. There is a small – but growing – portion of (craft) beer appreciators who understand the impact of raw ingredients (particularly water and hops sources) on a beer, where water (and hops) are the beer equivalent of ‘terroir’ in wine. These are the guys who are most likely to decry locally made imports on the grounds of ‘inauthenticity’. So the question here is around how important is the recipe vs the point of origin?

If I’m buying it based on price, I would need to understand that the quality/taste was the same in order to justify the same price point as a fully imported version (because I know that fully imported versions carry tariffs in their pricing). I would probably expect a small discount on a locally made version vs the import, the discount differential being the expected level of import tariff.

So from the shopper’s point of view, unless it’s specifically brought to their attention, it feels like a lot of them wouldn’t look at the labels closely enough to judge. And if it were brought to their attention, there are 1 or 2 groups of shoppers and consumers who would care (based on price and perceived taste changes) and probably another 1 or 2 consumer groups who wouldn’t.

For me personally, the question is more one around ethics and legalities of pack claims … what is being disclosed and what isn’t. There need to be some quite clear labelling codes around ‘product of/made in’ vs ‘imported and distributed by’ vs ‘bottled by’. Ie where the beer has come from vs where the bottle packaging/labels came from.

Currently the labelling can be quite confusing. I was in a Vintage Cellars the other day and their Corona said ‘Product of Mexico’ on the front, ‘Imported and Distributed By Fosters NZ’ on the back, but the labelling had the NZ standard drinks logo on it, so it was obviously at least labelled in NZ. So was it actually made in Mexico, but labelled in NZ? I know it sounds like labelling for dummies, but something like ‘beer made and bottled in Mexico, labelled in NZ’ would be clearer.

Even if the locally produced versions of the bigger ‘imported’ brands start to eclipse the sales of the fully imported versions of those same brands, there are still enough other imported brands/labels  – and a growing craft beer and microbrew market – to ensure ongoing variety.

Global companies have been making locally produced versions of their brands and products (think Kit Kat, Coca-Cola, Mars Bar et al), often tailored to local palates and tastebuds, for years.

The idea isn’t new.  It just needs to be clearly disclosed on the product – for those who care enough to actually read the label!

From the outset let me state that this store has only opened stage one of a major refurb so the comments are not based on looking at a complete “new” store, but on one where there are still builders walking around looking busy, hoardings and plastic sheets covering the next stages and a centre store Grocery area that is yet to be touched.

But the word on the street is that this refurb is Woolies response to the Coles refresh program, so looking at the first stage as an indicator of what is to come is a fair and worthwhile exercise and relevant for industry discussion, especially when it covers most of the Fresh depts – and they are the key depts in a Shoppers mind that they use to determine their store of choice. So from a rollout/ on-going perspective this store is an important indicator of the evolving competitive playing field.

Also Woolies are using their local Shopper data base to publicise that fact that in their view certain of the Fresh Depts are open for trade and in their “final” positions and layouts etc .

New fresh departments at Woolworths Caringbah
Hi XXXX,

We’ve got some great news about the renovations at Woolworths Caringbah! Our new fruit and vegetable, deli and seafood departments are now open.

The new market-style fresh produce department is now lighter and brighter with wider aisles, giving you a better view of our delicious, quality produce and our great specials that you can enjoy every week.

There’s an exciting new deli with a greater range of local and international gourmet cheeses and delicious fresh cooked chickens. The seafood section now brings you live mussels – nothing comes fresher than that!
Thanks again for your patience during the renovations, and don’t forget to visit to take advantage of your 50% extra Qantas Frequent Flyer points offer!

We look forward to seeing you in-store soon,

Kris
Store Manager
Woolworths Caringbah

So game on for us to comment!

Looking through the obvious refurb mayhem, this store does not have the theatre or the market feel in the Fresh depts of the new Coles stores, it is certainly not a generation or two ahead.

They have moved and centralised Cheese and Smallgoods from the Dairy to the front of the Deli area, Proprietary Bread will obviously join in store Bakery at the entrance when it opens and they have used new fixtures, signage and educational prompts in Produce.

Plus fine tuning/ new locations/ new fixtures for Seafood (live mussels) and Hot Chickens, one small demonstration cooking table and another small table at the front with assorted fruit for sale at 0.50c a piece targeting kids.

Meat is in the back left hand corner and is yet to be finished by the look of it. Macro is present with an organics Produce range – they had 21 SKU’s when I was there.

The Produce black boxes are also absent, with stock now being hand packed onto the new style of fixtures that are quite small compared to the usual Woolies store and to the new Coles offer. The Produce wall on the right as you enter looks great, plenty of colour and the housekeeping was excellent, as you would expect with all of the staff walking around, they needed something to do!

The Deli, Seafood and Poultry cases were in one straight line, with some excellent graphics on the walls behind the Depts.

But again, most of what was there had been done already and it is felt that with the changes they had lost that bulky, chunky market feel in Produce which is the most important Dept for Shopper impact and perception. Deli/ Seafood and Poultry depts. were quiet clinical in the feel and visual personality.

But at least they had some cross merchandising using small Woolies branded wooden barrels, unlike Coles that still don’t use them to add some Grocery colour to the Fresh departments and target the impulse sale / increase transaction value.

The above may change when it all comes together in July and the whole store is complete – I look forward to returning for another visit, I may be mistaken, but on first glance this offer is very good, but not ‘step change great’.

SPAR ALEXANDRIA

Spar stores aren’t new to Queenslanders, but until recently there haven’t been many in the Sydney and Melbourne metro areas. The Alexandria store opened a couple of months ago in Sydney so we thought we’d take a look.

What it is and where it is:
* A small footprint supermarket, effectively a mini mart. More supermarket than convenience store though. Reminiscent of Tesco Fresh & Easy or WalMart Neighbourhood Markets in the US
* Elements of Thomas Dux/Harris Farm, with a small supermarket dry grocery offer
* Alexandria is a suburb full of high disposable income SINKs and DINKs living in medium density, brand new apartment blocks. The Spar store is only a couple of blocks from Danks St, which has the well known Danks St Depot cafe deli and a Whole House Foods organic supermarket. There isn’t a Coles or WW in the immediate vicinity.

First impressions:
* Fresh fruit and veg external signage and decaling similar to the FoodWorks Ryde store reviewed last issue.
* This Spar had an outdoors-facing cafe utilising the kitchen from the Deli department inside the store. Deli service was one side of the kitchen, facing into the store, and the cafe was on the other side of the kitchen, facing out
* I was greeted entering the store by a Movenpick (premium ice cream) demonstration and tasting person, setting the tone for a higher end product store.

Instore:
* Low profile bread racking and fresh fruit and veg tables. Small selection of fruit & veg but some interesting packs of nuts
* Large deli as a % of the store print, AND they had white anchovies (which are my yardstick for deli range), however the quality of the anchovies was poor as they were very hard and not fresh
* Whole chiller bay right next to the deli of duck cuts and duck ready meals, first time we’ve seen a bay of duck products. This one was all LuvADuck brand, looked like an initiative by them
* Range instore generally smaller pack formats (catering to the locals living in small apartments), high end ready meals and a lot of premium icecream brands
* Not many overtly ticketed price specials
* No real gondola ends, only a couple on two aisle ends near the checkout.

Checking out:
* Low profile gum & confectionery ‘aisle’ near the checkouts rather than at checkout
* Checkouts were messy but service was friendly

Verdict:
They know their local market well and have focussed on top up and dinner tonight shopping trips with their deli and ready meals emphasis.

WW Parramatta

We were led to believe whilst Caringbah is the ‘next generation’ WW store refurb, that the Parramatta store (located in the Westfield) is the WW version of Coles’ Oakleigh store. Ie, the ‘trial magnet’, where lots of different things are tested. So we scuttled off to have a look.

Wasn’t as much happening there as was expecting … but boy does that store get a shedload of traffic.
Health and Beauty was very obviously a focus, with two full-height aisles separated by a low profile walk-around aisle to total 3 aisles. It had very large overhead department signage in colours and font reminiscent of Big W.

The health aisle has been extended to include a low profile sports nutrition aisle.
Bread was ranged in its plastic trays (rather than on wire racking). Looked like the bread equivalent of shelf ready trays, but it was a bit ugly. As were the HUGE thick grey plastic trolleys, very obviously heavy duty but I’m not sure to what end.

Things that differed from the usual run of the mill WW store included more shelf media (but less floor media) than we’re used to seeing, used for information and recipes etc.  Also more brand blocking (particularly in dairy case).

Two apparent trials included various headers in the fruit & veg, confectionery and health/beauty aisles; and some educational aisle blades in the Coffee aisle which talked about the various types of coffee.

So a few minor tweaks, rather than anything revolutionary. And they need to lose the ugly grey trolleys that make aisles impassable!

And then there’s …

The Village Grocer, Balgowlah: situated 3 doors from a refurbished Coles in the Stockland centre, this store was like a Harris Farm or Thomas Dux store with a ramped up fresh meal and deli area as well as a broad range of imported dry grocery products ranging from cordials to chilli sauces. Great selection of dips with some interesting brands and products we haven’t found elsewhere.
Novelty brandy packaging in Dan Murphys: What is going on in the brandy category? Unclear whether these are specific to Dan’s, but they’re carrying Stiletto brandy (high heel shoe shaped bottle); Venus (bottle shaped like guess who); Bouzouki (packaging shaped like a type of  mandolin/banjo), and another shaped like a cello or double bass stringed instrument. Last ditch attempt to grow a struggling category by promoting the ‘high end’ with novelty products?

The Shopper Marketing survey interviews we’ve been conducting during April are consistently identifying two key instore marketing areas of opportunity: occasion based solutions and instore theatre.

The major Australian grocery retailers’ relentless focus on clean store policies, particularly in centre store, is all well and good from an ease of shopping point of view. But an easy shopping experience isn’t necessarily a fun, exciting or enjoyable one.

Occasion based solutions and instore theatre provide a sense of delight and discovery that not only increase basket size but generate store and retailer loyalty by providing a genuine point of difference.

Following are some examples from overseas markets to demonstrate what can be done, with a few Australian iterations thrown in for good measure.

THEATRE STARTS OUTSIDE THE STORE

Westfield’s global retail tours highlight the creativity employed to draw traffic to store. The giant Louis Vuitton suitcase enveloping the Louis Vuitton store in New York comes to mind.

Figure 1. Just Sports exterior, Dallas, Texas

Figure 2. Whole Foods market, Los Angeles. Flowers and plants out front signify ‘Fresh’.

Outdoor chains in the USA such as Outdoor World, Bass Pro Shops, and Cabelas (the US versions of BCF – Boating Camping Fishing, except that they include large hunting departments) start the theatre outside the store with hunting trophies and stuffed animals. At centre store are huge dioramas of stuffed wildlife – deer, bears, mountain lions etc – as well as aquariums with live fish. These dioramas serve as points of navigation, dividing departments.

The stuffed animals ironically continue to ‘bring products to life’ at shelf.

Figure 3. Stuffed animals ‘enliven’ hiking boots in Bass Pro Shop, Nashville, Tennessee.

THE THEATRE OF FOOD – INSTORE FOOD PREPARATION

Mainstream and premium grocers in the USA ranging from HEB to Whole Foods to Bristol Farms increase their food sales margins by preparing food instore in front of shoppers.
At Whole Foods, for example, you can order your salmon cooked to specification.  At Bristol Farms you can sit in the coffee shop located in the centre of the store. Foodland Adelaide’s Finest at Fairview Park is doing a version of this with its instore cafe and takeaway coffee.

Some grocery retailers such as HEB have a chef’s corner (eg HEB’s Cooking Connection) where they not only prepare recipes of the day and display ingredients and complementary products, but also provide advice, effectively acting as an instore salesperson.

Figure 4. Cooking Connection in HEB, Fredericksburg, Texas

Feels like this is a natural extension of the Feed the Family and Curtis Stone programs in Coles, if they chose to go there.  Other Australian examples include SupaBarn in Canberra City, where they bake the bread in front of you (impulse sales based on the fresh bread smell alone!) and again Foodland Adelaide’s Finest, who have a chef’s corner.

THEATRE IN AISLE

Providing theatre in aisle and at shelf increases basket incidence of multiple categories by attracting top up shoppers who may otherwise only shop 1 category per aisle or second aisle. Australian examples of using fixturisation to increase category incidence include the much-cited and award winning Cafe At Home project from a few years ago. Below is an example of how Whole Foods approach the coffee ‘fixture.

Figure 5. Coffee ‘fixture’, Whole Foods, Los Angeles.

Figure 6. Craft beer tap handles in Old Chicago brewpub, Denver, Colorado

In US brewpubs (chain and independent pubs ranging many specialty and craft beers) the beer taps are centre stage, with the tap handles the engine room of discovery.

OCCASION BASED SOLUTIONS: SECONDARY DISPLAYS

One of the retail issues in the Australian market is that retailers are selling products, rather than solutions. Bunnings is a classic example, where by attempting to maintain a ‘warehouse feel’ they are missing the ‘this goes with that’ solution nature of the hardware category. Sure they have floor stacks in aisles, such as hammers where the nails are, but true solution based displays, eg ‘I’m building a deck, what are all the things I need?’, are thin on the ground.

Occasion based solutions, such as all breakfast elements (milk, bread, spreads, cereal etc) being placed together can drive AWOP as they increase the number of items in the basket.

However, for logistical, political and buying structure reasons, retailers aren’t going to just up and relocate a number of categories’ primary locations to group them together.

But shopper focussed solutions such as dinner tonight, lunch on the go, and entertaining can still be catered to with secondary and offlocation displays. (A nod here to Coles, where some of their renewal stores include a Food To Go chiller case). In the UK, pharmacy chains such as Boots and Superdrug offer food-to-go solutions in front-of-store chillers.

Figure 7. Food To Go area at Coles St Agnes, Adelaide SA

Figure 8. Takeaway Soup & Sandwich display, Whole Foods, California

This is the model being pursued in the USA, where smaller grocery and mass merchant suppliers who wouldn’t normally get an offlocation display look-in are banding together with complementary larger players to achieve impactful solution based displays.

Traditionally behind Australia in offpremise liquor execution, the USA is starting to catch up with a couple of ‘big box’ liquor chains gaining scale. Both Total Wine and Bevmo understand liquor consumption occasions. Aside from substantial gifting offers including boxes, bags, cards, glassware, wine openers etc in dedicated areas instore, they also play to entertaining occasions by ranging specialty cheese and gourmet crackers.

Figure 9. Cheese and Crackers unit in Bevmo, Arizona, USA. All that’s missing is the soft drink and mineral water.

So there are a few examples. Now that the basic ‘hygiene’ elements are in place, it’s time for Australian retailers to pick up their game.

We’ll discuss the role of interactivity and instore education in subsequent articles.

SHOPPER MARKETING SURVEY – HAVE YOUR SAY BEFORE TIME RUNS OUT

POPAI and ShopAbility are currently running the first industry benchmark study into the status of the Shopper Marketing, Category Management and POP functions in Australia.
Interviews have been conducted and now is your opportunity to have your say in the online survey, closes June 2. Participation is free, and study participants will receive a summary of the findings. To participate go to  http://www.ys3.net.au/surveys/5/y100514register.asp

All participants receive a FREE summary of the findings in July. The survey is now running and closes on June 2. Click the link below to participate FREE in the online survey, which will take approx 30 mins to complete. http://www.ys3.net.au/surveys/5/y100514register.asp .

Forward to a friend in the industry! If you think someone else involved in, or with views of the shopper marketing and category functions, would be interested in participating (and receiving the findings), please send them this link -http://www.ys3.net.au/surveys/5/y100514register.asp .
The more the merrier for a robust sample and holistic view.

Thank you for your participation, we look forward to presenting you with the results!
. Details about the study below.

The POPAI & ShopAbility Shopper Marketing & Category Management Industry Study  will help provide FMCG and retail sectors with a comprehensive overview of how to optimise both their internal and in-store shopper marketing and category management opportunities.
The Global Association for Marketing at Retail, POPAI Australia and New Zealand and shopper research and strategy firm, ShopAbility, have combined forces to put together a new study to help industry professionals enhance the shopping experience in-store, improve in-store areas of influence and ultimately help boost sales.
The study has come about after reviews of related studies overseas. It will be conducted over April and May and will combine in-depth face-to-face and telephone interviews with an online opinion survey.
“We are excited to be involved in the first industry wide study in this area in Australia,” said POPAI Australia and New Zealand General Manager, Karen Spear.

“We have previously conducted studies on the point of purchase industry but with this study, the scope is significantly expanded to take a more holistic view of the various functions involved in Marketing at Retail,” she said.

Co-Director of ShopAbility, Norrelle Goldring, said the results of the survey will help deliver the information they need to map out an activity and resources path for retailers and manufacturers.

“The study will help us to evaluate how Australian shopper marketing and category management related functions compare with overseas markets, identify common issues and opportunities and outline key steps for industry participants to take to make the most of their capabilities,” she said.

Individuals responsible for creating or running shopper marketing, category management and trade marketing/point of purchase disciplines or those who have frequent dealings with these functions including sales directors, marketing directors, (group) category managers/development directors, insights and innovations professionals, trade marketing managers, customer/channel marketing or development directors are strongly urged to take part in this survey.

To participate in this Australian-first survey, please go to this link:

http://www.ys3.net.au/surveys/5/y100514register.asp .

Results will be available early in the new financial year. Survey participants will receive a free summary of the results of the shopper marketing and category management findings of the survey.

For further information contact:

Norrelle Goldring, Director
ShopAbility
M: 0411 735 190
E: norrelle@shop-ability.com.au
W: shop-ability.com.au

Karen Spear, General Manager

POPAI Australia & New Zealand
M: 0412 668 579

E: karens@popai.com.au

W: popai.com.au

About POPAI Australia and New Zealand:

POPAI (Point of Purchase Advertising Institute) is the only global, not-for-profit association exclusively dedicated to the retail marketing industry. It has a global network of 20 offices covering 45 countries dedicated to serving in excess of 1,700 member companies.

In Australia, POPAI’s mission is to advance the evolution of Marketing at Retail as a strategic and tactical advertising medium and an integral part of the marketing mix.

This includes promoting the importance of Marketing at Retail in the total marketing mix; improving levels of education in the industry; developing and encouraging improved standards of practice; representing industry views; promoting a better understanding of POP mediums; provide opportunities to exchange ideas and experiences; and to conduct research for more effective strategy.

Call POPAI on (02) 9984 9322, look us up at www.popai.com.au or email marketing@popai.com.au

About ShopAbility:

ShopAbility is a specialist FMCG & retail consultancy spanning multiple channels. We help clients improve both their thinking and doing capabilities to improve instore execution for increased sales results. We help clients understand shoppers, retailers and store; we develop standout strategies for market advantage; and we build clients’ capability to deliver them.  Our retail and go-to-market strategies are holistic, differentiated and shopper-driven. Our offers span insight/research, strategy, execution, capability and training. Call us on 1300 88 56 44 for more information, look us up at www.shop-ability.com.au or drop us an email to enquiries@shop-ability.com.au

In discussing promotion in last month’s issue we talked about ‘making the punishment fit the crime’ – that is, matching the promotion mechanics to the objectives you’re trying to achieve.

Here we’re going to discuss in more detail how you can best support a promotion based on its scale, objectives and mechanics.

DETERMINE HOW MUCH TO SPEND BEFORE YOU START

What’s the promotion worth to you – what sort of Return on Investment (ROI) are you looking for?
Based on your promotion objectives, is the promotion expected to increase sales or is it a ‘cost of doing business’ based on a broader strategic objective?
This determines how much you should spend.
If your objective is to increase sales of product/brand/category X by Y% over Z timeframe, you need to figure out how many incremental dollars (revenue and gross profit) that’s worth to you.
You can then decide for every extra dollar you make on the promotion, what portion you want to spend on supporting it.
It’s a bit like sponsorship … in successful sponsorships, for every dollar spent on sponsorship naming rights, generally a further $2 or more is spent on support.
Determining your budget comes back to the scope you have set for the promotion – how many products/brands/categories it is running across and how long will it run for.
Shouting works better than whispering in retail environments – if they don’t know about it, they won’t buy it, so you need to have enough budget to shout a bit. Spend too little on support and you’re dooming your promotion to failure. Spend too much, even if on the right things, and you may get great retail KPI results on traffic, frequency etc but lose money in the process.

TYPES OF PROMOTIONAL SUPPORT

Traditionally, retail promotions are supported by one or more of the following depending on their scale/scope:

* Advertising: radio, TV, print media, online, digital eg SMS, email, social media eg Facebook and Twitter
* Point of sale: shelf ticketing, posters, header cards, counter cards etc
* Catalogues
* Displays: in-aisle, co-located with another category, gondola/aisle end displays/standees and ‘spectactulars’, additional offlocation displays (often in standees or ‘dump bins’); impulse displays at counters
* Sales staff incentives
* Mechanic oriented POS: eg scratch cards, loyalty cards

Or you might come up with something else or some additional types.

Generally, better results are achieved when support mechanisms are combined rather than expecting all of one support type to do the work.

Advertising and broad based out-of-store activities are generally designed to drive traffic to the store. Some retail objectives can be executed very successfully using instore execution only, without any out-of-store activities.

The trick here is to figure out the right balance based on a) your budget/ROI, b) your objectives, and c) scale/logistical capability based on how many stores it’s going to be in. The store and your customer database should always be your starting point (better to be instore with no outside advertising than to have out of store advertising but no instore execution).  The size of the available budget and the potency of the offer will dictate how much instore vs out of store activity you do.

An example of this might look like the below (this is indicative, not exhaustive).

Figure 1: Determining support types for your promotion.  © ShopAbility 2010.

EXECUTING YOUR PROMOTION

As alluded to above, certain parts of the store should be executed irrespective of promotion.  A suggested model might look a bit like this, where the target’s ‘bullseye’ is where you start:

Included in ‘other areas of store’ are Dispensary Counter, Checkout Counters, co-locating the product in another category aisle, front window displays, front of store sale tables/dump bins, staff & incentives.  The importance you place on each of these will depend on the product/category type and the promotion mechanic. Eg if it’s a mechanic and a product that’s suitable for impulse you might put in on the checkouts and in front of store dump bins.

The areas of the store in which you execute the promotion also tie into the RSVP3 point of purchase drivers:
Range:            What products are you promoting, and with what other products?
Space & Layout:     Do you need to change the space or layout of the category you are promoting in order to ‘face up’ the promoted product? Do you need to put the promoted product next to something else instore also (related category)?
Visibility & Display:     How many points of visibility will you execute around the store? How many displays will you have (see ‘Other Areas of Store’, above). Note that ‘stock sells stock’ in a lot of instances. The more stock you have, the more noticeable the display/promotion is, and the bigger the brand looks. (However you don’t want to order so much stock in you’ll never move it all … you can be smart here by putting empty boxes on display). Stockweight on a display should at least equal the amount of POS (header cards, posters) on any one display. Displays shouldn’t be POS heavy or obscure the stock.
Persuasion:    What’s the role of staff upsell, companion sell or incentives in persuading customers to take up the offer?

GETTING THE MESSAGE RIGHT

As a general rule, point of sale for promotions should read, from top to bottom in order:
1. Incentive/offer/prize
2. What the promoted product is (specifying pack sizes, if applicable)
3. How (mechanic).

It needs to be kept as simple as possible, an example is below.

There needs to be a clear call to action, retail oriented (not the above-the-line advertising slapped on a poster) AND it needs to survive the ‘3 second walk past test’.  Ie because the POS is going to be in environments where shoppers are moving, you need to be able to walk past it yourself and digest the message in under 3 seconds. So keep words to a minimum. (All the promotion terms and conditions can go in very small at the bottom of the poster).

Message Hierarchies using the ‘Path to Purchase’

In principle, the closer a shopper gets to the product, the more detail should be available. (Or the further away they are from the product, the simpler the message needs to be).

This means that while the message remains consistent, the level of detail on the POS changes according to where in the store they are.
The level of detail also changes according to the size of the POS. It’s no good trying to fit War & Peace on a shelf ticket, or lots of small font detail in a window poster people walk past. For example:

Externals/Windows:             WIN + prize + product shot (no mechanics, just ‘see instore’)
Display signs, pallet headers, posters:    WIN + prize + product shot + mechanic (T&Cs down bottom in small print)
Wobblers at shelf:            WIN + prize + product shot (mechanics on back).

And as a final thought, you might be able to tie the promotion into an overarching retail occasion (Mothers Day, Fathers Day, Christmas) or a consumer occasion such as Back To School.

So that’s Promotion support.  Next time we’ll take a look at the role of store staff persuasion and how different selling techniques can achieve different things.

Till then!

We welcome feedback on these articles – what you agree with, what you don’t – and what you’d like to hear about. Email us with feedback on enquiries@shop-ability.com.au

Our previous article on shopper insights, way back in January last year, looked at deriving applicable findings from shopper research.

This time around we thought we’d take a more practical, hands on approach and look at the grocery shopping experience and behaviours from the shopper’s point of view to highlight gaps between what shoppers want and what retailers are currently providing. In other words, opportunities to improve execution and therefore sales.

Get me in and out quick

After location (‘Closest to my home/work’), the top reasons shoppers choose a grocery store are Range (‘they have what I want and need’) and Convenience (‘I know where everything is and can get in and out quick’). Price is further down the list.

You’ll retain shoppers over time if your store is laid out in a way that makes sense to them and makes it easy to navigate. (This is something to bear in mind for renewal stores, which can take shoppers up to a month to acclimatise to and ‘learn’ the new layout).

The biggest irritation factor in supermarkets is usually checkout waiting times. These average 6 minutes – and (ironically) longer for the ‘express checkouts’ queues in late afternoons/early evenings for all the Dinner Tonight shoppers (who have smaller baskets). There’s a relationship between the time to shop vs the time at checkout, a bit like reward vs time spent. The quicker the shopping time (the fewer the items in the basket) the faster the shopper expects to get out of the store. I’ve recently changed my preferred supermarket for this reason (along with one to do with better range).

My local supermarket always has long queues. Their competitor recently opened a store 10 doors up the road, and this new store has more checkouts open more of the time, and importantly (for me) self-scan checkouts. I don’t go back to the ‘old’ supermarket any more because it’s too much hassle. The only time is when I need items that the new competitor supermarket doesn’t stock … which is once in a blue moon. So the ‘old’ supermarket has effectively lost me as a shopper for logistical reasons. Nothing to do with price.

So aside from opening more checkouts at peak periods and adding self-scan checkouts, what can you do? Well, give shoppers something to DO at the checkout to keep them entertained whilst they’re waiting. Magazines, sure. But what else? There’s a role for digital media here – recipes, informercials, education about complex categories. ‘Did you know?’ type stuff, not just playing manufacturers’ or retailers’ brand ads. Also, sampling and demonstrations could be conducted at, along or near checkouts, with displays of the sampled stock near the checkouts so the shopper doesn’t have to break out of the queue and go back into the centre store to get the sampled item. Better yet, the sampling company could physically hand the desired item to those wanting them. This is a way to create further impulse opportunities without cluttering the checkouts with more gum, softdrinks, batteries etc.

My Fruit & Veg is getting squashed

In other words, lay it out in the order they shop it.

This one comes up a lot in shopper research. It arises from retailers putting supermarket entry through fresh fruit & veg as a way to position themselves as ‘owning’ fresh. Trouble is, unless you’re on a Dinner Tonight shopping trip (around 20% of trips) the reality is you’re going to be buying a whole lot of other stuff that winds up going on top of the fruit & veg in the trolley/basket because it’s been shopped first.

Supermarkets need to think about having multiple points of entry to mitigate this, and a proper compartmentalised trolley and basket solution.

Shopping traffic direction will vary based on the entry points of the store, but as a general rule shoppers move around a store according to the side of the road they drive on. Ie Australian shoppers will tend to shop from left to right of store, where Americans will do the reverse.

Anything that’s likely to melt or thaw out (ice cream, frozen meals) is generally shopped last.

So you could argue that the ideal departmental layout for a shopper would actually go something like this (from point of entry):
1. Non-food & General Merchandise
2. Ambient/shelf food
3. Fresh fruit & veg plus bread
4. Frozen foods.
(This will obviously change a bit based on trip type, there’s no perfect solution so the above is the closest to one-size-fits-all).

As many non-food items are at the higher value and margin end (think Personal Care) and/or are items purchased ‘so we don’t run out’ (like toilet paper), encouraging more traffic through this area upfront could net you profitable impulse sales.

Put similar things together

Old school retail thinking is to place unrelated categories in the same aisle for assumed ‘halo’ effect of increased traffic and strong category impact on the weak one. This makes for a confusing shopping experience. From the shopper’s point of view, unless it’s for a gifting occasion, why would (box) chocolates and confectionery be in the same aisle opposite gift cards and wrap?

To be fair, supermarkets have improved their category adjacencies within aisles in recent years so we now have most general merchandise together, most household cleaning together etc.

But what is not done here, and yes I am a broken record about this, is marketing by occasion (outside of major seasonal retail occasions like Easter, Xmas, Mothers’ Day and Back to School).

What I mean here is creating solutions around usage and consumption occasions rather than ranging by product, format or manufacturer type. Dinner Tonight, Entertaining, Lunchbox, Gifting, Ready Meals are just a few. These can be executed in-aisle and/or as secondary displays.

One of the major supermarket chains has started having a crack at this with a concept that combines cards, wrap, magazines, and DVDs. Given that these are mostly longer browse time type items in what is not traditionally a browse channel (certainly not to the extent that say Borders and book specialty is) I’d wager that the traffic in this area will be low but the browse to buy conversions for those shopping the area should be pretty good, and the value per item will be higher than in many other areas of the store.

Maximising impulse when 85% already do it

The traditional retail thinking is ‘Put milk at the back – make them walk the store as they might buy other things on the way’.

The reality is that more than 85% of shoppers deviate from (add to) their list anyway once they are in the store, irrespective of whether the list is a mental or written one.

So you’re already getting a high degree of impulse shopping. The question is how much per shopper. This is a function of trip type and dwell time.

Putting milk at the back of the store for a shopper only wanting 2 or 3 items is pointless, because they’ll be going to the convenience store for the milk anyway in this instance … see the point above about standing in checkout queues for only a few items. Back to Get Me In and Out Quick -  shoppers prefer milk at the front of store. A study done a few years ago with a major independent grocer and major dairy supplier proved it when they dual located milk both in main dairy chiller AND in impulse fridges at front of store. Milk sales shot up by a double digit percentage.

But you can’t use the front of store for EVERYTHING. So aside from front of store and gondola ends/wing displays, then what?

Use the aisles.

Clean store policy is one thing, but hang sell and clip strips aren’t necessarily noticed in aisle by many shoppers. Without cluttering the aisles, I see a role for well-placed case stack displays of complimentary products to that category (not products from the category, all you’ll do then is create brand switch and trade down rather than an incremental sale).

Specific shopping missions (trip types) are more likely to get more impulse than others. Shoppers on stock up shops (approx 30% of shopping trips) will do an aisle by aisle shop regardless of what’s in each aisle (see Figure 1). These are the shoppers and trips likely to result in the most impulse.

Top up shoppers will potentially browse the aisles their destination products are in, but will avoid aisles that don’t have products on their list (see Figure 2). So you need to maximise the aisles they are likely to be in (or simply execute 1-2 small impulse displays in every aisle, that way you catch both the stock up and top up shoppers).

Dinner Tonight shoppers, depending on store layout, tend to ‘racetrack’ around the perimeter of the store. They concentrate on fresh fruit & veg, frozens, and shelf ready ambient and chilled meals. Your opportunity here is to put complimentary meal solution displays in these areas … salad dressings with the salads, chilled or shelf stable desserts near the pasta etc.

In summary, by reducing hassle (getting them in and out quick), laying out the store in the order they’d prefer to shop it, providing occasion based solutions by placing similar products together and providing impulse opportunities that make sense, you should not only increase your average basket values in the short term, but retain your shoppers’ business in the long term.

STOP PRESS – SHOPPER MARKETING SURVEY – CALL FOR EXPRESSIONS OF INTEREST
Following the response to our ‘Where to Shopper Marketing?’ article in the Feb 1 issue, POPAI and ShopAbility are running the first industry benchmark study into the status of the Shopper Marketing, Category Management and POP functions in Australia.
Interviews and online surveys will be conducted across April and May.
Study participants will receive a summary of the findings.
To register your interest in participating, email marketing@popai.com.au

For Retail Pharmacy Magazine

In discussing price in last month’s issue we touched on price promotions and some considerations when pulling promotions together. That was the tip of the iceberg.

Here we’re going to examine promotion objectives, mechanics and probable shopper reactions in a bit more detail to help you put together promotions that work, because you’ll have figured out what it is you want them to achieve at the outset.

Begin with the end in mind – Promotional Objective setting

‘I want to increase my store’s traffic, average sale value and steal some share from competitors’ – if you’re a retailer.

‘I want to increase sales and improve my brand’s awareness and share’ – if you’re a manufacturer.

Well, duh.

But how? And how do you know which things work and which things don’t, viz the famed historic advertising guru David Ogilvy’s quip about ‘We know that half of all advertising works, we just don’t know which half’? And how do you measure it?

Be specific about you want to achieve upfront, as this impacts the promotion mechanics to be used, the level of support you should give it, how it should be executed instore and the likely shopper impact.

There are a number of types of objectives that all relate to promotions:
* Retail objectives (5 way multiple): traffic – more shoppers, average weight of purchase, item spend, basket spend, basket incidence and penetration, frequency of visit (same shopper more often)
* Shopper/category objectives: department growth, category growth, category segment growth, shopper satisfaction with category/department/store, shopper dwell time, past 4 week purchase; category/product sales velocity (units per store per week); household penetration
* Brand and Marketing objectives: brand share of category or category segment, past 4 week product/brand consumption, awareness levels of brand pre/post, trial or sampling penetration, brand perceptions/attitudes, brand/product ranging and distribution, brand preference
* Strategic objectives: eg perception of retailer’s brand or store (value, service, range propositions)
* Financial objectives: during promotional period the forecast total and incremental sales revenue and gross profit, minimum margin, floor price to achieve margins and GP
* Operational objectives: eg old stock clearance, product deletion clearance.

You don’t have to construct objectives for every type, just select one or two.  You can use SMART (Specific, Measurable, Actionable, Relevant, Time Bound) to flesh them out.

For example, you might want to ‘Improve the awareness of our cosmetics offer by increasing sales of lipsticks by 20% over April and May’.

Be aware that some objectives may conflict with each other and by increasing one element you may decrease another. This is demonstrated in Figure 1 below.

FRAME OBJECTIVES WITHIN A SCOPE

How ‘big’ is the promotion – on how many products is it going to run? Will it be run store wide, ie across every product in the store or at least a number of products?  (The current – and somewhat controversial – Woolworths ‘Same Prices as a Year Ago promotion is an example of this).

Will it run on in a specific category, brand, single product only? (How does this fit with your catalogue strategy, which may be category led or more likely specific single items from selected categories?)

When will it run and for how long? Are there any seasonal impacts to consider? Do you need to ‘discount turkeys at Christmas’ (eg, cut price on Claratyne and Telfast during hayfever season to drive traffic) or are you better off focusing on your range (as opposed to price) or companion selling of these during season since the traffic is there anyway, or on increasing out-of-season product sales?

SET GOALS YOU KNOW YOU CAN MEASURE

What do you already know about the category, brand or product sales? How have past promotions performed? (Be careful here, past promotions may have performed poorly due to anything from wrong mechanic to poor execution). What does your POS system tell you about average product sales levels and purchase frequencies? What have you observed anecdotally, eg on average how many items do shoppers walk out of your store with? What reports are available to you that might help with category or industry averages?

OUTPUTS AS WELL AS OUTCOMES

A promotion is only ever going to be as good as its execution.

Most of the objectives we listed above would be measured as outcomes (ie results). In order to measure a promotion’s effectiveness you also need to review the outputs (ie, what was achieved). This may include things like what support it received (see below, eg how many ads ran, was it in catalogue), how many stores did the promotion run in, how many stores ranged the products on promotion, how many stores ran the point of sale materials (and which ones), how many people were sampled etc.

Mechanics – Make the Punishment Fit the Crime

Promotions generally fall under two headings, Retail Promotions and Consumer Promotions. See Figure 2 below for some examples of these.

The key here is to match the mechanic to the objective. Make the punishment fit the crime.

For example, multibuys like 2fors may drive average weight of purchase (AWOP) and increase your average spend, but depending on the category you may simply be pulling sales forward (pantry stocking – see below) because you decrease frequency. But if it’s a category with expandable consumption (if you promote, they buy more and consume more – snack foods, confectionery and shampoo come to mind) you’re likely to get an incremental sale.

‘Win’ mechanics may drive basket incidence, or potentially category purchase frequency by shoppers loyal to that brand or product, and may increase that brand’s awareness temporarily, but may not do anything for traffic. Which is OK, if your goal is to drive basket incidence.

IMPACTS ON SHOPPER BEHAVIOURS

Based on objectives, and if you execute with mechanics and support per your objectives, a number of different things might happen as a result of a promotion.
Dynamics to look for and  understand include:
* Trade up (which you want)
* Trade down (which you don’t want … shopper planned the purchase and now they don’t need to spend as much, pulling your transaction value down rather than increasing it)
* Pull sales forward or pantry stock: you decrease purchase frequency and increase the time between purchases (interpurchase interval … IPI)
* Decrease transaction value/basket spend: this can occur if your promotion is based around frequency (like those Buy 9 get 1 free coffee cards) which means they come back more frequently but buy less per trip (but overall this should add up to more sales, IF you’re not trading them down whilst they’re there)
* Switch products/cannibalise existing products: sales may increase of the promoted item but decrease of a similar item, so you need to consider the overall category sales not just the promoted item’s sales
* Abandon the sale (shop elsewhere): this happens if you go out of stock on the promoted item or they can’t find it in the store
* Buy in addition/incrementally to the planned item: yes, you want this. Traffic driving promotions hopefully result in impulse purchases during the shopping trip, if you’ve executed your impulse categories and lines right.

So that’s a start on things to think about when designing a promotion or reviewing a promotion pitched to you by a supplier or manufacturer.

Next time we’ll look at what support, advertising & promotion and execution a promotion should get based on its scope and objectives.

Till then!

We welcome feedback on these articles – what you agree with, what you don’t – and what you’d like to hear about. Email us with feedback on enquiries@shop-ability.com.au

Shopper Marketing – A Round Up

The notion of Shopper Marketing is gaining pace, but the discipline is still in its infancy.
Following is a round up on current Shopper Marketing thinking and doing (activity types). We’ll build more specific examples, and report back on, this in subsequent Shopper Marketing related articles during the year.

The category and shopper game has been evolving apace over the past few years, where Category Management is now an adult and has spawned an infant in the form of Shopper Marketing.

CURRENT THINKING

One of the longest standing Category Management conferences in the USA, running for nearly 20 years, last year became the Shopper Marketing Fusion conference – fusing Category Management and Shopper Marketing.

Now we have the Retail Commission into Shopper Marketing, announced last year and spearheaded by Brian Harris (from The Partnering Group – one of the ‘fathers of Cat Man’), Coca-Cola and a number of major US suppliers and retailers. The upcoming April Commission confab aims to come up with a ‘method’ for shopper marketing, in the way the 8-Step Category Management process was developed. And to determine the linkages between Category Management and Shopper Marketing.

In 2007 and 2008 GMA/Deloitte released some fairly comprehensive reports into the state of Shopper Marketing in the USA. They are worth the read. The GMA/Deloitte definition of Shopper Marketing is:
“All marketing stimuli, developed based on a deep understanding of shopper behavior,
designed to build brand equity, engage the shopper (i.e., a consumer in ‘shopping mode’), and lead him/her to make a purchase.”  (Author’s italics).

We question whether retail environments in Australia currently BUILD manufacturers’ brand equity (they might build their own retail brands and private labels if done right, but some promotional and pricing executions of supplier brands in grocery have eroded brand equity rather than built it).

In any case, broadly this definition dovetails with our view that the retail environment should be used for marketing, but that this is in embryonic form in Australia.

Shopper Marketing includes activities currently falling under the current labels of Customer Marketing, Trade Marketing, Retail Marketing, and Account Marketing.  Where Category Management sits is still in debate, as is the role of pre-store vs in-store.  What is commonly agreed is that shopper marketing is shopper centric, with a deep understanding of shopper behaviour at its core.

Using the traditional point of purchase drivers, RSVP3 (range, space, visibility/display, price, promotion, persuasion), the current scope of Shopper Marketing activities vs Category Management might look a bit like this:

Fig 1: Scope of Shopper Marketing  © ShopAbility 2010

HYGIENE VS SELLING

What is becoming evident is that Category Management is effectively a necessary hygiene factor. It makes retail environments easier to shop, but not necessarily more fun or enjoyable and is not ‘marketing’ per se.

EMOTIONAL, NOT JUST RATIONAL

What is also clear from the above, and was underlined at the Shopper Marketing Fusion conference we attended in Florida at the end of last year, is that the current scope of Shopper Marketing activity is promotionally focussed … not ‘all marketing stimuli’ as the Deloitte definition specifies.

What’s missing from the current activity scope is the role of instore experiential marketing – theatre, ambience. The type of stuff that Harrods, Whole Foods and Bristol Farms do so well.

We have an opportunity to ramp up the ‘marketing’ aspects instore and to use the store environment to promote discovery, delight, awareness and education. This means dialling up the roles of instore media, advertising, information kiosks, educative POS, sampling and demonstrations

In other words, many of our retail environments in Australia play to RATIONAL aspects, when what is also required (and generates more sales) is EMOTION.

WHAT’S HAPPENING NOW

So, where is Shopper Marketing activity at and what are people doing at the moment?
Following are some of the takeouts from the conference as to USA shopper marketing activities.

OCCASIONS & SEASONS, NOT JUST PRODUCT & PRICE
Manufacturers and Retailers in the USA work together to build calendars of seasonal, and micro-seasonal, activities. Examples of this include programs such as:
* ‘Spend time around your table’ (Thanksgiving)
* ‘Make it tonight’ (effectively ‘dinner tonight’)
* ‘Superbowl At Home’ (marketing to one of the world’s most watched sporting events)
* Season within season (micro season) eg Season = Winter, MicroSeason = Cold & Flu.

Occasion based solution marketing requires not only catalogue inclusions and often couponing, but also that elements of the ‘solution’ are co-located in store. This is currently mostly being executed via large, themed, offlocation displays (including chillers/frozens) rather than changing category locations or adjacencies (which would be the next step). These offlocation displays are a way for smaller manufacturers to get offlocation all together where they wouldn’t normally have enough scale by themselves. Complimentary suppliers of occasion based solutions work together with specific retailers to achieve tailored programs.

TAILORED, NOT MASS

There is a shift to understanding and marketing to specific trip types eg Dinner Tonight trips, entertaining trips. This is overlaid with what that trip type looks like for different shoppers, based on the retailers’ shopper segmentations.
In the USA, retailers are driving manufacturers to not only use the retailers’ shopper segmentations in framing all instore initiatives (not just range).

IMPACT, NOT JUST ACTIVITY

Because the Shopper Marketing discipline is new (or evolving out of instore promotional activity), there has been a focus on activity but not on measurement.
This is changing, with increasing recognition that shopper marketing activities and initiatives need to be measured not only by the historic profit, sales revenue and product sales volume but also by ‘traditional’ marketing measures such as reach and awareness.
Methods for measuring ROI are being developed and tested in the larger companies.

INTEGRATION, NOT ISOLATION

This is the one that most companies are struggling with because it requires the biggest paradigm shift in thinking & structure.
In a 2009 Interscope/Futurescope study of the top US manufacturers and retailers regarding Shopper Marketing, slightly more than a third (37%) of companies had already established Shopping Marketing functions while 43% of companies are supporting Shopper Marketing within existing functions. The Shopper Marketing department is a year old or less at four of ten (41%) responding companies. Of those with shopper marketing functions, the Shopper Marketing department is a year old or less at four of ten (41%).
Opinion is divided on where the Shopper Marketing function sits. In the Interscope survey results, the SM function currently reports into Marketing (25%), Executive Management (23%), Sales (23%), and Category Management (10%).
Because the nature of the Shopper Marketing function is integrative (blending Marketing, Category, Sales) companies are struggling with processes to resource and embed it.
However, those companies with Shopper Marketing functions reporting into Executive Management are performing better than those where the function reports into either Marketing or Sales.

There is a recognition that shopper marketing is currently under resourced and underfunded and that to realise its potential there needs to be not only dollars thrown at it but a true ‘discipline’ (set of methods and processes) developed.

Interesting times! The next year or two will be critical for the development of Shopper Marketing. We’ll be coming back to you during the year with updates and more details. In the meantime if there’s anything specific around Shopper Marketing  in Australia you’d like to see explored, investigated or discussed, email us enquiries@shop-ability.com.au