ShopAbility discuss the current status of the Shopper Marketing function in the USA vs Australia, subsequent to attending the first Shopper Marketing conference in the USA and a the release of a number of shopper marketing discipline related surveys and initiatives. For Retail World Magazine.
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.
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 firstname.lastname@example.org