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SHOPPER MARKETING
SHOPPER MARKETING
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hopper marketing is taking our companies in the right direction at least thats the perception among manufacturers and retailers who are actively practicing shopper marketing. According to the Promotion Marketing Associations (PMA) 2nd Annual Shopper Marketing Study, investments in Shopper Insights capabilities are clearly paying off for the industry as half of the companies practicing shopper marketing feel they have a very good understanding of their shoppers, representing a significant increase from last year.
Despite this encouraging news, 82 percent of the industry still feels further improvement in retailer-manufacturer collaboration is needed. There was little difference between retailers (78 percent) and manufacturers (87 percent) in their expression of this need. The good news is that survey respondents have indicated there are three areas that, if improved, will lead to more effective shopper marketing collaboration between manufacturers and retailers. The three key areas are: 1. Common metrics, or lack thereof 2. Post promotion evaluation 3. Longer-term joint planning
Rick Abens
Director, Marketing Analytics, ConAgra Foods, and VP, Research, for the PMA
Rob Fields
Director of Member Development, the PMA
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With this in mind, more companies could potentially see ROIs in the range of 5-to-1 that the best practitioners are achieving. Isnt that a good investment in our economys future, President Obama?
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Retailers are using shopper marketing to increase store relevance to shoppers as a way to stimulate profitable growth. This required a strategic shift from marketing categories to marketing to targeted shoppers, a strategy that originally was adopted as a defense for price competition, especially from the value retailers. On the other hand, manufacturers focus on building brand equity and ensuring a strong relationship with their retailer partners. Certainly, this is critical for companies that build brands through retail. However, this focus can also set up frameworks wherein success is measured in terms of retailer cooperation, with less emphasis on shopper satisfaction. Put another way: Marketers try to produce shopper insights and marketing programs that are persuasive to retailers, whereas retailers want shopper insights and programs that delight their shoppers. There are a few reasons manufacturers were slower to adopt shopper marketing practices and are still more focused on their retailer customers than on the shopper: 1. Manufacturers have more confidence in increasing or decreasing advertising or price because they understand the impact of those marketing mix elements from years of measurement. 2. Manufacturer sales teams historically were incentivized based on units sold. 3. Some manufacturers marketers are not as well-versed on the customer business issues and have fewer comparable benchmarks to help them understand what to expect as the practice grows. 4. Manufacturers also required a strategic infrastructure shift in order to adapt to an unprecedented amount of collaboration between their own marketing and sales teams, which is necessary for planning shopper programs.
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Interestingly, awareness of program and brand tied for second place among retailers, reinforcing their emphasis on shopper marketing as a strategy to build equity and brand differentiation.
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Extremely / Very important 73% 68% 68% 65% 64% 59% 58%
Excellent / Very good performance 34% 30% 34% 22% 28% 26% 34%
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TOWARD SOLUTIONS
Support through shopper insights
fforts to improve collaboration are at least moving in the right direction: Nearly 40 percent of retailers are satisfied with the support they get from their vendors, a 5 percent increase compared with 2008. And 32 percent of manufacturers are satisfied with the support from their customers, which is a huge 12 percent gain over last year.
2009
2008
2009
Retailers Manufacturers
Improved shopper insights are a leading contributor to better collaboration. Both retailers and manufacturers ranked shopper understanding as the most important success factor (81 percent reported as very important). In fact, since last years study, the percentage of companies reporting feeling good about their shopper insights improved from 40 percent to 49 percent. Clearly, this improvement is the result of prioritizing shopper insights as an important business function and supporting it with the appropriate resources. Retailers have increased their shopper marketing staffs by 60 percent over the past year, and manufacturer staffs are 23 percent bigger, according to the latest Grocery Manufacturers of America/Deloitte Shopper Marketing Study.
2008
In order to improve retailer/manufacturer collaboration, four areas must be addressed: 1. Closer alignment of objectives and mutual respect for each others KPIs. It will continue to be difficult to achieve true collaboration if both parties have different success metrics. 2. Upfront agreement on post-program evaluation criteria, and a willingness to measure and share results. Both partners must commit to sitting down and reviewing the good and bad aspects of programs. 3. Processes for applying the learnings for future program improvement. Both retailers and manufacturers must also commit to cascading learning throughout each others organizations to best apply the knowledge and experience theyve gained from working together. 4. Increased commitment to joint long-range planning. Neither retailers nor manufacturers turn on dimes, so its only prudent to get well ahead of activation deadlines.
Call to action
Shopper marketing promises great returns for the entire industry. Retailers are effectively differentiating their banner, manufacturers are extending brand equity right up to the first moment of truth, and shoppers are enjoying a better retail experience. Those that collaborate better and implement measure-learn-change processes are much more likely to be successful.
For more information on the PMA and its Shopper Marketing Center of Excellence, please visit www.pmalink.org or call (212) 420-1100.
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