Course Correction: Does the Notion of Shopper Marketing Need a Reset?

Pity the freshly degreed MBA just now entering into the CPG business world. They must wonder: "whatever happened to the "consumer" that I studied in Marketing 101?" The rampant growth of the "shopper" marketing nomenclature in the U.S. marketing and retail industry has been astounding, often replacing the consumer discussion in the trade press.The buzz is seductive. Listening to it one might conclude that the Shopper Marketingdiscipline is fully integrated into brand marketing plans, and is a core part of the go-to-marketstrategy for marketers and their distribution channel partners.Unfortunately, it is not so. The fact is that Marketers are struggling with bringing the promise of Shopper Marketing to life, and Retailers are moving in their own, often different, directions.A review of the literature concludes that Marketers have failed to grapple with the fact thatShopper Marketing is a retailing concept, not just a rebranding of old-style consumermarketing. The focus has been on studying their version of "shopper insights" rather thanbuilding programming initiatives that begin with and work backwards from top customerinitiatives.This may have contributed to many Marketers missing a critical trend - the increasing impact and influence that top Retailer's own Shopper Marketing departments are having on retailer-initiated programming.Recent examples cited in the press include: Walmart's "Project Impact" initiative; Walgreens' hiring of promotional/shopper marketing agency Arc Worldwide as AOR; and SuperValu's formation of an in-house Shopper Marketing group. In the new Shopper Marketing world of tomorrow, you had better not bring a program to SuperValu without vetting it through their Shopper Marketing team first.We have watched this shift evolving for some time, but note a dramatic acceleration in recent months. Perhaps this traces to economic pressures, along with the need for retailers todifferentiate themselves on dimensions other than price.The future power of these retailer departments will reshape the Shopper Marketing landscape and will, we believe, necessitate a reframing of the Brand Marketer's traditional marketing plan development as well as traditional sales/buyer conversations.The alternative is that Marketers will be coerced into pre-packaged Retailer programs andleaned on to provide incremental funding of proprietary retailer media to support this activity.For example, one could hardly watch television this past holiday season without seeing someform of Walmart advertising seamlessly including a variety of national brands.We are watching 5 key implication areas for Marketers:Cross-Discipline Restructuring - preparing the organization to facilitate effectivecustomer conversations.Shopper Solution Sensitivity - responding to the fact that Shoppers are store, trip andproblem driven, before they are brand driven.In-Store Media Planning - building a shopper communications strategic and executioncapability.Improved Behavioral Research - that provides real in-store answers to how shoppers shop.Asset Leverage - thinking "outside the retailer box" to identify Retailer and Marketerassets that could be leveraged to their mutual benefit.There are also three key areas of implication for Retailers:Tapping Vendor-Leveragable Assets - national brands have much more to offer thanbudgets.Tearing Down the Walls - shopper solutions require cross merchandising, which, in turn mandates interdepartmental cooperation.Differentiate Yourself - promotional programming built on evergreen events can enhance shopper store appeal.Brand Marketer ImplicationsCross-Discipline Restructuring. At the end of the day, Marketer programs cannot work without Retailer support. The operative word is collaboration: working together with Retailers to talk to their shoppers, not to your consumers.The disconnect is that the traditional sales/buyer approach is ill equipped to handle thisdialog. As the Shopper Marketing discipline gains focus at retail, it is more and more difficultfor traditional CPG sales personnel to leverage the full scope of potential opportunities. In fact,the buying and merchandising departments with whom they interface frequently are not evenin the shopper marketing program development loop. This is resulting in increased costs,inefficiencies and missed opportunities.Dechert Hampe reports on this disconnect in their "Sales Force of the Future" annual survey. Senior manufacturer sales and retail executives were asked to rate the current and future importance of twenty-one key attributes of the selling organization, and how well theythought the sales community is doing at meeting these priorities.The study suggests that the gaps in Consumer Marketing/Merchandising, RetailMerchandising and Shopper Insights are particularly large. All but one of the retailers' ratingsare at 4.00 or higher, while only one manufacturers' rating is over 4.00.The situation is compounded by the fact that retailers are developing their own seasonalcalendars and programming. They are less and less likely to even need what individual CPGbrands are offering.As such, the Marketer's process of initiating Retailer conversations must be changed before the promise of Shopper Marketing can hope to be met. Beyond the importance of understanding shopper motivations and actions, it is becoming just as important to understand retailer infrastructure and how it can be leveraged within a sales support ecosystem.We would also argue that the increasing focus by top Retailers on marketing vs. traditionalmerchandising will necessitate a reframing of the marketing plan development process. Thiswill be increasingly true as research and insights shape the Shopper Marketing landscape ofthe future.This evolution is, in fact, already happening. Forward-thinking Marketers have begun toevolve their Shopper Marketing departments. They are integrating disciplines in order toprovide holistic support to sales and customers. These new "teams" might encompass ShopperInsights, Category Management, Research and In-Store Merchandising groups -- in an effort toput forth a seamless comprehensive selling story, one that is supported by hard data andanalytics.What seems to be missing from this approach is the anointment of an internal resourcecharged with identifying and understanding top retail marketing and merchandisinginitiatives. Working directly with retail marketing and Shopper Marketing teams, these"Directors of Retailer Insights" would provide their sales and marketing groups with ideas asto how to leverage retailer activities to benefit their brands. The objective is to secureawareness and then ownership of appropriate seasonal or strategic programming.Shopper Solution Sensitivity. Retailers know that shoppers shop for solutions before they shop for brands. For example, a meal solution, a budgeting solution, an entertainment solution or even a time solution like "get-me-out-of-this-store-fast." A shopper solution may include a number of brands from synergistic categories -- many times from more than one manufacturer.So the goal of Brand Marketers should be to be part of a shopper solution, one that stems from a Retailer proposition -- one that is unique to that retailer, helps them differentiate their retail store brand, and fits into their calendar planning.As individual brand programs have given way to multi-brand shopper solutions activities,Marketers are discovering that bringing the power of multiple brands together to offer retailera well thought out shopper solution can often reinforce and/or trump a pre-packaged retailercalendar event.This requires that today's marketers become not only retail collaborators, but also categorycollaborators. We like to think of it as moving from the notion of "Category Captain" to"Shopper Solutions Captain."Additionally, utilizing the shopper and budget impact of multiple brands provides increasedfunding clout to bring more ammunition to the table.Shopper Media Planning. It is safe to say that traditional media planners don't think in terms of "in-store impressions" or "shopper CPM." In all likelihood neither does anyone else. And that is a core Shopper Marketing problem, especially as traditional media dollars shift toward in-store Shopper Marketing programs. Our conversations with brand Marketers reveal that few have a real, long-term media plan that includes a retail media strategy.In-store media is the key tactic by which Brand Marketers can control their in-storecommunication. It includes all forms, not only audio and video media, but display and shelfcommunication as well.In this new retail-driven shopper marketing environment, in-store messaging needs to closethe sale and communicate your program shopper solutions in a matter of seconds. Thedissipation of brand advertising in traditional media has resulted in the fact that in-storemessage is becoming the prime consumer and shopper message.It is critical, then, that the translation of brand messaging to in-store messaging be both brandbuilding and, at the same time, purchase motivating. Sometimes this involves a promotional offer, sometimes not. But it always must be crystal clear and telegraphic.Treating retail as media by creating a retail media plan is not terribly difficult. The process can be culled down to three critical components: 1) messaging; 2) targeting; and 3) compliance. Optimizing all three can put you well on your way to driving increased volume, profit and, most important, increasing the return on a substantial component of your total marketing investment.Messaging: Getting the message right begins with understanding that the shopper is adiscretely different person than is your consumer, even if literally she is the same person.(Frequently, she is not). When your consumer enters the store, he or she becomes theretailer's shopper. They are seeking solutions, not brands. Only in a few cases will yourbrand represent the entire solution she's looking for. Targeting. Your in-store display communications can be planned and activated on aregional or by store basis to reflect both business and demographic variables. This includesplanning where, within the store, your brand messaging should be placed. There are dataand techniques now available to help you identify where you should be placing yourspending and focus. Knowing on which regions and stores to focus attention provides aunique opportunity to differentiate brands and drive substantially increased ROI for instoredisplay spending. Compliance. A recent report from the In-Store Implementation Share Group quantified the cost to the industry of poor retail display execution, and it isn't pretty. They projected thenegative impact on CPG companies to be one percent of sales, or $10-$15 billion. Additionally, they estimated that 50 percent of authorized displays are erected either late or not at all, an additional cost of $25 billion. Imagine the revenue opportunity of simply increasing 50 percent compliance to 75 percent?Improved Behavioral Research. There is a clear need to improve the methodology of acquiring real in-store answers as to how shoppers shop. The core issue seems to center around the practice of using surveys, focus groups, shopalongs and other small-scale ad hoc modeling techniques to define shopper behavior.The resultant data can be confusing if not downright conflicting. For example, take thequestion of whether or not CPG shoppers use shopping lists. According to a GMA study just recently issued only 23% enter the store with a detailed shopping list. Almost simultaneously,MARC issued a report that 40% of shoppers say they use a shopping list and IRI issued areport that 64% of shoppers rely on a list. Those are big discrepancies. So who to believe?The point is that the established and experimental practices that are attempting to provideinsight into shopper behavior are fraught with risk. What is needed? More statistically validinformation sources that measure what we would term "on-site insight." The need is tomeasure real shopper behavior, not what people say they do, but what they really do do.Emerging tech-savvy vendors are beginning to offer these capabilities, notably the"ShopperGauge" offering from the RockTenn/BVI partnership, which employs a combination ofin-store video and analytical technology to provide real-time in-store answers.Asset Leverage. An often overlooked shopper marketing strategy involves Marketersconducting a deep-dive analysis of assets that might be embraced by Retailers as applicable totheir in-store strategic approach.In major manufacturer corporations these assets might not be so obvious, sometimes because they are created and managed by departments with no day-to-day connection to the Shopper Marketing group. These could include supply chain capabilities, product-customizationflexibilities, or simply "consumer" marketing assets that weren't originally acquired for thepurpose of shopper marketing. For example, a corporate sponsorship, such as NASCAR, andthe programs developed around it, might not be common knowledge in the ShopperMarketing department, but could have strong Retailer appeal, especially a retailer with theirown racing affiliation. Additionally the use of "value added" media from traditional broadcastor print could be offered to a retailer to support an in-store solution.One benefit of asset analysis to a multi-brand solution approach is that it forces marketers to think "outside the retailer box" and leverage Retailer and Marketer assets that retailers rarely think about as adjuncts to their "merchandising focused" seasonal events.Retailer ImplicationsLook To Vendors For Leveragable Assets. Lest we forget, national brands are the vertebrae in the backbone that makes retailing work. In addition to the shopper equity they represent, brand Marketers have a multiplicity of resources available that rarely hit the retailer radar screen, often tracing to the aforementioned lack of knowledge by the Marketer's own sales force.These include sports sponsorships that can be used to reinforce seasonal promotions, or media buys with value added overlays to drive incremental awareness of in-store promotionalactivities. The well-established brand icon assets like the Pillsbury Dough Boy, or the M&M's characters can also be used to drive shopper engagement. The asset leverage conversationshould become a core component of all sales/buyer conversations.Tear Down Your Walls . Time-starved Shoppers are in stores looking for solutions. They don't think departments first, just like they don't think brands first. Acknowledging this fact requires that retailers facilitate collaboration between departments. As one leading retail spokesperson said: "Meal Solutions are a core shopper appeal. And those solutions, by definition require cross-departmental merchandising. It is no longer acceptable not to have a clear process in place to cross merchandise solution bundles." Retailers must encourage and motivate their buyers and merchandisers to be responsible to shoppers first, not to their own category needs. This may require a major restructuring and retraining effort.Differentiate Yourself . Retail promotional calendars run the risk of all looking the same. Back-to-School is Back-to-School for everybody. But does it have to be? The challenge is how to make seasonal programs uniquely appealing - how to use them to extend and support your core strategy and point-of-difference. Walmart is doing an excellent job of tying their seasonal programming back to their core message of Save Money. Live Better. For example their "Game Time" theme bridges the full potential of the football-viewing season.These strategies should flow from the marketing department, but then be communicatedthroughout the organization and be translated into action across all appropriate departments.Seasonal vendor conversations need to start with a communication of what the season meansfor your store and how you are using this programming to communicate your point-ofdifference.The Emerging FutureThe evolution of retail focus from a "stack-it-high-watch-it-fly" merchandising to a "shopper solution" marketing orientation is prompting the need for Marketers to view in-store real estate as a "branding" opportunity. "Retail strategy" is no longer a contradiction in terms. Marketersneed to evaluate in-store communication as media and apply the same rigor to it that theyapply to traditional media planning.Shopper Marketing in the future will be a marriage of Brand, Shopper and Retailer Insights, that leads to a leveraging of combined Marketer and Retailer assets, charged with a major dose of creativity. This process will achieve success via category and occasions solutions, innovative programming and measured results.However, the need to provide multi-disciplinary shopper insights married with individual retailer knowledge, means that Shopper Marketing departments can no longer stand on their own, and expect to get results.The good news is that all of the above is "marketplace ready." Retailers are more eager than ever to work with manufacturers to better understand the impact of in-store marketing programming, to share data and analytics and to develop mutually-beneficial shopper solutions approaches.With only a bit more course correction on the part of both parties, the promise of "shopper marketing" can become fulfilled.The bad news, for our entry-level MBA, is that marketing is no longer an ivory-tower "consumer" discipline. It requires practitioners to get out into stores and really understand what's going on with shoppers. If that's not what you signed up for, you may be in the wrong line of work.

Course Correction: Does the Notion of Shopper Marketing Need a Reset?

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