The Hub: Tier-Two Retailers

As more consumer packaged-goods companies focus shopper-marketing resources against the top 6-8 national, "tier one" customers, there has been a sudden resurgence to find opportunistic volume among "tier two" customers.Regional grocery chains such as Stater Brothers, Wegmans, Hy-Vee, Wakefern/ShopRite, Harris Teeter, Giant Eagle, and Roundy's suddenly are emerging as the new darlings of shopper marketing. It is not difficult to understand why; results consistently exceed expectations for sales dollars, units moved, and feature/display.These tier-two retailers provide much stronger gives and gets, deliver strong return-on-investment, and work with manufacturers and brands in true collaborative partnerships. However, this is not a recent phenomenon. Tier-two customers have a long history of delivering strong shopper-marketing performance.And yet, the natural tendency for most companies is to bundle together all tier-two customers as one large homogenous group of retailers. It's just easier to deal with one classification and not worry about Robinson-Patman issues. Shopper-marketing staff support at headquarters may be limited or overtaxed, working budgets may be finite and fixed, and the actual sales calls on these customers may be indirectly controlled by a broker rep rather than a national account manager.Besides, it's not easy to step back and define how the resource allocation issue should be resolved. As a brand manager, it's challenging to field requests from the sales teams without a specific channel strategy to identify which classes of trade represent higher brand or business priorities.As a sales team leader, it is difficult to plead your case for shopper-marketing funds when you don't know the brands' marketing objectives or have access to shopper-marketing managers who can help connect the shopper insights for a specific retailer. There is also the frustration of seeing the volume opportunity, wanting to realize the volume, but being unable to assist, either due to lack of time or funding.Consequently, tier-two customers fall into the abyss of limited-menu marketing support, trade marketing-funded shopper-marketing support, or no shopper-marketing support at all. It is certainly not intentional; it just happens. The irony is that these tier-two customers routinely deliver the highest variable margin contributions and greater opportunities for brand and category growth. The solution can be found in three key action steps: 1) Forward planning; 2) Investment criteria; and 3) Empowerment.Forward Planning. Start now to solicit 2012 action plans for select tier-two customers. Provide the sales teams with clearly defined templates with measurable performance inputs to enable the ability to scorecard the proposals in rank descending order.Investment Criteria. It's not just a matter of return-on-investment; other qualitative factors such as supporting key brand initiatives, new brand launches or line extensions, and driving trial against targeted shopper segments, also carry a weighted factor in the evaluation of where to allocate shopper-marketing funds. For example, increasing household penetration among Hispanic families may influence a higher weighted factor in the consideration set.Empowerment. The toughest challenge for brand managers is to empower the sales teams to get it done while complying with the overall brand directives and brand essence. With a good communication process to keep brand management or shopper-marketing managers informed, this can certainly be accomplished.From a pure brand investment perspective, a shopper-marketing dollar invested in select, tier-two retailers is guaranteed to deliver better results than a dollar invested in straight trade marketing, advertising, or national consumer promotion. It is not uncommon for select tier-two retailers to deliver 5:1 return-on-investment, or 3:1 incremental return-on-investment.The key to success is selective shopper-marketing investment based on solid rationale. One cannot invest shopper-marketing dollars against tier-two retailers on an ad hoc basis. There must be method to the investment, a strategic vision, historical performance indicators, and reliable retail activation execution.Surgical Precision RequiredHere are some ways to invest against tier-two customers with surgical precision:Geographic Concentricity. Establish beachheads of brand strength (usually strong CDI/BDI clusters) and focus shopper-marketing dollars against total clusters. Once these clusters are firmly entrenched, expand support gradually to surrounding markets and tier-two customers in a Doppler effect. Think of how Walgreens established beachheads in Southern California, Texas, Illinois, and Florida -- then expanded its stores in a concentric circle until it became one enormous national chain.Targeted Shopper Segmentation. Examine the goodness of fit between tier-two customers who identified specific shopper segments and the branded target consumers. Where there is evidentiary proof that targeted marcom messages evoke purchase behavior, be the bulldog on the porkchop.Extraordinarily High Gives and Gets. Monitor performance among certain tier-two customers over time and you'll discover similar results again and again. This is no accident. It happens by design because this handful of customers consistently deliver solid in-store execution, compliance to features/displays, and order enough product to support retail activation.Category Focus. If your brand category is among the customer's top 3-5 categories-of-focus in the coming year, it only makes sense to share the same category growth objective.Pilot Programs. Smaller regional chains often make ideal test markets for concepts that involve new shelf merchandising, loyalty programs, and innovative ways to improve in-store shopping behavior. These pilot programs may involve new technology with smart phones, opt-in online advocacy, or cause-marketing outreach tied to purchase.Early Adopters. Find the short list of risk-averse early adopters. These are the buyers willing to try something new, and to break what's not broken in an attempt to drive incremental sales. Your sales teams know who these buyers are -- they have "Beat Walmart" tattoos.Of course, there will always be a need for turnkey menu-marketing programs. Consistent brand equity building is the primary reason, but others include leveraging national consumer promotion platforms or key branded drive programs; seasonal themed events; sports sponsorships, event marketing; new product launches or new line extensions; and brand activity focus.Is menu marketing the "one size fits all" solution for tier-two customers? No. It is an option, and an affordable option, but there will always be select tier-two customers worthy of shopper-marketing funds above and beyond menu marketing.Thirty years ago, as an impressionable assistant brand manager, a wise vice president of marketing told me that "a marketing dollar is a marketing dollar -- use it wisely." Those words ring truer today than ever before.Don't dismiss tier-two customers or lump them together under menu marketing. Spend the time to identify true opportunity volume and invest with surgical precision. Start now to solicit proposals from field sales -- you just might be surprised to rediscover volume opportunity among tier-two retailers.Terry Mangano is executive vice president of Catapult Action-Biased Marketing, based in Phoenix. Previously, she was a strategic business unit team leader for Miller Brewing Company.

The Hub: Tier-Two Retailers

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