Marketing to Value Shoppers

Call it the "pause" before the purchase – that moment when a value shopper asks herself if she really needs the item. That pause has been significant for some time now.Why? Because the Great Recession, although officially over, has impacted the majority of American shoppers' behaviors and attitudes. Thom Blischok, chief retail strategist at Booz & Co., calls it a "fundamental economic transformation." In its 2012 "Four Forces Shaping Competition in Grocery Retailing" report that included a survey of 2,000 grocery shoppers, Booz & Co. reported that approximately two-thirds of newly frugal shoppers said they "will not revert to previous behaviors" as we pull out of the recession (see image attached at right).Today's value shopper should not be defined by household income, says Larry Levin, executive vice president, general manager, consumer & shopper insights, SymphonyIRI Group. "It's startling that a lot of clients still use income as a segmentation technique," he says. "We found that 30% of people who make more than $100,000 are struggling."Regardless of income, shoppers are visiting more stores to get the best deals, curtailing trip frequency, learning to live with less, spending more time preparing to shop (e.g., reading circulars, going online, clipping and printing coupons, making lists), comparing prices online, purchasing groceries online, buying private-label products, visiting dollar stores and cooking at home more often.And these changes are not proving to be temporary. Although consumers had a bit more disposable income in the fourth quarter of last year, Blischok says, "I don't see any appreciable change in consumption for the next two to three years."Bottom line: The value shopper (at all income levels) is here to stay.Traditional Value ShoppersFor some, value still comes down to cost. Jeff Skolnik, executive vice president of shopper marketing at Blue Chip Marketing Worldwide, calls this consumer the price shopper. "Price is her bottom line," he says. "She uses coupons religiously and only shops where she believes that her dollar will go further."These traditional value shoppers look for everyday low prices and visit stores like Walmart and Dollar General. They purchase store brands to save money, switch brands to find a better deal, shop for items that can create the most meals at the lowest total cost, and coincide shopping trips with paydays or when SNAP (Supplemental Nutrition Assistance Program) benefits are received. (As of November 2012, more than 47 million people in the United States were participating in SNAP, according to the Food Research and Action Center.)Mike McMahon, president of Spire LLC, says SNAP shoppers have $70 billion in spending power and that these shoppers see brands as a way to reward their families "and, emotionally, themselves because they cannot afford more clothes or PlayStations or iPhones. For a brand not to consider this group a viable target is to ignore a potentially large growth opportunity."Shopping 'Smart'For many others, value shopping is going beyond price to stretch their dollars and be savvy about purchases. Dollar stores and supercenters continue to win shoppers from other CPG channels; SymphonyIRI reported that share gain was up 1.3 for dollar and 1 for supercenter.Levin, citing an increase in the number of younger and higher-income households visiting dollar stores and Walmart, says "it's now fine to drive one's Mercedes to a dollar channel." Skolnik notes that Dollar General reports its fastest-growing segment is those making more than $70,000 per year."One of the myths is that people want to be covert about shopping smart," says Suzanne Quint, publisher of Time Inc.'s All You, "but we've found that the majority of women shop smarter because they want to, not because they have to, and are proud to do so."Three ArchetypesWith a tagline of "Enjoy life for less" and geared to the value-driven woman, All You refers to its readers as smart shoppers. In All You's recent online survey of 2,600 women ages 21-59, conducted with Nielsen and Insight Strategy Group (see graphic attached at right), three archetypes of smart shoppers emerged:The super saver (38% of smart shoppers) was born and bred to save, is seen as a social influencer among friends, and uses Facebook to research and share shopping deals.The committed convert (25%) is motivated by the economy to shop smart, saves to splurge on family and herself, reads online reviews, likes using coupons, and says good deals help justify her spending.The strategic splurger (37%) buys luxury brands for less and tends to splurge, will spend more to save time, likes to keep her savings a secret, and is tired of an inbox full of daily deals.Brand loyalty is important to all, with 94% reporting they look for ways to buy brands they love at the best price. Technology aids them in their quest; 70% check deal websites or emails on a mobile device daily and 83% forward deals to family and friends.All You is a monthly publication, available exclusively in Walmart nationwide or by subscription, and will expand distribution to additional retailers beginning with its June issue. The company would not disclose which retailers. To further its cause, All You in March kicked off its "America's Smartest Shopper" contest nationwide. Consumers submit a 60-second video sharing a smart shopping strategy for a chance to win cash prizes and a profile in the magazine.Understanding the SegmentSpire's McMahon says that for brands and retailers to really understand value shoppers and successfully market to them, they have to go beyond simply looking at data. "Conduct in-home ethnographies and spend time in a value shopper's home," he says. "Discuss their strategies for shopping and the role of brands. Then go shopping with them and see their behavior in the store."Brett Townsend, director of shopper insights, PepsiCo, says it's vital for marketers to not feel sorry for nor talk down to price shoppers. "Show them how you understand them and are helping them provide for their families with dignity, and your message will resonate."Later this year, PepsiCo's Frito-Lay will bring a program to Dollar General based on the insights that no matter how much a person is struggling financially, he/she always knows someone under even more financial pressure, and that national surveys show low-income households donate more to charity than higher-income consumers. "Yet, these shoppers don't always have the extra money they want to donate," Townsend says. "So we developed a program where if they purchase from a variety of Frito-Lay items, we donate a PepsiCo food item to a designated charity. We've given them the opportunity to help others simply by making purchases they normally make, and that really resonates with them."Connecting With the SegmentPre-trip planning can be essential to value shoppers, so marketers need to meet them early on the path to purchase. This could be through print, radio, digital, mobile, online, store circulars, direct mail coupons or coupons clipped from a magazine/newspaper, says Colin Stewart, senior vice president, AMG Strategic Advisors.To make a connection, "you need to show that you get her and her sensibility," says Quint. She points to a Cool Whip Frosting ad from Kraft Foods Group in All You's February issue as the perfect creative to attract smart shoppers (see image attached at right). Using the theme of "So good, you'll look for reasons to celebrate," the ad showed a chocolate cake decorated with the words, "Took it back without a receipt." A Dove ad from Unilever in the same issue used testimonials from magazine readers and encouraged trial with a $1 coupon. Dove was able to tap into the power of All You Reality Checkers, a social community of more than 50,000 engaged readers who test products and share their reviews through social media.Lower prices and P-O-P activity can help woo shoppers who plan less and make decisions in-store. Communicating value claims at the shelf can also be effective. Take two same-priced laundry detergents, one a name brand and one a discount brand in a larger bottle. A value shopper may think the discount detergent is the smart buy, says Blue Chip's Skolnik, but by "communicating at the final moment of truth the fact that the cost per load is actually less expensive for the premium concentrated brand, a value shopper will be more likely to trade up."McMahon says ConAgra Food's Chef Boyardee brand does a good job showing how shoppers can stretch purchases by making multiple meals from a few ingredients. "Many manufacturers have taken products that might typically be a meal unto itself and developed a recipe strategy to stretch the meal as well as broaden appeal across multiple consumer segments."

Marketing to Value Shoppers

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