Retail as Collaborative Marketing Medium

The combination of lifestyle fragmentation, retail consolidation and a strong economy have created a new marketing world. Marketers, retailers, agencies and P-O-P producers must understand those changes and react to them to continue to be successful.That's the warning from Mel Korn, ceo at Saatchi & Saatchi Collaborative Marketing in New York. Korn will present a keynote address on "The Rise of Retail as a Collaborative Marketing Medium" at The P-O-P Show /Chicago at 9 a.m., Thursday, Nov. 18, at Navy Pier in Chicago. To provide some understanding of Korn's topic and offer perspective on the proposals he will make in his speech, P-O-P Times caught up with Korn to ask him about his ideas.P-O-P TIMES: What factors in the way consumers live have led to this change in the retail landscape?KORN: There has been a sea change in the way consumers live and shop. Their lifestyles have become fragmented and they have speeded up on the social speedometer. The way they receive information, the amount they receive and the way they communicate have become a time warp. Years ago, three networks reached all the eyeballs in the country. That's not the case any more. There is a ton of stuff that pulls consumers' attention in different directions. As a result, they have limited time and want solutions to their problems quickly and efficiently, and they want products to provide those solutions in an economical manner they can understand.P-O-P TIMES: How has consolidation affected retailers? Hasn't it made them more efficient by pulling customers to them rather than the smaller competitors who are now gone?KORN: There are economies of scale at work to some extent, but at some point, after several years of consolidating out local competition, there are no more cost efficiencies to be gained to drive the top line of the business. They need to create marketing effectiveness to raise profits, and that requires stores to shift from being merchandisers to being marketers. But most of them don't have that expertise.P-O-P TIMES: How does that affect the manufacturer?KORN: The manufacturers are now facing powerful leverage rather than a little corner store. And it's harder for them to justify raising prices to offset their own additional costs because inflation is under control. That makes people more aware of rising prices. At the same time, the easy cuts have been made to eliminate costs from the operating systems. So manufacturers have to find other ways to make a profit and be accountable, at the same time that larger retailers are demanding more buying power.P-O-P TIMES: How can retailers and manufacturers work together to overcome these challenges?KORN: They have to realize that retail stores no longer are the point of distribution for SKUs. They now have to use the retail environment as a collaborative marketing medium through which they have access to consumers. And that means they must treat the store itself as the first point of contact for product messages and ensure it offers solution-driven ideas that increase consumption.P-O-P TIMES: How will they accomplish that?KORN: A lot of things will happen to lead to it. One of those will be a focus on receiving measured performance and results from suppliers rather than simply paying for services. And it's beginning to happen already. For instance, [Procter & Gamble] recently announced it had changed its compensation method for its agencies, going from commission to a fee plus incentives based on performance. Manufacturers are going to put more emphasis on receiving ideas that work so they can get their products to the marketplace more quickly and attract more attention once they're there.P-O-P TIMES: What will that mean for in-store merchandising options?KORN: It essentially will unshackle everyone and make them think more about where the best place to effect consumption of the product will be. And I think that will lead them naturally to realize the impact that takes place in the store. They'll have to take a closer look at the point closest to where that purchase actually takes place. That should open the opportunities for more P-O-P options.P-O-P TIMES: Will that increase the amount of marketing budgets devoted to P-O-P?KORN: It should. I believe marketing and advertising people will have to begin to apply the amount of creative thinking that they now put into a 30-second commercial to the three seconds they have to direct their message to the customer in the store. Marketers will have to realize the value of those three seconds and the impact they can have. And a lot of agencies will have to wake up and realize that results count, not the media used. Too many of them want to spend their time creating 30-second TV commercials, and asking them to work on an in-store piece is like a slap in the face to them. But that in-store communication is vital, and everybody in the chain has to wake up to that fact.P-O-P TIMES: What will that in turn mean for P-O-P suppliers?KORN: They will have to become just as focused on being solution-driven and how they present their medium within the store. The key is to think in terms of "in-store communication." The suppliers have to stop looking at themselves as print shops and realize that they are becoming a primary communication medium. They need to upgrade their technology, their graphics, their copy presentations, every aspect. The pieces they create cannot be secondary or passive. Everything will be more active.P-O-P TIMES: Do you think these changes will happen quickly?KORN: They are happening now. The landscape has already changed and continues to do so. Manufacturers and retailers have to acknowledge that, figure out how the changes are affecting the people in their audience, and then determine how they should deal with it. The bridge to the future is labeled "marketing," and all three elements in the market -- consumers, manufacturers and retailers -- will have to walk hand-in-hand over that bridge together if they are going to communicate. Those who understand the need for that collaboration will thrive.

Retail as Collaborative Marketing Medium

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