CPGmatters: Can Mobile Marketing Rejuvenate Trade Promotions?
By Al Heller
Through a special arrangement, presented here for discussion is
a summary of a current article from the monthly e-zine, CPGmatters.
The
rising discipline of mobile marketing brings with it a chance for retailers
and CPG suppliers to usher in a new consumer-centric era of compelling, creative
trade promotions that step up discounts as individuals engage more with specific
brands and stores.
Buy more of a brand, or shop more at a store, or use a cell
phone to pass along articles about, say, fabric care from a detergent manufacturer,
and a consumer could receive extra savings rewards from manufacturers and retailers.
How
cool is that? It could be mighty cool for brands that market directly to consumers’ cell
phones as they build their shopping lists or are actually in the stores.
"Tech-enabled shoppers of every generation, but especially younger shoppers,
use cell phones and PDAs increasingly to buy smarter and save. The action is
in the store. That’s where to communicate because conventional media
are fragmented to the point where those buys are less effective for brands," Wayne
Spencer, senior vice president-business development, Synectics Group, told CPGmatters in
an interview.
With mobile trade promotions, he said, the industry is starting
from scratch with a clean slate to distance itself from the wasteful, sub-optimal
merchandising patterns of the past.
"It’s critical that retailers and CPG collaborate to reach a single
sophisticated view of the truth that both sides can mutually act on. This shared
view fosters a collaborative environment, which will inevitably result in incremental
profits and volume on the in-store merchandising investment," Mr. Spencer
said.
"If we do this right, mobile marketing will probably rejuvenate trade
promotions. If we don’t, CPG margins will continue to erode. We need
to move far away from where trade promotions have devolved. Consumers are bored
to death with promotions today. They’re zombies who look for the lowest
price. This doesn’t
help the retailer or the brand," he insisted.
Here is a good example of
trade promotions in the future: Blended promotions between name brands and
complementary private label products, such as pasta and sauce, or meats and
breads, or milk and cookies. In Mr. Spencer’s
view, "brands
need to realize that private label isn’t going away, and stores need
to maximize category penny profits with the correct blend of brands and private
label. They need to co-exist, augment each other, and focus on serving consumers
with the shared goal of enhancing their in-store experiences."
"The funds for mobile marketing and social networking [today] will most
likely come from the advertising/consumer marketing budgets, rather than from
trade promotion budgets, because CPG controls less of the latter than they’d
like," he added.
Discussion Question: How do you think mobile technologies will affect trade
promotions? Do you see retailers and manufacturers recognizing mobile as an opportunity
for beginning a new era of collaboration "from a clean slate"?
Mobile technologies will revolutionize shopping behavior. It’s up to marketers to determine how they will leverage new opportunities or play catch up for the next ten years. If every CMO had an MM, “mobile mentor,” companies could develop a strategy that anticipates and moves in harmony with what is new, mobile and influential.
It is more likely that there will be Monday morning quarterbacking in real time. If someone is willing to refer to consumers as “zombies looking for the lowest price” it’s an indication of how little regard there is for the sophistication that is building on the consumer side of the cash register. That attitude will keep the company in the dark, perhaps putting them in the cemetery of retailers that used to be.
Mobile and social marketing are just new means of reaching customers. In their respective eras, “revolutionary” mediums like television, radio and newspapers before it served the same purpose. As Marshall McLuhan reminded us, the medium is the message meaning the message/pitch should be adapted to each medium to be most effective (don’t sell/pitch on the mobile the way you sell on the web, don’t sell on the web the way you sell in print, etc…). BUT…the end goal of reaching out and engaging customers hasn’t changed all that much!
I would also argue that the fundamental value proposition of an in-store experience and in-store merchandising hasn’t also changed. A large majority of purchase decisions are still made at the point of purchase and the wise retailer will undoubtedly invest in mobile and social marketing but continue to focus on in store promotions and the point of sale shopping experience for the customer. The more things change, the more they stay the same.
Mobile Marketing might be part of an answer to rejuvenate trade promotions, however, in any case trade promotions are very unprofitable and non productive for many consumer packaged goods (CPG.)
The fact of life is that trade promotions have become a necessary evil for many CPG because retail chains often demand a significant trade spend for CPG to remain on the shelves and in the planograms (POG.)
While most trade promotions are based on price reductions many CPG and retailers are not served well by promoting all CPG the same way. It’s like square pegs in round holes and a waste of money for many CPG. Ironically, the cost of wasteful trade spending actually affects the everyday cost of CPG to the consumer.
For those shoppers who embrace smart phones, mobile apps could help close the loop between trade promotions in the store and direct-marketing-like personalization.
The potential is intriguing; the methods are still being invented and worked out. Some mechanisms are fairly easy to accomplish–such as placing QR codes (2D bar codes) on posted signs so shoppers can capture offers with their camera-enabled phones for later redemption by scanning the phone’s screen at the checkout. A clunky method, but it works today.
Other, permission-based interactions promise more automation behind the scenes, such as close integration with frequent-shopper card programs for targeted offer distribution. Some offers may be communicated in the store using SMS messaging (“texting”), triggered by the phone’s proximity. Apps incorporating electronic coupon “wallets” are likely to follow.
For higher-consideration purchases, shoppers are beginning to use apps for on-the-spot competitive price research. This may affect how some trade deals are structured. Some manufacturer-funded price incentives may be offered for very brief durations – like Black Friday only, or until the first 50 units are sold in each store.
It’s very early in the game yet. The challenge for brands may be to sort out which mobile mechanisms can best support their trade marketing goals, and how to configure them for greatest value.
It is early days in developing mobile marketing strategies that generate real value. The leading brands and retailers are working with social media experts to understand how mobile marketing can work best for them.
It is a new day, and companies are in many different places on the learning curve. Loyalty card tie-ins for retailers and shopper opt-in promotions for brands are being evaluated often with an anything might be possible approach. But there is white space in finding the right resources and implementing actionable programs. New collaboration is possible, but good shopper insight data is needed to optimize. There is much to be learned in a short time frame. But most signs suggest new MM approaches will become the better approach for consumer centric results that build loyalty for brand and retailers.
Not to generalize too much here but I think the key is understanding that while mobile is a powerful new channel, it’s still merely another channel. And if all we do is take failed media approaches from one channel and push it down to mobile, it won’t be any more effective. In fact, they could be tremendously more annoying. None of us need more interruption.
I think the winners in the mobile marketing game will be those brands that can achieve one or both of the following:
1. Help consumers filter out irrelevant marketing information and offers. Or conversely, to receive more relevant offers.
2. Help consumers make more informed, responsible and satisfying purchases.
In this way, mobile becomes a pull channel as opposed to a push channel as many are looking at it right now.
This statement, “new consumer-centric era of compelling, creative trade promotions that step up discounts,” presages the continuing idiocy of thinking shopping is all about “discounts.” Trade funding is all about moving profits from the bottom-line of suppliers to the bottom line of retailers, PERIOD.
Until retailers (and others) get more serious about understanding exactly how shoppers shop in their stores, there will continue to be a barrage of “mud on the wall” research, where many things will be tried and some will be more effective than others. Since price is nearly certain to be the focal component of all this research, PRICE will be credited for any positive effects. And retailers will be at the fore to insure that that is the conclusion.
Today the issue with mobile marketing is its lack of scale and there are several factors limiting the growth. First of all, until retailers acquire capable in-store networks (WiFi, Bluetooth, nfc) the ability to effectively communicate with consumers through mobile devices will remain inconsistent. Secondly, more thought has to be given to the role that mobile plays within digital framework rather than delivering existing content over a mobile device.
Mobile gives retailers another avenue to engage consumers as individuals, to better understand the in-store shopping experience and deliver relevant information and offers about products and services a customer is interested in.
Today’s opportunity is to partner with retailers to embrace the future and learn what works and what doesn’t. As far as moving volume is concerned, those days are yet to come.
We keep hearing about mobile marketing and the revolution that is coming for, what, about 10 years now. Not many CMOs I know are even considering it.