CPGmatters: Retail Commission Aims to Enhance Shopper Marketing
By
Dale Buss
Through
a special arrangement, presented here for discussion is a summary of a
current article from the monthly e-zine, CPGmatters.
CPG
companies and retailers are more interested in – and more experimental
with – shopper marketing than ever, but so far their successes have been
relatively hit-or-miss. The goal of a new industry-wide initiative called
the Retail Commission on Shopper Marketing is to come up with a retailer-driven
model that will make shopper marketing effective for manufacturers and
shoppers as well as retail chains.
Led
by charter members Coca-Cola Co. and 10 major chains, and advised strategically
by the Partnering Group and the In-Store Marketing Institute as well as
by a number of other CPG giants, the commission was launched last spring.
Members aim to establish some specific shopper marketing pilots by this
spring as well as unveil some of their initial conclusions, best practices
and guidelines at the In-Store Marketing Summit, to be held at McDonald’s
headquarters in Oak Brook, Ill., in April.
Some
of the industry pioneers who initiated category management a generation
ago now are behind the creation of the Retail Commission. But unlike the
highly successful practice of category management, retailers in general
haven’t initiated a thorough-going approach to shopper marketing.
“Shopper
marketing primarily has been on the manufacturer side,” said Brian Harris,
president of the Partnering Group, based in Cincinnati, and one of the
fathers of category management as well as of the new shopper marketing
initiative. “Manufacturers have been bringing in creative and good ideas
to retailers for several years, but retailers are overwhelmed – they don’t
know where shopper marketing goes or where it fits.”
“To
change that, we had to get retailers to put their stamp on [the commission],
otherwise there would be lots of wasted money, and disconnects. Retailers
needed to understand it and shape it and feel good about it,” said Mr.
Harris.
Coca-Cola
has been active already in ramping up shopper-marketing initiatives with
the likes of Meijer, the Grand Rapids, Mich.-based mass discounter, and
other retail chains. Kraft also has been proactive about shopper-marketing
experiments with Meijer – one of the retail commission’s charter members
– and with other retailers.
But
so far, effective shopper marketing collaborations like these have been
the exception rather than the rule.
The
problem often begins with a disconnect between shopper insights and shopper
marketing. “There’s a lot of unproductive work being done, when it’s not
plugged into a comprehensive model of how shopper insights should be gained
and where the biggest gaps are that need to be bridged,” Mr. Harris said.
“The
trend is to budget more money into in-store activities and influencing
shopper behavior. That’s great for retailers, but if there isn’t a disciplined
approach, [shopper marketing] will be a money pit. Investments keep getting
bigger, and you can spend a lot of money – poorly – if you don’t understand
that and don’t have a platform that’s manageable.”
Retail
Commission founders want to make the entire discipline of shopper marketing
more reliable and repeatable.
“We’re
trying to convey to retailers the notion that there’s lots of energy, creativity
and resources on the manufacturers’ side that can be tapped into if [retailers
and manufacturers] would get some thought alignment on this issue,” said
Steve Frenda, managing director of strategy and development for the In-Store
Marketing Institute.
Discussion
Questions: What are the main hurdles to improved in-store shopper marketing?
What can vendors do? What can retailers do?
Being the President of Loyalty 360, we are seeing great initiatives from EYC, Clear Cell, dunnhumby, Terradata, Group Aeroplan, Comarch and others. Very exciting times. It’s a great time to be a consumer.
Perhaps the biggest challenge for retailers and manufacturers is not in the “lack of data”–there is a wealth of it, and as authors have pointed out, it is getting to be increasingly expensive. The issue that will be addressed by the best of firms will be in “Data Integration” practices.
Retailers have to know more than just consumer “behavior” and “attitudes” as they occur in their own stores, they have to have that consumer and shopper insight as it applies to their competitors, as well. They have to “see and listen” in a broad fashion.
Some will get it, and lead with innovation. Some will mimic and follow along. Some will “control costs,” and not move ahead in this arena–then make adjustments of executives, associates, shareholders, merchandise, and more.
Having solid shopper marketing/consumer insights is a MUST DO for retailers and manufacturers in the coming years.
I’m all for shopper marketing but it’s getting pretty confusing out there. Marketers call it influencing shopper behavior, I call it distracting the customer from making a buying decision. And why all the focus on low margin stuff like Coke and Kraft? Retailers need to put their foot down and create campaigns that work.
Hopefully this commission will put out some practical stuff but I’m not holding my breath. Anything created by the vendor is for the sole benefit of the vendor. Maybe all the BrainTrust Panelists should get together to create a more independent body….
The blending of shopper-focused efforts to drive sales with Category Management efforts to drive distribution should be a match made in heaven. But the devil’s in the details.
“The Commission” has set a laudable agenda for itself–to identify best practices in Shopper Marketing and make the nascent discipline more standardized and transferable among professional organizations.
This is an opportune moment for retailers to take greater and wiser control over the shopper agenda within their stores. They should more actively define how manufacturers may employ this valuable channel to influence purchase behavior. This begins with identifying their own strategic goals for dealing with shoppers–a core activity that cannot be piece-mealed to vendors the way Category Management has been.
Steve (Mr. Frenda) hit the nail on the head: thought alignment between suppliers and retailers is the big opportunity; that, and defining shopper marketing more clearly. In terms of alignment, most suppliers are still too brand (me)-centric. That is, they are really good at talking about their brands and products and making their case as an isolated premise; not so good at presenting holistic and customized solutions that acknowledge each retailer’s goals and other brand players (including the big elephant in the room: private label).
I’m concerned too that the term “shopper marketing” is getting over-complicated before it can even be clearly defined. Social media, mobile/proximity marketing, digital out-of-home (DOOH) initiatives and plain old block and tackle merchandising are all variously lumped into the shopper marketing world (hence the dart throw investments and fuzzy ROI).
I would like to see the retail commission take on the trees before hitting the forest…we don’t need another PRISM schism!
There are fundamental flaws from the perspective of the retailer with this approach. The problem is, this approach surrenders retail control of what is most profitable for them to sell. As Willard Bishop (company) has pointed out, any way you figure it per square foot or front foot facing, Retailer Brands are a higher margin than CPG products. And then Own Brands reinforce reasons for shoppers to visit their store more frequently.
As presented, this is a CPG benefiting program. And CPGs have about eight times the profit and fifteen times the market value of major retailers per dollar revenue.
I’m with Carol–I’m still awaiting a clear definition of shopper marketing. When is an in-store event shopper marketing and when is it trade promotion?
Buzz around shopper insights and consumer-focused marketing will not go away any time soon. My interest is in discovering ‘buyer insights’ then replicating the pattern to drive incremental sales volume and build shopper satisfaction.
While I will hold out hope for this “Commission,” the tsunami of information can no longer be ignored. It also can no longer be manipulated by gut feel alone. This is a relatively simple challenge that requires a complex solution. There are analytics tools available in the marketplace that can get retailers and manufacturers to the “Last 100 Yards.” There will be a point of diminishing returns, however, the capability exists to manage this information and define tactical actions to take.
The Retail Commission can be an important step ahead to bridge some of the disconnects between retailers and brands. Stores talk about departments and areas, brands talk about categories. All are collecting data and many kinds of analytics are used, but communication gaps are divisive.
The Food Marketing Institute announced an initiative last Spring, to create common metrics for the most basic measures for the business, like out-of-stocks, returns, credits etc. Retailers and brands have legacy systems tied to their reporting. Many simple performance measurements have to be “translated” depending on vendor partner and retailer–which takes a lot of extra time to be on the same page. Many opportunities to work together are lost because of the different perspectives.
As both retailers and vendors work to become shopper centric and transparent in their collaborations, the application of shopper marketing will become more useful in driving performance results. Good luck to the Retail Commission in developing a platform to realize the potential here!
The shopper marketing opportunity is huge. The likelihood of this opportunity being productively realized, however, is small. Beyond data accessibility and organization (an enormous issue by itself), issues of conflicting agendas (suppliers vs. retailers), organizational incentives and inertia within retailers, and implementation difficulties may allow sporadic progress to be made…but, as always, immediate needs will dwarf and squeeze out such long-term and big ‘competitive insulation-building’ initiatives like shopper marketing.
Enlightened retailers are few and far between. In an industry where competitive advantage is so desperately needed, it is simply amazing that virtually NONE of these kinds of opportunities are capitalized on, whether they be plannogramming, ECR, Category Management, or whatever the ‘flavor of the year’ might be.
Who have retailers been marketing to, if not to shoppers? “Shopper marketing” is a new idea? We’ve had Customer Relationship Management (CRM) for what, a couple of decades, now? CRM efforts have been largely sloppy and unsuccessful for one basic reason: Customers resist being managed. As they say, it’s like herding cats. The superior effort, and term, is CMR, Customer-Managed Relationship. Any successful shopper marketing plan must be, at its base, menu driven. Customers must be able to pick and choose the marketing services they want, and to be able to change their minds whenever they want.
Here’s an illustration: Many marketers tend to think that consumers have internal “value equations” that remain static over time. One such value equation might be price + location + variety. Once a retailer figures out a customer’s specific value equation, they believe they can market to them in a formulaic way. It’s a common retailer “push strategy.” Old dogs really do resist learning new tricks. However, a “pull strategy” usually works better. Individual value equations are in flux, sometimes changing minute-to-minute. That very expensive deli platter at the store, which you would never buy, suddenly looks much more affordable on a payday as you’re driving home from work to host a family get-together at your house. Your value equation changed. And, no pun intended, you made an unusual menu choice for you. Shoppers must have the flexibility to take as much or as little marketing as they want, and to change their marketing consumption habits whenever they want. Develop a marketing menu, test it, keep it fluid, and let customers choose the features they want.
I’d like to take a moment to thank all of the BrainTrust panelists and others for their contributions to this piece.
I know I was able to glean some additional thoughts and perspectives to add to the considerable work that has already been done.
As someone who is very close to the work of the Retail Commission on Shopper Marketing, there are a couple of misconceptions stated above that I’d like to clarify.
First of all, this Commission is “owned” by the Retailers. Through the generous sponsorship of The Coca-Cola Company as primary sponsor and the other 12 manufacturers and agencies, we have been able to bring this to life.
In the comments, several references were made to the lack or glut of data and the chaos surrounding it. The Commission work has consciously stopped short of trying to sort that out. The hope is that by using the framework created the data and tools available in the market can refine themselves to fit within some of the language and boundaries created.
The stated purpose of the Commission is as follows:
1. Define retailer requirements: strategic, operational, organizational
2. Integrate Shopper Marketing into current business practices
3. Establish new collaboration model for growth & shopper satisfaction
Key principles of the commission work are shown below:
1. Shopper and consumer focused
2. Retailer sponsored and enabled
3. Delivers execution excellence
4. Driven by a collaborative process
5. Results in real shopper value
6. Creates efficiencies and improved returns
Finally, I have attached a link to a presentation (somewhat abridged) that was given at the Institute’s In-Store Expo in October by Brian Harris of the Partnering Group, Janet Sparkman of SUPERVALU and Diane Wallace of Coca-Cola. I might note that the definition contained in that presentation has undergone even more refining with the work of the group.
Please reach out to me if you would like to engage in additional dialogue on this important industry initiative.