What’s In-Store for Brands? Retailer Marketing
By Bill Bittner, President, BWH Consulting
Yesterday’s Wall Street Journal front page trumpeted the shift from out of store advertising to in-store marketing as the way to reach consumers suffering from message overload as they make purchasing decisions.
According to the article, Procter & Gamble created a new position 18 months ago under the title of Director of the FMOT (pronounced “EFF-mott”) or “First Moment of Truth.” The FMOT Department’s goal is to impact consumer decisions during the three to seven seconds that comprise the “First Moment Of Truth” when a consumer initially notices a product on the shelf.
P&G’s director of FMOT, Dina Howell, told the Journal her goal is to take in-store marketing “from an art to a science.”
The growth of in-store marketing is perhaps best exemplified by the commitment to it by the world’s largest retailer. The article discusses Wal-Mart’s use of in-store television as a vehicle to present new products to consumers for the first time. Last year, according to the WSJ piece, 122 new products were launched on Wal-Mart TV. Brand marketers pay to air their product spots on the retailer’s in-store network.
Many advertising firms are now moving from their traditional branding roles using out-of-store media to developing in-store promotion campaigns, including special shelf displays and packaging.
The investment bank Veronis Suhler Stevenson Partners pegged last year’s in-store marketing expenditures at $17 billion. It projects that number will increase to $23 billion by 2009.
Moderator’s Comment: Where do you see in-store marketing heading? Does it provide an opportunity for category managers at retail to increase the return
on their sections by being able to offer point-of-purchase promotions?
The focus on in-store provides a great opportunity for category managers at retail to generate incremental volume and profits for the departments and sets
they oversee. It has to be tied in, however, with an overall in-store program that prevents “desensitizing” the customer. Too many in-store displays and promotional messages may
turn off customers who want to get their shopping chores done in peace.
Retailers can work to plan programs for the various categories as the consumer sees them, emphasizing soups in the winter and cold cereal in the summer,
and let manufacturers bid to participate. Category managers will begin to look at the total performance of the category instead of individual brands or items.
Looking at this from the technical perspective, this trend further emphasizes the need for retailer item files that recognize label variations for the same
item. One of the easiest ways for the manufacturer to impact the point of purchase decision has been with special labeling, such as cents-off or pre-priced versions of a product.
The challenge is that inventory tracking and replenishment systems are not always built to recognize the relationship between the various versions of an item. With Computer Assisted
Ordering and perpetual inventories becoming more of a reality, it is important the system designs take into account the variations on labeling. Now with increased emphasis on
in-store marketing, it becomes even more important. –
Bill Bittner – Moderator
Turning in-store marketing from an art to a science is a great thing to do, but it should not be viewed as the “first moment of truth” for any CPG product. Plain old mass marketing still earns that title.
Despite the fragmentation of media and viewers, mass marketing is still king when it comes to the early stages of the “hierarchy of effects” for CPG products (awareness, familiarity, preference, etc.). Granted it is harder to conduct mass marketing today compared to 30 years ago, but the tasks are just as vital as ever. So mass marketing also needs to move from an art to a science to keep up with these challenging trends and, unfortunately, today’s marketers haven’t proven themselves to be very good scientists.
In-store marketing is the moment of maximum need (pronounced “shoppers buy stuff they like and need”). Shoppers are in the store to satisfy wants and needs. The truth part is self-evident in their purchasing. They buy stuff they enjoy. There are few epiphanies at shelf.
Shoppers will spend more during a trip when:
– Stores and their marketing partners understand the preferences of each shopper during each trip, and…
– They share personalized recommendations with shoppers, in-store, based on that understanding.
Most retailers can use their frequent shopper data to address the understand preferences part. Those preferences can then be turned into high quality product recommendations that are relevant for the shopper who receives the recommendation.
From personal experience (in-store Relevance Marketing is what our company does), reminding shoppers of products they have purchased (met needs) and suggesting others they have not been purchasing but are relevant to them based on their other purchases (unmet needs), results in significant increases in spending by those shoppers. And that makes sense. Shoppers buy more of the stuff they like. Remind them, and they’ll thank you by spending more.
How many times have you gone to the store and arrived home only to realize you’ve forgotten something? Wouldn’t you have appreciated the store reminding you that you were about to run out of shampoo, that you might need more coffee filters and that, while you’re here, there’s a new premium coffee blend available that – though you have never purchased – appeals to your coffee snob tastes? And you’d flip if the store determined that you were a fanatic of product A and made sure product A was always favorably priced for you, and only you, every time you visit. You would enjoy the special attention. You would buy more based on these relevant recommendations. You would return more often.
The opportunities to help shoppers purchase more by aligning with their preferences, while they’re in-store, are endless and profitable. There’s no need to take the chance that they might get to the shelf. Use what you know about what they enjoy to lead them to the shelves and products that align with their preferences.
Bill Bishop’s comments about compliance are really important – a retailer considering digital media in stores needs to understand that this will force marketing, merchandising, and store operations all into the same room if the program is to be successful – an uneasy alliance at best.
But I think the most important thing is one no one has brought up yet – content! The content that needs to go into in-store media is not your parents’ advertising, and this seems to be one of the major barriers to success for these networks. 30 second spots are too long, and focus too much on awareness, rather than the immediate selling proposition for someone about to make a product choice. So they can’t really be repurposed. Not to mention all the other dynamics of out of home advertising – ambient noise, visibility, approach, traffic flow, etc.
I’ve heard too many success stories for this to die down to just a fad, but it’s so immature – there’s a long way to go on many fronts. Agencies need to understand that, just because it’s on a TV screen, doesn’t make it TV. Merchandisers need to understand that it’s not just about the products. Marketers need to understand that this needs to be integrated into a holistic communication strategy – whether you’re in marketing for the brand or the retailer. And store ops needs to understand their role in keeping the network available in all stores, and they need to communicate the impact that it’s having on stores – particularly as initial efforts, high in repetition because of lack of content, drive store associates insane! It’s not just the customer who has to listen to this stuff, and the impact on employees should not be overlooked.
As inefficient as TV is, there is currently no meaningful alternative to the power of television advertising for building a brand. Although most marketers are as addicted to TV as a smoker to cigarettes; they don’t have a more cost-effective alternative.
The inefficiencies of POP and retail promotions are greatly amplified by the human factor required to achieve full compliance across the retail landscape. Wal-Mart TV notwithstanding, so called “retail TV’ doesn’t really address the issues because what you have today is simply plasma screens hung from the ceiling or stuck wherever space is available. This only adds to the overall clutter and does not address any of the core business issues. Aside from business interests, has anyone ever watched Wal-Mart TV or any other retail TV “network” for that matter?
What is required is a solution that is integrated into the complex financial relationship that exists between retailers, consumers, marketers and media. Until that solution exists, TV advertising will be the best way to build a brand.
Perhaps the point that is being missed in the discussion is the extremely inexpensive cost of media and, indeed, production for these in-store networks.
We have been able to consistently show SKU sales increases over 40% against test stores for a monthly investment of $6K to cover 600+ locations.
In addition to grocery; fashion and entertainment retail are embracing private networks and deploying considered solutions that will continue to show direct sales increases.
In-Store TV should be considered by marketers as part of the overall campaign. Why would you let someone else be the last audio/video message to your potential consumer?
As Peter Fader says, there really are three moments of truth:
*awareness
*in-store
*use
There can be a science associated with each of these. But P&G’s focus on the in-store piece over the past few years is evidence of the neglect that preceded that focus, not just by P&G, but largely by the entire multi-trillion dollar industry.
The foundation of science is 1. observation, followed by 2. categorization, then by 3. counting and, finally, understanding what the numbers mean – 4. modeling.
Unless this approach is taken, business people will race to the only numbers that matter to them – the bottom line – and the “science” of shopping will continue to be the dismal kind.
Commenting on the third step in science, Lord Kelvin said, “When you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.” However, without adequate observation and categorization, counting will not necessarily be useful.
Let’s be sure the science of shopping is real science.
Bill’s reference to desensitising says it all to me. I have rarely seen an in-store demo or tasting that was surrounded by crowds. Occasionally, particularly cookery demonstrations, but otherwise just the occasional shopper stops to chat and try to find out about the product. Conversely, I think a lot of people are turned off by the idea of being actively sold to while they are trying to concentrate on stocking their larders, fridges and freezers or feeding their family or minimising the time they spend shopping. Any in-store promotion is a challenge. It has to be attractive and informative but totally non intrusive and non pressuring or hectoring. Quite a difficult objective and not one that many companies have yet achieved. My personal best bet would be to simply hand out coupons for immediate redemption at the checkout.
So it seems that the marketing community now wants in on what we Shopper Marketing people have been doing for years (with little or no funding). The problem is not many of them really understand the media and therefore are bound to misuse it.
Retail is not like any other medium in the marketplace today. It serves far to many stakeholders and is inconsistent and uncontrollable. Retail is a living beast and any sales person or category manager can tell you it is treacherous waters to those not skilled in navigating it.
The catch is that it has become far to important for brand marketers and ad agencies to deny and, therefore, they are now bound to get involved. But even they are stumbling along the way. Hiring a hodge-podge of skill sets that relate to the retail environment, they have yet to tap into the “Experts” who have been navigating these waters for a little over 10 years now.
There are many of us who have been operating in this environment, whether it was called Co-Marketing, Trade Marketing, Shopper Marketing or In-Store Marketing, the fact still remains…this media is here to stay.
Advertising in the retail environment is kind of like product placement in movies (but not entirely). You want to leverage the “experience” of the environment (whether it is a movie or a retailer) to present your product and its benefits to consumers. The catch is you have to integrate your product into the environment, otherwise you get an obvious tactic that sticks out like a bad Apprentice episode.
This is where the experts come in. We are part retail experts, part retail forecasters, intimately knowledgeable about the retailer and its operations. We understand the consumer and their mindset as they shop the different channels, stores etc. And we know brand building and promotions. We are skilled collaborators, insuring all of the stakeholders feel a sense of ownership. We have created the systems to make this practice BOTH an art and a science.
So heed the warning – this thing called “Retail Marketing” needs to be handled by the experts…otherwise it is bound to fail.
The best opportunity for reaching consumers at the “first moment of truth” in the purchasing decision is at the point of meal planning, which for many shoppers takes place in the meat, seafood or produce aisle. From a shopper’s perspective, we enter the store searching for a solution rather than individual products. The shopper is confronted however with the noise and clutter of endless promotions shouting “buy me” at every turn. The promotions seldom honor the shopper’s fundamental problem: trying to get a meal on the table that will please family and friends given limits of time, budget or skill.
“Take the Poll” leaves out a new option for connecting the manufacturer directly with the shopper in the aisle at the “moment of truth”. The Sept. 19th issue of Supermarket News featured an article in the Fresh Market section covering Giant Carlisle and Tops’ roll out of Recipe Kiosks in the meat aisle. Interactive digital media can offer both the “first and the last word” of influence. Traditional signs and graphics simply shout. Interactive listens and responds!
We have got to get this discussion of in-store marketing focused on the needs of the customer. What information would help the consumer to make the ‘right’ purchase decision?
Something I think that complements in-store marketing is what I call
“opportunity marketing.” Our company, Smart Reply, delivers text
messages and or voice messages to existing customers during drive time
or weekends to visit their favorite store with a relevant offer based on
that shoppers preferences and past purchases.
Example: send a text message or voice message to mom or dad at 5pm to
stop by the grocery store on the way home for fresh in-store prepared
foods. We’re doing this for some national grocers and specialty
retailers.
The advantage is you pick-up a customer that maybe wasn’t even planning
to shop that day, and you’ve added value to your customer and
personalized your brand.
In-store is great and something to consider, but I love the fact you can
Strategically increase foot traffic on a day-to-day basis, and see
measurable results. Combine this with in-store marketing and that is
where the superior retailers will win the competitive battle.
The RW survey lists several marketing/promotion alternatives. Only the first is independent of store compliance. The manufacturer can most easily control the packaging. Every other alternative requires human intervention, within the retail organization or by contractors hired by the manufacturer. All point of sale promotions, on a per-unit basis, are more expensive than effective national ad campaigns and professional packing improvements. So POS promotions have to be more effective to pay for the higher expense.
Bill makes an important point regarding the greater opportunity for category managers to drive increased sales from point-of-purchase promotions in a world where manufacturers are recognizing and striving to exploit the power of in-store marketing. This is just one key tactic that both manufacturers and retailers can use to both win in a more collaborative marketing effort, and there are more also leveraging the new databases that Bill calls out.
Let’s take a little different focus, however, on the article and raise the question, “Is increased manufacturer emphasis on in-store marketing on a collision course with retailer marketing and branding strategies designed to create clear and distinct market positionings for individual retailers?”
Don’t think there’s a simple answer, but do feel that the question needs a lot more attention before manufacturers or retailers can be completely enthusiastic about the growth of manufacturer in-store marketing.
What do you think?
Ah! the “First Moment of Truth” and transferring an art to science. That’s a great idea, if not necessarily a new one.
While I agree with the essence of previous comments on in-store marketing, I’m inclined to believe that if anyone – manufacturer or retailer – tells the truth in any marketing efforts, he/she is sure sooner or later to be found out. So in-store marketing expenditures will increase from $17 to $29 billion by 2009 and the real “truth” lies therein.
Bill Bishop’s point is extremely well taken. I hope the manufacturers who try this are working closely with their retailer partners, rather than trying to pop out some cookie-cutter “grand idea” and expecting buy-in. In surveys we do of retailers, there is considerable bristling by retailers who say manufacturers keep coming at them with ideas, unilaterally, without having discussed them first. I’d add here also that anybody getting into this should read Paco Underhill’s seminal book and national bestseller, “Why We Buy,” as well as his other excellent book, “Call of the Mall.” Terrific insights and a good foundation for any program you come up with.
There’s no question that in-store marketing by CPG firms can improve dramatically. Having said that, Wal-Mart TV seems like a case of the emperor’s new clothes. Have you ever seen anyone paying attention to in-store TV? Have you or your family ever reacted to in-store radio?
Kmart’s blue light special may be the smartest use of in-store marketing I’ve seen in the last twenty years. Love it or hate it, you noticed it, and it made you think about the item it was promoting.
I don’t think in-store marketing will really change until retailers use it as a means to sell more goods, as opposed to as yet another revenue stream to generate incremental vendor spending.
Kroger’s much ballyhooed alliance with Dunn Humby seems to be failing because it doesn’t pay out for vendors. The reason it doesn’t pay out is that Kroger is keeping a substantial part of each vendor’s contribution as profit, instead of investing these funds into making the program successful.
Both “Bill’s” have laid out good questions. A few thoughts…
Re: Bill Bittner’s question of tactics — “in-store marketing” is not to be equated with “in-store promotion.” Or at least we should not automatically equate “promotion” with “price incentive.” The biggest barrier we find to getting Marketing VP’s to embrace in-store marketing is that they automatically assume the money will just end up in price (at best) or in increased retailer margin through “program fees” at worst.
Try this exercise. Close your eyes and imagine a world with no TV and no internet. Now, how do you build your brand? The ideas you generate will start to sound a lot like effective “place marketing.”
Re: Bill Bishop’s question of conflict between building store franchise and brand franchise in-store — no contest. Retailer wins. (Anyone recall your first day on sales training when some retailer reacted to your “you need to promote my brand” speech by taking you outside, pointing to the store marquis and saying “now Sonny, when it says Pepsi up there instead of Wegmans…”)
Having said that, there are plenty of retailers who are building at least part of their store franchise on being the preferred place to buy brands. These retailers should embrace truly creative in-store marketing ideas, and, in fact, most of them say they will in surveys we have done. Interestingly enough (and to the first question above), we often hear the retailer complain that “the only thing the manufacturer has to offer is price.” It’s time to put the manufacturer’s MARKETING genius to work in-store.
The “Other” category cannot be ignored. There are technologies becoming available that offer new venues for addressing the FMOT. These include Personal Shopping Assistant devices being tested by several retailers in the US and Europe and other technologies, like short cell phone messages or digital signage placed strategically in the store.
Mark and madbadger make important points about compliance and the value to manufacturers. In-store promotions can be effective, or they can be a boondoggle for the retailer. The relationship has to have balance and the vendor has to see a real return on investment. Ultimately, that comes down to how well the retailer implements the promotion, and how consistently across all stores.
First, marketing creates and communicates the Brand’s unique selling proposition that engages shoppers to the trial and repeat levels!!!
All in-store activity is made to reinforce the USP message, and catch the shoppers’ eyes, not be the primary source.
If you want to talk about clutter, and the many thousands of selling messages the consumers get, it is in the supermarket.
Basics of marketing (and we need to get back to them, retailers and PKG cos.) is the way to go, without a collision course between the retailer and marketer. Hmmmmmmmmmm
I disagree with Professor Fader. Of course he’s correct that there are other stages in what he calls a “hierarchy of effects” that lead to a purchase decision – awareness being the most crucial. But these other stages are not moments of truth. The moment of truth comes when the consumer puts the product in the basket or doesn’t. All stages in the hierarchy of effects lead to this action. Communicating at that time is crucial. The second moment of truth comes when the product is used because, if the consumer isn’t satisfied, the brand doesn’t become a regular purchase.
In store marketing and advertising is part of the relationship building process with customers. As manufactures rent more real state within a store, they need an opportunity to sell at shelf. Manufacturers know the demographics of most customers within specific retailers. They have access to this in-store information, which is already a science. I can’t remember 2% of what I did, saw, or heard yesterday, so why not impulse me at shelf.
This is not a new concept. Checkout Channel, Savings Spot, InterAct, VideOcart, Instore Advertising, to name a few. The difference may be that the advertisers may actually step up this time.