The Branded Pantry

I have written several times about Shopper Marketing as one of the big movements affecting both the increasing complexity of the trading partner interface and the flight of dollars away from traditional brand and banner building media. 

The roots of Shopper Marketing began in the 1990’s with Procter’s “first moment of truth” efforts or “Hello Consumer, meet shelf!”  Shopper Marketing growth continues to accelerate.   Number studies indicate compelling potential gains.  Perhaps the most complete study is offered in the 2008 GMA/Deloitte Shopper Marketing Study.  Shopper Marketing drives top line growth in a mature industry.  It helps trading partners build and sustain brand AND banner equity while traditional marketing media continue to falter. 

Let’s examine what is meant by Shopper Marketing.  According to the GMA/Deloitte Study:  “Shopper Marketing is the employment of any marketing stimuli, developed based on a deep understanding of shopper behavior, designed to build brand/banner equity, engage the shopper and lead him/her to make a purchase!”  When done well, a shopper should feel as if the store was designed just for them.  For the manufacturer Shopper Marketing fills a void in the long-desired goal of 360 degree marketing which integrates all marketing elements into a single holistic story.  Brand equity is generated via the retail environment.  For the retailer Shopper Marketing is about driving the relevance of the brand to the shopper and retail partner.

Experts believe Shopper Marketing will soon become the dominant concept in store selling.  Why?

1. CPG retail faced tough times even before today’s challenging economy.  Seventy percent of consumer goods categories had lower sales lifts from promotions this year than last.  Market share of the Top 10 brands is declining. The percentage of shoppers loyal to brands or banners has decreased steadily over the last 10 years.  Fewer than 10% of the more than 30,000 new products introduced each year remain on the shelf three years after introduction.
2. Experts agree that:  Shopper marketing can grow brand revenue over 25% faster than overall category growth.  CPG brands and retail banners that fully adopt, execute and engage a well conceived Shopper Marketing strategy will gain significant and sustainable advantage over those who are slower to adopt.  Fragmentation of consumer demand and the emergence of market niches stand at odds with traditional investments in brands, mass media and mass distribution. 

An October 6 ADAge article reports that Shopper Marketing gets higher marks for ROI than conventional media.  Most big CPG firms are jumping on the Shopper Marketing bandwagon, as are retailers.  Seventy-five percent of surveyed companies rate Shopper Marketing as one of their Top 4 activities.  The GMA/Deloitte study add that both trading partners intend to increase investment in in-store marketing over the next three years.  The growth is second only to investments in interactive/Web marketing.  These investments come at the expense of traditional media.  Procter’s A.G. Lafley continues to throw increasing support behind his already substantial efforts commenting that “more of the shopping list is being decided in the store.”

Shopper Marketing is not a mature science.  The best Shopper Marketing practitioners admit there are no perfect strategies.  GMA/Deliotte reports a wide disparity of company experience and ability in Shopper Marketing with only 5% of the surveyed firms “culturally embedding” the practice.  The other 95% of trading partners who are participating in Shopper Marketing are just beginning to scale their efforts.  Current financial pressures may slow development, particularly, as substantial business gains take some time to develop. 

 Clearly, the promised results are worth the effort and expense, but adoption is slow in coming. 

The Top Four challenges facing CPG and retail trading partners when adopting of shopper marketing include:

1. Insufficient technical and process capabilities
2. Cost of data collection and analysis
3. Budget
4. Skillset for analysis.

The other hurdle broadly acknowledged is the measurement of execution compliance.  The study defines execution as the gap between what a company’s leaders want to achieve and the ability of the company to deliver.  Put another way execution is the universal pitfall of Shopper Marketing just as it has been for so many industry efforts.