US retailers and manufacturers embracing shopper marketing
Shopper marketing, a strategy based on the in-store elements of the marketing mix to directly target customers, is reaping great rewards for the growing number of companies embracing the concept.
Companies are discovering that, by using market insights, they can enhance the shopping experience to engage the customer, influence their purchase decisions and boost brand loyalty.
The impact over the last couple of years has been profound for some companies and 73 per cent of participating consumer packaged goods (CPG) manufacturers and 86 per cent of retailers now rank shopper marketing programs among the top four activities that deliver meaningful return on investment, according to a new study conducted by Deloitte Consulting LLP on behalf of the Grocery Manufacturers Association (GMA). Furthermore, 19 per cent of the manufacturers and 50 per cent of the retailers ranked in-store activities as the leading element in generating ROI.
The study, titled “Delivering the Promise of Shopper Marketing: Mastering Execution for Competitive Advantage”, also revealed that the percentage of manufacturers and retailers that have significant shopper marketing organisations dramatically increased from 6 per cent in 2007 to as high as 60 per cent in 2008. Respondents expect shopper marketing investments, as a percentage of the overall marketing mix, to continue to increase for at least three years.
“Nearly every major manufacturer and retailer in the industry is dedicating resources to shopper marketing,” noted Brian Lynch, GMA director of sales and sales promotion. “This report outlines lessons learned to date and puts forth a game plan to help companies become more sophisticated in their operations and thus more fully realise the enormous potential of shopper marketing.”
Successful shopper marketing programs evolve through a three stage lifecycle, according to the report. While many companies have allocated resources and established pilot programs (stage one – ‘incubating’), they often fail to build the capabilities required to perform with scale (stage two – ‘scaling’), and rarely, so far, succeed in culturally embedding this new way of thinking and working (stage three – ’embedding’).
“Retailers and manufacturers who are embracing shopper marketing and executing against a core set of principles are growing 50 per cent faster than the categories in which they participate,” claimed Rob Holston, Deloitte’s shopper marketing practice leader. “This speaks to the promise shopper marketing holds for those who do it well.”
The ability to work and align with key partners was considered a necessity to success and, despite both retailers and manufacturers claiming they were highly able and willing to cooperate, both sides felt they were being let down by the other. It was consequently recommended that realigning structures to fit with partners could be one way to help buildthe trust needed to make shopper marketing a success for both retailer and manufacturer.
Critical to the long term success of shopper marketing industry-wide will be the development of tools to measure performance. There are numerous perceived resource and constraint obstacles to measurement, but 60 per cent of retailers cited insufficient technology as their primary barrier and 70 per cent of manufacturers said the cost of data collection and analysis represented their greatest impediment. Regardless of the specific challenge, companies must plan for and work around these obstacles to ensure they do not stall overall shopper marketing progress.