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A shopper marketing cheat sheet

A shopper marketing cheat sheet Jim Nichols
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A shopper marketing cheat sheet


I wish I had a nickel for every time I've heard the words "shopper marketing" in the past year. I was first introduced to the term while doing a database project for iMedia. Over four months I began to see more and more titles with "shopper marketing" in them -- this in an industry in which titles and hierarchy don't change that often.


Since then, I've seen shopper marketing conferences debut, friends get shopper marketing titles, and many other signs that this is not a passing fad.


So what's it all about, and why should you care? Explore this handy cheat sheet on the fundamentals of shopper marketing.

A shopper marketing cheat sheet


What's the definition of shopper marketing?


Many definitions have been promulgated, but at its core shopper marketing relates to marketing programs that reach consumers inside brick and mortar store walls. That could mean anything from a tear-off pad sweepstakes to integration into an in-store shopping phone app to an end-of-the-aisle display or a program on Walmart TV.


What the shopper marketing "revolution" is really about is taking a more integrated and strategic approach to in-store experiences as a driver of both sales and brand equity; that every program should strongly deliver on sales objectives while driving differentiation and brand appeal.

A shopper marketing cheat sheet


Why is it such a big deal all of a sudden?


It's getting harder and harder for brands to make a sale. Given that, brand teams are scrutinizing every dollar spent and working to ensure that all significant expenditures are strategically based.


Additionally, the amount of money spent in store has climbed markedly over the past years. Decades ago, the ratio of ad to in-store spending was heavily weighted to the ad side. Companies spent the bulk of their dollars driving awareness and brand liking among consumers. As retailers consolidated and became more sophisticated, and as the number of brands and products within categories grew, the balance of power shifted. Today, retailers demand a larger portion of the pie, and they can get it because:



  • More than half of brand choices in many categories, including consumer packaged goods (CPG), are made in store. (Source: Booz and Company)

  • High quality store brands have put further pressure on brand differentiation, pricing, and the need for deals.

  • Retailers view "slotting allowances" and promotional vehicles like features and displays as a major revenue profit source and demand brand participation "or else."

  • The 2009 economic downturn made consumers more deal conscious and more willing than ever to substitute brands.

If a category spends 30, 50, or 80 percent of marketing dollars on in-store activity, those dollars need to be enhancing brand imagery as well as selling product.


Finally, our hyper-fragmented media market has contributed more indirectly, but perhaps no less significantly. Brands cannot reach consumers as efficiently as they used to. In some categories, a large portion of a target audience might never see any marketing element for a brand beyond store walls.

A shopper marketing cheat sheet


How is "shopper insight" different from "consumer insight?"


One of the key tenets of shopper marketing is that we need to pay more attention to how people make decisions and buy. The rationale here is pretty compelling -- most brands have spent bazillions understanding who their customers are, but relatively little on how they approach an aisle and what drives them to choose one offering over another.


Here's an example: Companies that make laundry detergent know who buys the most product, what forms they prefer, what stains they find the toughest, etc. But, as to how they make an in-store brand choice, the research probably gets a little sketchier. Do they shop by form? Stain? Color of clothes? Package size? Washer type? Which matters more, price or brand? If price is primary, do they compare price per ounce or price per load? Do consumers think there is one best brand or that they get better results by alternating brands? Do some people get confused and walk away from the aisle without buying anything?


Of course, many brands have examined these sorts of questions in the past. But most brands spent less time on this than on advertising research and the like. And if more than half of purchase decisions are made in store, does it really make sense to spend 80 percent of your time testing TV ads?


That isn't to say that the "who" of marketing isn't important. Rather, we need to improve the balance between demographic, psychographic, and behavioral research.

A shopper marketing cheat sheet



What product categories are most active in shopper marketing?


Most people think of shopper marketing as primarily a CPG phenomenon. Certainly, the leading CPG companies -- Procter and Gamble, Kraft, General Mills, Unilever, Clorox, Nestle, Coke, Pepsi, SC Johnson, Kimberly Clark, etc. -- are among the most active in the discipline. This stems from the following:



  • Relative size and sophistication of these companies

  • High levels of marketing spend in CPG

  • Proportion of total marketing spend that goes to in-store in these categories

Within CPG, the activity is most pronounced in high spend categories like soft drinks, refrigerated, laundry, household cleaners, cereals, and convenience foods with high margins.


But this is by no means a CPG-only phenomenon. Shopper marketing is permeating many consumer categories from electronics to consumer durables like washers and dryers. I'm told even some auto makers are getting on the bandwagon because of the primacy of in-store experience in auto purchase decisions. Since there are relatively few categories where in-store spending isn't significant, expect to see more and more shopper marketers in virtually every consumer category over time.

A shopper marketing cheat sheet


Where does shopper marketing "live" in a brand organization?


If ever there were evidence of the benefits of breaking down departmental silos, it's in shopper marketing. This is totally a cross-disciplinary field. If you had to lay odds on what role a shopper marketer played before assuming that title, the safest bet would probably be trade marketing or promotions. But shopper marketing is more revolutionary than evolutionary. It is not simply a new name for promotions, but rather a new function that integrates consumer marketing, trade marketing, and consumer promotions expertise in service of multiple brand objectives.


Shopper marketing appears to attract "high fliers" -- people on the fast tracks in their companies. Perhaps this is because success is so rooted in cross training and leading multiple disciplines. My suspicion is that in the same way that "pure" consumer marketers were the "powers that be" in years past, I am convinced that shopper marketers will be playing those pivotal roles in the future.


I used LinkedIn to draw some observations about the paths that shopper marketers have taken to reach their current positions. A fairly large number of the profiles I examined showed experience in both sales and brand marketing. Often shopper marketers began their careers in sales and shifted to trade marketing or brand marketing before they assumed their new, integrated roles.

A shopper marketing cheat sheet


Where does digital fit into shopper marketing


When you think of in-store marketing, the first things that come to mind might be displays or cardboard shelf talkers. But digital, and most specifically mobile, are changing the face of shopper marketing every day.


Mobile phone applications have already had dramatic effects on retail shopping, and their impacts are really only beginning. The stats on mobile and retail are staggering:



  • 66 percent of smartphone users use their phones as shopping aids. (Leo J Shapiro and Assoc, 2012)

  • 59 percent use their smartphones to compare prices. (Deloitte, 2011)

  • 47 percent leverage local search to find retailers. (e-tailing group, 2012)

  • 47 percent use their phones to get product information. (Leo J Shapiro and Assoc, 2012)

  • 18 percent have redeemed a mobile coupon in the past 90 days. (JiWire, 2012)

A lot of retailers and brands were caught off guard by mobile. Amazon was a very big winner early on when they encouraged people to comparison shop from retail aisles. They continue to do well with this strategy, much to the chagrin of retailers like Best Buy. But Best Buy has since responded in a host of ways, not least by providing early funding for Tecca -- a review and price comparison site. Other retailers have their own initiatives in place.


For brands, the number of mobile shopper marketing options is growing rapidly. 


A shopper marketing cheat sheet


What's most remarkable about these new apps is the incredible range of functionalities. There are so many variations that virtually any brand sales objective can now be accommodated. 


Conclusions


Shopper marketing is definitely something you will be seeing more of in the months and years ahead. If you work on brands that sell at brick and mortar, it makes great sense to keep learning about the field. More broadly, digital marketers would do well to keep abreast of developments because they are sure to be among the key catalysts for the near- and medium-term growth of mobile.


Certainly, the development of shopper marketing as a discipline is great if you believe that strategy should guide all marketing efforts -- shopper marketing extends strategic alignment into retail environments in unprecedented ways. And that's vital to the future of brands because so much of our marketing budgets are being deployed inside retail walls.


Jim Nichols is vice president of branding at ROI DNA.


On Twitter? Follow iMedia Connection at @iMediaTweet.


"Woman comparing products with a tablet computer" image via Shutterstock.


"Beverly and Pack," "85mm.ch," "TurtleMom4Bacon," "Steve Snodgrass," "dgray_xplane," and "Tessss" images via Flickr.


"Shopkick" image via Shopkick.


"CompareMe" image via ComparMe.

Jim Nichols is VP of Marketing for Apsalar. Jim has 20+ years experience in over 80 different categories, including developing successful positioning and go-to-market plans for more than 40 adtech and martech companies. He joins Apsalar after...

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Comments

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Commenter: Alejandra Taborda

2012, December 19

I find it interesting the article is funny how the consumer been changing as technology evolves. The messages are being obsolete traditional and immune to new consumers. Communication trends must change, offering experiences and tell stories, clearly addressed to pose clear objectives established under strategic planning. http://bit.ly/Ov9w87 http://bit.ly/Pth3bW

Commenter: Michelle Skea

2012, June 26

Hi Jim

I'm assuming that your statistics and insights are for American consumers. How do you think they would differ in Canada? What similarities and dissimilarities can you envision?

Commenter: Rob Gorrie

2012, June 01

Hey Jim - nice piece.

Having grown up in shopper marketing (well...it used to be called point of purchase advertising or below the line advertising), I like this article a ton.

A few thoughts:

The Shopper Marketing budgets (or where they are commonly drawn from on the MDF/trade/in-store front) are calculated as almost twice as large as the measured media budgets...something like 150 Billion / v. 260 Billion. Makes for an attractive bucket. As media/creative/content budgets have been stretched, fragmented or shrunk and more attention put on in-store (e.g. Jim Stengel started pushing this for P&G a decade ago and Tripodi at Coke started hard after this in 2007) many agencies started creating new divisions to follow the money, creating a new category of company (or at least one that got renamed).

You're dead on WRT the silos...one of Shopper Marketing's biggest failings in scope (IMO) though is it isn't just about what activity IN the store happens...it's the insights from influences right around the store or right before they arrived as well. It doesn't benefit a retailer to simply amplify "switch" sales via in-store shopper marketing (one brand wins over another)...it has to contribute to "plus sales" to float all boats) and get new consumers to the store. There's an awful division and turf battles between "media" and "shopper marketing" that need to disappear to help drive retailer/brand needs at the trade area marketing level but managed from corporate. In many circumstances the understanding of an in-store expert simply doesn't translate into how someone got to the store in the first place....and same goes for many media folks who couldn't name what aisle and shelf their client's product is actually in in Krogers or why it's important.

My fascination is right in line with yours...technology, including mobile, is going to inherently disrupt these silos (media/merchandising v. in-store/around the store) and force an integration between CRM, media, merchandising, sales, content and consumers/shoppers. Right now retailers are a little baffled by all of the opportunities/technologies out there (your usual Shopper Marketing guy is not a socially active, mobile using ex-developer who used to work at Razorfish.) and hence slow to change (or do anything)....but they may have to pull "command and control" of local media buys AND all in-store digital communications/media back into their own walls with their own expertise to get control of it and make the silos play nice together before outsourcing it again...Macy's does some of this already quite well...

Lastly, scale of a lot of these technologies/companies simply isn't there yet (20 million users isn't scale to most retailers whose customer base may account for 150 million shoppers monthly, which exacerbates the problem of adoption.

Should be a fascinating area to watch over the next 10 years!

Cheers. Hope to see you when I'm next in San Fran!

Rob