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Culturally embedding companies capture a disproportionate share of the benefits

Companies active in shopper marketing are growing faster than their categories

SECTION TWO

throughout the company. Many require job rotations that develop shopper-centric skills. Some are even considering or beginning to redistribute people from the shopper market- ing teams back into other functional areas to diffuse the skills and mindset throughout the company. In these companies, the shopper marketing function will likely shrink to a small group responsible for sharing knowledge and acting as consultants to other teams while the brand, category and account teams will take on primary responsibility for developing both consumers and shoppers.

These companies are also using insights and measurements in a more robust way. They are integrating shopper insights all the way back to product development. They are working to standardize their measurement systems so that marketing mix models allow allocation to shopper marketing as part of the overall marketing mix. They are also using holistic scorecard-based evaluation models to test whether programs are effective across shopper marketing and traditional marketing objectives alike.

Ability of Companies to Capture Potential Shopper Marketing Value

100%

Incubating Average: 5%

Scaling Average: 25%

Culturally Embedding Average: 60%

80%

60%

40%

20%

Company Shopper Marketing Potential Value Captured

0%

20%

40% 60% 80% Companies Active in Shopper Marketing

0% 100%

Source: 2008 GMA/Deloitte Shopper Marketing Study

The companies executing shopper marketing effectively indicate they are achieving sub- stantial revenue gains, well above category growth rates. They are taking market share, which means companies lagging in shopper marketing may suffer losses in mature, stag- nating markets like North America, or be effectively excluded from the growth opportunity in emerging markets.

Lift of Company CAGR over Category CAGR by Shopper Marketing Lifecycle Stage

Manufacturer

2.5

Multiple of Company CAGR over Category CAGR

2

1.5

1

0.5

0

n = 22

Incubating

Scaling

Culturally Embedding

Source: 2008 GMA/Deloitte Shopper Marketing Study

12

Accelerating through the lifecycle requires careful planning to traverse inflection points

SECTION TWO

Accelerating through the Lifecycle

“I would like to move from category management to business development. I see the role of the category manager changing from a traditional buying group, focused on trade pur- chases, to a selling group focused on maximizing value. The group should focus on find- ing the right products to meet consumer needs and extracting as much value as possible from products. We should not buy large quantities of items simply because they are avail- able at a good discount. But how do I convince my team to change?” – Grocery Retailer

Progressing through the lifecycle requires sustained commitment and organizational learning. In fact, learning is non-negotiable: a company cannot leapfrog stages simply by increasing resources. However, they can accelerate their progress by making a genu- ine cultural commitment to shopper marketing, deliberately planning their progression through the lifecycle, and carefully investing in the right infrastructure and talent base.

Equally challenging – and equally difficult to rush – is shifting the organizational mindset from traditional brand management, category management and trade promotion manage- ment to a new shopper marketing mindset that is cross-category and banner-specific. Old habits must be unlearned; new habits learned. Obstacles from legacy systems, unenlight- ened partners, and misaligned incentives must be overcome. The required progression through the lifecycle is not only a function of learning, but also a function of cultural realignment across the organization. Both processes take time and real-world experience.

Lifecycle Inflection Points

Strategic Advantage

Incubating

Scaling

Culturally Embedding

3

Sub -Optimal Scaling

Tactical Advantage

1

2

Ad Hoc Programs

Tenure of Shopper Marketing Effort

Do Nothing

Common Barriers

1

Getting Started

  • Lack of understanding and buy-in to shopper marketing

2 Starting to Scale

  • Insufficient dedicated resources and skillsets

  • Misaligned incentives

  • Lack of alignment/ buy-in by partners

  • Inability to quantify impact

3

Moving to Culturally Embedding

  • No formal C-suite sponsors

  • Status quo view of shopper marketing as tactical vs. strategic function

  • Insufficient tools/capabilities for sophisticated marketing mix analysis

  • Unstable foundation with partners (lack of proven credibility)

Consequences of Stalling

Company loses share as competitors gain with shoppers and retailers

Gains are limited by level of sophistication and scale of efforts

Company does not realize full potential and loses incremental opportunities and risks losing share

Source: 2008 GMA/Deloitte Shopper Marketing Study

13

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