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“The same person is performing the same activities as before only with a title change.”

“Most grocery retailers are not prepared for sophisticated, cross-category/cross-store collaboration with manufacturers. We need a

“Manufacturers often determine an objective, then go and find data to support it. They then attempt to sell these ‘insights’ to retailers.”

call to action, ‘Retaile , we are orienting ourselves around you – we need you to be ready for us.’

“The manufacturer’s account person is still being incented on short-term display placement, not on marketing success, category growth, and the

“The opportunity for change exists and many retailers want to engage in it, but they currently don’t have the talent to make it happen.”


“Retailers expect eye-popping insights from us but many are still not open to sharing the data we

Source: 2008 GMA/Deloitte Shopper Marketing Interviews

need to develop those insights.”


Examples of Retailer/Manufacturer Misalignment

Retailers say about Manufactu


Manufacturers say about Retailers:

– Loses market share

– Gains short term benefits

– Loses relevance with consumer

Loses access to innovative ideas for cross-category

– Loses potential partners

banner differentiation

Risks manufacturer defection

This gap is due to legitimate structural challenges to effective collaboration. First, companies often allow short-term incentives and risk aversion to trump greater gains from building committed, trusting relationships. Second, existing capabilities, processes and structures are misaligned between retailers and manufacturers, complicating effective collaboration.

Barriers to Collaboration: A Matter of Will and of Skill A Matter of Will: The Prisoner’s Dilemm

Source: Deloitte Consulting


A key difficulty with achieving genuine, win/win collaborative relationships stems from a classic problem: the “prisoner’s dilemma.” In this dilemma, both sides must overcome immediate risks to achieve long-term benefits. Both parties fear that too much transpar- ency could result in data leaks to competitors, diminished bargaining power, or less control over final programs. Because of the risks, neither side fully trusts the other to act in each other’s long-term mutual interest, so both play it safe by focusing on short-term gains. However, playing it safe risks a large loss too. This prisoner’s dilemma is not a one-time game, and there are more than two players. Retailers and manufacturers who stay in the safety of short-term, transactional relationships risk ceding the genuine relationship and long-term gains to competitors. If either side of the relationship is seen as not fully com- mitted or short-sighted, the other will quickly follow suit, or walk away.

Genuinely Collaborative

Long-term gains can lead to a strategic advantage for committed collaborators, dramati- cally exceeding the short-term tactical gains of transactional collaboration. However, long- term gains are the result of short-term actions. Companies may need to take early risks to signal their commitment to a genuine relationship, such as unilaterally sharing data. Likewise, each interaction with partners provides the opportunity to reinforce trust through demonstrated success – or single-handedly reverse all relationship gains. The relationship can only be maintained if both sides regularly reinforce that their intentions can be trusted.


Overcoming short-term collaboration risks results in long-term benefits to both parties

Independent / Transactional

Independent / Transactional

– Gains short term benefits

– Gain long-term benefits

– Loses retailer insights and access to consumers

– Co-develop innovative ideas for differentiation

– Risks retailer defection

– Strengthen long-term relationship


Lose-Lose (Both)

Win-Lose (Retailer)

Shopper Marketing Collaboration Prisoner’s Dilemma

Win-Win (Both)

Genuinely Collaborative

Win-Lose (Manufacturer)



A Matter of Skill: Structural Challenges to Collaboration

Even if the prisoner’s dilemma is conquered, and retail and manufacturing partners align in their desire to form highly collaborative relationships, challenges remain in aligning the in- frastructure, capabilities and processes between partners to enable effective collaboration.

Key Manufacturer Problems along the Collaboration Chain

Generate Insights

  • Ability to generate unique

and banner-specific insights

  • Mismatched segmentation


Unwilling to share data / lack of data standardization

  • Applicability across store

clusters and formats

Develop Programs

  • Lack of understanding of

retailer platforms

  • Lack skilled resources to develop unique shop-per centric activations

  • Missing a seat at the table with key accounts

Execute Programs

  • Lack of consistent source of program funding

  • Internal misalignment between key functions

  • Loss of control once taken to retailer

Measure Programs

  • Missing tools and resources to confidently measure program performance

  • Inability to segment impact of various stimuli within program

  • Prohibitive cost of advanced tools and syndicated data

Source: 2008 GMA/Shopper Marketing Study

Because shopper marketing is an account-specific strategy, solutions to these challenges are not easily scalable. For example, a manufacturer cannot resolve mismatches between segmentation hierarchies with one retailer and then expand that solution to the rest, nor can it develop partner-specific shopper insights and apply them across the board. The manufacturer will need to work independently with each high-priority partner in order to determine specifically how they will work together. The key for both partners should be to focus on selecting the right partners, building capabilities and talent around collaboration, and putting in place structures and processes to enable account-specific solutions.

Mastering the Collaboration Challenge

Getting over both the prisoner’s dilemma and the structural hurdles to effective collabora- tion requires five key elements from both the manufacturer and retailer:

  • 1.

    Credible commitment

  • 2.

    The right partners

  • 3.

    The right insights

  • 4.

    The right structures

  • 5.

    The right process

Credible Commitment

Shopper marketing relationships between manufacturers and retailers can generally be characterized as either “transactional” or “committed.”

Transactional collaboration, which leads to less rewarding, short-term relationships, includes any action that is viewed by partners as purely self-serving, without focusing on the long-term interests of the partnership. It tends to be characterized by manufactur- ers selling-in programs which will distinctly benefit their own brands without necessarily expanding the whole category or improving the shopping experience while retailers negoti- ate incremental penny-profits for the privilege of executing the programs. For example, retailers see manufacturers as prioritizing the transaction over the relationship when the manufacturer uses “insights” to argue that they should get a competitor’s end cap. Manufacturers see retailers as prioritizing the transaction when they demand insights and programs without sharing data or when they use the manufacturer’s insights to grow their own private label business at the expense of the manufacturer. Transactional collaboration can result in mutually-beneficial shopper marketing programs, but it cannot realize the full potential value that is possible with fully committed collaborative relationships.

Committed collaboration, which leads to more rewarding partnerships, incorporates a stra-

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