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SECTION 3

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SECTION THREE

Looking Forward: The Future of Shopper Marketing

The growth of shopper marketing has been accelerating, and it will continue to grow rapidly. The potential gains are too compelling. Not only does it drive top-line growth in a mature industry, but it helps manufacturers and retailers alike to build and maintain brand and banner equity at a time when the effectiveness of mass media continues to wane.

Today’s frenzy of shopper marketing activity is not yet achieving its full potential impact. That will soon change. Most companies are at an early stage of development, only experi- menting with ad hoc programs. Few have advanced far enough to truly build strategic advantage. But as marketers learn how to clarify strategic positioning, conquer the organi- zational hurdles, collaborate, measure performance more effectively and execute at scale, shopper marketing will grow to become an increasingly important source of advantage for those who do it well.

In the long term, we believe that shopper marketing will fade as an independent concept. Companies will infuse shopper-centricity across their marketing and sales organizations. All activity that is meant to drive sales, brand and banner equity will incorporate both the consumer and shopper viewpoint. All the relevant insights, positioning, metrics and orga- nization will evolve to support a single 360-degree marketing perspective.

In the near term, we believe that shopper marketing will be shaped by a number of emerg- ing trends:

1. The shopper marketing gap will continue to widen. Top-performing companies have learned to execute shopper marketing effectively and are already embedding it into their cultures. They will continue to race ahead along the learning curve. Many of those who are still incubating shopper marketing programs will struggle. As the leaders and fast followers establish themselves with key retailers and improve their performances, laggards in shopper marketing will find it increasingly difficult to catch up. Laggards also risk being “locked out” of emerging markets as leaders apply their knowledge to emerging trade channels – potentially skipping the brand and category management phases and turning immediately to shopper marketing as the model for consumer marketing.

Becoming a top performer requires a cultural change that typically takes consumer products companies five years or longer, but it must be done to stay in the game. Starting quickly with strong leadership and thoughtful planning will accelerate the process.

  • 2.

    Shopper insights will become more closely linked with consumer insights through better organizational alignment and development of shopper-cen- tric skillsets. Combining shopper insights and end consumer insights will provide a more powerful tool for improving the relevancy of product development as well as shopper/consumer programs both in-store and out-of-store. Companies will invest in the knowledge management technology required to make scalable insights available across the organization.

  • 3.

    Shopper marketing will play a crucial role in a holistic, 360-degree market- ing approach. As companies develop effective, comparable measurements for in-store marketing, companies will optimize and continuously improve their mix of all elements of the marketing wheel. Shopper, mass, trade, online and other market- ing elements will have to compete for investment by performing against marketing objectives. Traditional functional walls will be broken down and we will see a con- vergence around planning and investment decisions to drive efficiency in brand and banner development.

  • 4.

    Retailers’ clean store policies will drastically reduce the opportunity for manu- facturers to use displays and other visual marketing stimuli at the point of sale. Since there will be fewer in-store opportunities available, retailers will become even more selective in partnering. Manufacturers that view shopper marketing as solely in-store visual messaging will struggle to find room to play in this environment.

Industry cooperation is essentially to achieving the full potential of shopper marketing

SECTION THREE

Those that view it through a broader lens as a way to connect with shoppers (includ- ing the use of merchandising, package design, labeling and shelf layout) and are able to deliver the most consistent and holistic relevance to the retailer’s core shoppers will have the advantage.

5. Retailers will divide into camps based on their collaboration strategies. One group will embrace shopper marketing as a way to work with manufacturers to im- prove the shopper experience and drive revenues through increased trip frequencies and basket sizes. They will share shopper data and develop deep relationships which are rewarding for both sides.

The next two camps of retail strategies are dangerous for retailers and manufacturers alike.

The second group will listen to manufacturers but take sole responsibility for their in-store strategies without truly giving manufacturers a seat at the table. Listening to manufacturers but excluding them from the final strategy risks alienating them and losing out in the future. Alienated manufacturers may take their most-valuable insights, funding and programs elsewhere.

A third group will see shopper marketing primarily as a way to extract revenues from manufacturers by “selling real estate.” Using new tools and technologies to bet- ter understand the value of store parts and working with manufacturers to improve shoppers’ experience is a sound strategy. However, when retailers use these tools to purely monetize the store, they are essentially abdicating control over the shopper’s in-store experience. This strategy is sure to deliver a short term profit boost but is unlikely to be a winning strategy in the long-term.

Many companies will struggle to adapt to these challenges. However, for those companies that move quickly and thoughtfully, building the organizational capabilities and commit- ment to succeed, shopper marketing will be a powerful source of sustainable strategic advantage.

A Call for Industry Cooperation

Shopper marketing promises great returns for the entire industry – manufacturers, retailers and agen- cies. While both manufacturers and retailers are clearly aiming to develop competitive advantage through differentiation, shopper marketing is not just about shifting share. It is also about raising the tide within expandable categories and delivering incremental growth for all participants.

To accelerate and multiply the promise of shopper marketing for all stakeholders, the industry should work together towards the development of standards, benchmarks and best practices.

Nielsen In-Store’s P.R.I.S.M. consortium and others have begun to define industry-wide standards for metrics such as in-store gross impressions. The industry needs to continue to build upon these efforts to prove out existing metrics and develop new ones so that marketers can focus on effectively allocat- ing resources and creating value, not guessing at the effectiveness of programs.

The industry should also work to develop blinded benchmarks on shopper marketing impacts and processes. By improving the process and better understanding what works and what does not across the board, it will be easier for retailers and manufacturers to work together on the activities that drive the most shopper relevance.

Finally non-competitive industry players should establish shared interest groups to exchange ideas and best practices. This will accelerate the sophistication of shopper marketing across the industry, grow- ing the pie for all.

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