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Not surprisingly, companies are shifting their marketing resources increasingly away from traditional elements which are becoming less effective (e.g., freestanding inserts, radio, billboards) and toward more effective in-store elements (e.g., shopper-centric programs, in-store co-marketing).

However, shopper marketing is not just an in-store tactic. It is a shopper-centric approach to increase the relevance of products, brands and store banners. Manufacturers and retailers can use shopper marketing in concert with traditional marketing strategies to substantially improve the shopping experience for a targeted shopper. Happier customers dwell longer, buy more and visit more frequently – results that are difficult to match with conventional practices.

For retailers, shopper marketing differentiates their banners and generates top line growth due to higher trip frequency, larger basket sizes and growth in expandable categories. A more engaging shopping experience leads to increased customer loyalty.

For manufacturers, shopper marketing increases the exposure and relevance of the company’s brands and products to target shoppers. Sales increase while dependence on deals is reduced. Brand equity is generated via the retail environment.

The potential returns from shopper marketing are hard to ignore. As an example, models cre- ated based on actual consumer goods companies’ experiences indicate that effective shopper marketing can grow a brand’s revenue 25 percent faster than the overall category. In one case, a $3 billion consumer products manufacturer estimated a $250 million annual revenue lift through effective implementation of shopper marketing.

Like category management, shopper marketing requires more work, incremental investment and new capabilities, but forward thinking companies see that the rewards will outweigh the costs substantially, and are acting now.

The remainder of this report describes the lessons learned and work required to win the ben- efits of shopper marketing.

SECTION TWO

SECTION TWO:

Lessons in Shopper Marketing Execution

Key Takeaways:

  • Don’t Mistake Activity for Impact.

  • There is a Natural Lifecycle for Shopper Marketing.

  • Go Forward with a Map and a Sextant.

  • Overcome the Barriers to Genuine Collaboration.

  • Master Execution for Competitive Advantage.

1. Don’t Mistake Activity for Impact

Shopper Marketing Activity is Exploding

Since last year’s GMA/Deloitte report, retailers and manufacturers have ratcheted up their investments in shopper marketing. They’re putting in place people, technology, and part- nerships in an attempt to make shopper marketing a true discipline in their organization, a driver of growth, and a true force in their markets. However, much of this activity has missed the mark.

The pace of activity has clearly accelerated. In this year’s research, companies overwhelm- ingly report increased budget and headcount dedicated to shopper marketing. Several manufacturers are overhauling their marketing, sales, and account management teams to improve their shopper marketing efforts. For retailers, shopper marketing is mak- ing inroads into merchandising and category management functions. Both retailers and manufacturers report increased collaboration, with a growing number of pilots dedicated to testing new and promising ideas.

Growth in Shopper Marketing Headcount 2007-2008

Manufacturers and retailers are growing their shopper marketing investment

Respondants reporting (%)

Manufacturer

Retailer

100%

100%

Respondants reporting (%)

2007: n = 17

20%

2008: n = 65

0%

60 Point Increase

60%

40%

60%

40%

20%

2007: n = 8 2008: n = 10

0%

2007

2008

Shopper Marketing Headcount

21 or more

11 - 20

6 - 10

1-5

80%

23 Point Increase

80%

1-5

2007

2008

Shopper Marketing Headcount

21 or more

11 - 20

6 - 10

Source: 2008 GMA/Deloitte Shopper Marketing Study

And the growth will only continue. Both retailers and manufacturers plan to increase in- vestments in in-store marketing programs over the next three years. More than 60 percent of retailers and manufacturers plan to increase spending on non-trade in-store programs over the next year, and 20 percent say that they plan to increase it by more than five percent. When looking three years out, those numbers reach 80 percent and 40 percent respectively. The growth is second only to investments in interactive/web marketing, and comes at the expense of traditional media such as television, radio, billboards and out-of- store couponing/ free-standing inserts (FSIs)

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