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The industry will continue to grow in-store activities at the expense of traditional media

SECTION TWO

Expected Marketing Mix Growth, One Year and Three Years Over the Next Year

Interactive/Web In-Store Shopper Centric Programs In-Store Communication/Advertising

In-Store Co-Marketing Programs Mobile Television

In-Store Couponing

Trade Promotions/Displays Print Out-of-Store Couponing/FSIs

Sponsorships

Radio Outdoor/Billboard

n = 79 (66 Manufacturers, 13 Retailers)

In the Next Three Years

0%

20%

40% 60% Respondents reporting (%)*

80%

100%

Interactive/Web In-Store Shopper Centric Programs

In-Store Communication/Advertising In-Store Co-Marketing Programs

Mobile In-Store Couponing

Trade Promotions/Displays Television

Out-of-Store Couponing/FSIs Sponsorships

Radio Print

Outdoor/Billboard

n = 78 (66 Manufacturers, 12 Retailers)

0%

20%

40% 60% Respondents reporting (%)*

80%

100%

Increase more than 5%

Increase 0-5%

Neither increase nor decrease

Decrease 0-5%

Decrease more than 5%

*Note: Data shown as a percent of total responses for each mix element; the number of respondents for a single mix element may be less that the total sample size Source: 2008 GMA/Deloitte Shopper Marketing Survey

A Lot of Pilots, but How Much Impact? “Shopper marketing will grow dramatically over the next few years. The big question is

  • are we making the best decisions?” – Health & Beauty Manufacturer

As noted in last year’s GMA/Deloitte report – the train has left the station. However, something has gotten lost in all this activity. As organizations race to catch the “shopper marketing train,” many are jumping aboard without checking their destination. Others might be catching the right locomotive, but have failed to pack the right supplies for the journey.

Interviews with retailers and manufacturers consistently revealed a lot of well-founded pride in shopper marketing efforts – but when pressed for specifics, things get a little fuzzy. Despite the flurry of new resources, new techniques, and new pilots, few organiza- tions can articulate how they make strategic choices about shopper marketing. Organi- zations report that they are not able to calculate the impact of their shopper marketing efforts, or identify which programs, partners, or tactics are the most successful. And while most organizations plan to employ performance measurement more rigorously in their future decision-making, barely half currently use performance data to measure program performance, evaluate partners, or determine marketing mix.

The pace of change itself is complicating matters.

As the industry fully embraces this new and evolving field, manufacturers and retailers are experimenting, learning and codifying at the same time. While a slew of pilots might

More sophisticated companies report greater effectiveness across across all shopper marketing objectives

SECTION TWO

show great promise, the sheer number of possible tactics and tools makes it hard to isolate cause-and-effect or to allocate resources efficiently. Worse yet, the industry itself still lacks coherent, universal shopper marketing performance metrics.

One result of today’s somewhat confused approach to shopper marketing is that a few companies have significantly outpaced everyone else in understanding and implementing shopper marketing. The “sophistication gap” between these leaders and the rest of the industry is growing.

A Widening Sophistication Gap

“There’s a distinction between the manufacturers who ‘get it’ and those who do not. Working with the ones who do not is like squeezing water from a rock. Every meeting is like the movie ‘Groundhog Day’ – it’s the same thing over and over again.” – Retailer

The North American consumer products environment is a quickly changing landscape. Top performers in shopper marketing are becoming more sophisticated in their efforts. They are putting more and better resources into shopper marketing, investing in the toolsets to help make more strategic decisions, and working hard to recruit and train the right people. Most important, the leaders are doing so faster than other companies, many of which are adopting a wait-and-see attitude or approaching shopper marketing tentatively through ad hoc experimentation. As a result, the sophistication gap between top performers and everyone else is getting wider, and the slower moving companies find themselves at risk of being left behind.

Companies with advanced shopper marketing capabilities report that their initiatives per- form significantly better at driving company-level results such as boosting top line growth, driving value from relationships, and building brand equity. They report one and a half times greater effectiveness than the less sophisticated group at achieving results across all shopper marketing objectives. They have overcome key challenges such as obtaining executive sponsorship and funding, and are putting the planning and evaluation infrastruc- ture in place to even further improve shopper marketing effectiveness.

Shopper Marketing Effectiveness at Company Level Results

Manufacturer

Retailer

5

5

Average Effectiveness Rating*

4

3

2

4

3

2

Generating

Minimizing

Building

Driving new Generating

Meeting

Boosting

competitive

the cost of

brand

product

relevance

retailer

top line

*Average respondent rating of their shopper marketing programs effectiveness at acheiving objectives, on a scale of 1 (not at all effective) to 5 (very effective) Source: 2008 GMA/Deloitte Shopper Marketing Study

1

1

Level of Sophistication

Basic

Intermediate

Advanced

Boosting top line growth

Level of Sophistication

Basic

Intermediate

Advanced

advantage

in-store

programs

n=90

Minimizing the cost of in-store programs

Building

Enhancing

Generating Differentiating

equity

development with retail requirements growth and innovation partners

my retail banner

n=15

relationships

retail banner the shopper greater va

lue

equity experience from manufact

urer

So what holds the rest back? Many struggle with the basics – how do they gain organiza- tional alignment and secure sufficient resources to design and execute shopper marketing programs? How do they integrate shopper marketing into their formal planning process- es? How do they measure and analyze results?

7

Less advanced companies often struggle to resource their emerging shopper marketing initiatives. They face insufficient funding and lack of appropriate skillsets and talent. Of- ten lacking executive buy-in or organizational understanding of the importance of shopper marketing, they are unable to secure the commitment for additional headcount and pro- grams. They tend to conduct their programs on an ad hoc basis (68 percent of companies in this group) versus as part of a formal planning process. Once programs are in place,

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