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Advancement through the lifecycle drives impact

SECTION TWO

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.

2. There is a Natural Lifecycle for Shopper Marketing

A Shopper Marketing Lifecycle is Emerging

Interviews with retailers and manufacturers have identified a clear progression that com- panies must go through to achieve the potential value of their shopper marketing initia- tives. Companies tend to progress through a Shopper Marketing Lifecycle, beginning with a commitment to test shopper marketing, and culminating with culturally embedding it throughout the organization.

Shopper Marketing Development Lifecycle

Strategic Advantage

Incubating

Scaling

Culturally Embedding

Tactical Advantage

Initial Commitment

Small scale impact, as ad hoc programs drive positive return

Growth in impact as scale programs; also growth in costs

Significant margin improvements and new growth due to integration/optimization

Tenure of Shopper Marketing Effort

Source: 2008 GMA/Deloitte Shopper Marketing Study

A company’s stage in this lifecycle drives – or limits – the level of impact their shopper marketing initiatives can achieve:

Incubating

Many organizations begin shopper marketing with an executive-level commitment to shopper marketing on a pilot basis. A significant initial investment is typically required to build the capability to generate relevant insights and activations, but a large infrastructure is not necessary. Pulled from multiple functional areas, the teams experiment, hone their skills, and increase the sophistication of their thinking and partner relationships. Compa- nies often begin by dedicating resources toward the generation and commercialization of insights which is at the foundation of shopper marketing. Metrics are minimal, often qualitative assessments of impact and excel-based analysis. Funding for programs tends to be ad hoc, coming from some combination of corporate, brand marketing, customer marketing and account teams.

Most organizations qualitatively recognize the potential of shopper marketing at this stage but have difficulty quantifying the impact. The ad hoc nature of the programs, the level of organizational sophistication, and lack of scale also limits the impact at an organizational

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SECTION TWO

level. While designed to demonstrate the power of shopper marketing, pilot programs also reveal the potential change in roles and shifting power-dynamics within and between partners. For instance, many companies experience a struggle between brand manage- ment, category management and sales over the control of funding and shopper programs. Once those changes become evident, powerful sources of organizational resistance often emerge. Working through these points of resistance often determines how quickly compa- nies move from incubating into scaling shopper marketing efforts.

Based on our study results, we estimate that about 40-45 percent of companies who have begun the shopper marketing journey (some, generally niche, companies have not yet committed to shopper marketing) are in this phase. They typically capture about 5-10 percent of their company’s total potential shopper marketing benefit. Some companies in this stage are actually losing value. This is typically caused by a lack of investment in capa- bilities to generate and activate insights, lack of ownership of strategy and lack of sincerity with partners.

Scaling

Companies in the scaling stage have made shopper marketing a fixture of their business strategy by establishing formal shopper marketing groups, tools, and processes. They focus on building sustainable capabilities, becoming more rigorous with analysis, decisions and investments, deepening relationships with partners and standardizing processes.

Many establish a separate shopper marketing organization that reports through either the marketing or sales function, and dramatically ratchet up resources dedicated to shopper marketing. These organizations employ more robust metrics (such as reach, conversion, and ROI) using a scorecard approach to demonstrate the value of shopper marketing pro- grams to remaining internal skeptics.

Manufacturers typically wrestle with the scalability of insights at this stage. The key chal- lenge for manufacturers is that insights are inherently difficult to scale because they are specific to accounts, banners and even store clusters or regions. Manufacturers must strike a balance between the cost of customization (insight, program tailoring) and the benefit of increased in-store activity. Many are choosing to use a combination of dedicated shop- per insights people for critical accounts, potentially co-located with the customer account teams, and a centralized group to handle all other research priorities. Companies are also trying to systematize the ability to convert insights into activations at this stage by cross- training brand, category and account teams.

Benefits increase dramatically during this phase, as the sophistication, range, and reach of shopper marketing programs expand. Costs also increase as organizations dedicate more resources. Many still lack the decision-making processes and tools to consistently prioritize the most effective programs. About 50 percent of companies are in the scaling stage, and they capture an estimated average of 25 percent of their company’s total potential shopper marketing gains.

Culturally Embedding

According to our research, only 5-10 percent of companies have begun the transition into the most advanced phase of the lifecycle – culturally embedding. Companies at this stage have scaled their shopper marketing programs and have shifted focus to optimizing their programs – systematically and iteratively assessing programs, partners, and investments to drive continuous improvements. However, even leading shopper marketing companies will readily admit that they are just entering this phase and have significant work to completely embed these capabilities. These companies currently capture an estimated 60 percent of their total potential shopper marketing value.

Culturally embedding companies have begun integrating shopper marketing throughout their organizations. Marketing, sales, merchandising, and category management embrace it as a critical lever of the overall marketing plan, coordinate to show a seamless face to the customer and align with planning calendars of key partners. Trade promotions and overall trade strategy align with shopper marketing efforts.

Advanced companies are paying particular attention to developing shopper-centric talent

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