The life of the marketing executive in a consumer product company was so much simpler in the past. They could carefully identify their target market, craft their positioning, and invest in traditional advertising to build their brands and turnover. Not so today. Traditional advertising is losing its effects. The rise of multiple network TV channels, hundreds of cable channels, Netflix, iflix, Apple TV, YouTube and a host of other new media has made advertising increasingly fragmented. In addition to all these options, the consumer is often looking at multiple screens while watching television. He may be checking his email in his laptop, or browsing product information through his mobile phone. The battle for the consumers’ attention has become exceptionally difficult.
Retail vs. Manufactures
Many companies have begun to shift more and more of their budgets in-store. ATL (above the line) and BTL (below the line) ratio is shifting in favor of BTL. The point-of-sale is becoming one of the last bastions of reaching a mass audience. It is estimated that an end-cap in Walmart reaches more people in a week than a 30-second commercial on prime TV. Countless research points out that brand decisions made in-store range from 30% to 70%, depending on the category.
But are these investments paying off? The rise of promotions to drive retail sales has not necessarily addressed the declining efficiency of advertising. While manufacturers increase spend on in-store promotions, retailers often use this support to generate income to drive store expansion and soften hard operating margins. The goal of manufacturers and retailers often do not align. Retailers just want to sell more products and don’t really care which brand. Manufacturers, on the other hand, want to sell more of their brand and don’t care where it is sold.
But it is not only the CPG companies that are challenged. While retailers continue their acquisition binge and exuberant expansion, same store sales growth is under pressure due to hyper competition and declining foot traffic in-store. The rise of the omnichannel shopper who now has endless options of choosing where, when, and how to shop has changed the retail landscape permanently. The path to purchase is no longer a simple straight line. The zero moment of truth, for many, becomes the only moment of truth. This trend is expected to continue as online sales continue to grow. But it is not only online sales that are affecting traditional retail sales, many purchase decisions are highly influenced online. Consumers will browse product information, reviews, and compare prices before even making a purchase. Marketplaces such as Amazon and Alibaba pose a new generation of competition that is hard to beat. Retailers are no longer in control. Control has been transferred to the shopper who is becoming increasingly harder to find, engage, and please.
Shopper Marketing is the Key to Unleash Value in the Age of the Shopper
How can brand marketers and retailers drive growth and create value in this revolutionary market landscape? Shopper marketing may very well hold the key to unleashing a new wave of value in the age of the shopper. Shopper marketing is the process of understanding shoppers and using that knowledge to implement a marketing mix, that influences shopper behavior in-store toward driving growth of the consumption of a brand and/or category. Shopper marketing done right not only drives purchase at the point-of-sale, but helps drive brand consumption as well. It represents true collaboration between manufacturers and retailers for the benefit of the shopper.
We need shopper marketing because there is not one single category in existence, in which the shopper is always the consumer. The consumer is the person who uses the product or service. The shopper is the person who actually buys that product (or service). The job of a brand owner is to know how to influence both the consumer and the shopper. The shopper is often the most important. At home, people consume what they already have; if their favorite brand is not there, they usually don’t mind and will drink or eat whatever is available.
A man may prefer Heineken beer and Lays potato chips, but his wife who does the grocery shopping decides, in-store, to buy Corona instead since it is on sale and she has seen her husband drinking this brand. As for the chips, Ruffles potato chips is similar enough to Lays and has a buy-one-take one offer. The kids may prefer Fruit Loops cereal, but mom thinks Super K is a healthier alternative. The husband is often the one who pays for a vacation, but it is usually the wife who will choose the destination. When you ask a consumer what he likes in his coffee brand, he may say things like the taste, the flavor, the temperature. Now ask, what things are important to people when they are shopping for coffee? They may answer packaging, price, promotions, color and shape.
The Missing Piece in Marketing
Isn’t consumer marketing and trade marketing enough? Not anymore. Shopper marketing creates coherent links between the end consumer, the in-store environment, and the retailer. It is the missing piece in many company’s marketing programs. And it is what is needed in the age of the omni-channel shopper who holds all the power. True partnerships between retailers and CPG manufacturers should be more strategic and less transactional. The traditional approach is typically adversarial and aggressive. The negotiation is a zero-sum game-- one side’s gain is the other’s loss. It is time to move from this adversarial relationship to one that is truly collaborative. The only way to capture growth in the marketplace is to think about the shopper first. Shopper marketing leads to a triple win: the manufacturer, the retailer, and the shopper all win. Retailer and manufacturer need to work together to understand the types of shoppers who buy their products, how to influence those shopper behaviors, and how to invest wisely on behalf of the shopper. The age of shopper marketing is here. Are you ready?
About the Author
Frances Yu is the former Chief Retail Strategist of Mansmith and Fielders, Inc. For more information, please email firstname.lastname@example.org.