1-shopper marketing sser-prepared#47-50 - sse … · brent mckenzie, mba, phd shopper marketing...

Brent McKenzie, MBA, PhD

Shopper MarketingWhat we Know and Don’t Know

SSE-Russia – WebinarNovember 26th, 2014

gTallinna Kaubamaja –

BackgroundCategory Management Case

Study

yRe-independence and

TodayThe Future?

1970’s-1990’sChallenges of SM

1960’s – The BeginningThe Theory & Practice of SM

Retail trade in EstoniaThe History of Shopper Marketing

Discussion

IntroductiongWhat is Shopper

Marketing?

Overview

Why do People go Shopping?

Traditional Retail Strategy

Traditional – variety of products, variety of brands, variety of quality

Variety – category killers/specialty shops – less breadth but greater depth of products – i.e. instead of 5 different hammers, choose from 25+ hammers

Technology – high tech systems and operational tools –RFID “smart” shelves, self checkout, bar codes in shopping cart handle

Loyalty – programs to build one-to-one relationships with customers – special deals, etc.

Customer service – “take good care of your people, and your people will take care of your customers”

Existing Retailer Strategies

World ConsumersChanges over time – Consumer confidence

Canadian ConsumersChanges over time – Canadian Confidence

Canadian Retail SalesChanges over time

What is Shopper Marketing?

We believe shopper marketing is the most exciting approach to marketing today - we also believe it is the most important marketing investment you could make, as it looks at the world from the shopper’s vantage point.

Source: http://www.birdsonggregory.com/990/shopper-marketing-defined/


Source: http://www.integerme.com/shoppermarket.aspx

What is Shopper Marketing?Shankar et al (2011) in their Journal of Retail article“Innovations in shopper marketing: Current insights and future research issues,” Journal of Retailing, say that there are many different definitions of shopper marketing and have either broad or loose meaningsassociated with them - this ambiguity is complicated by the lack of consistency of the definition within different industry publications

What is Shopper Marketing?Still somewhat of an evolving term, shopper marketing can be understood as the orchestration of all activities that turn shoppers into buyers

Beyond developing novel creative communication at the point of sale, shopper marketing applies a shopper lens to the entire process of strategy, product and brand development, logistics, route to market, and selling and merchandising a product in a retail environment

It requires taking a more holistic approach when developing business-unit strategies to move beyond more than just brand-development decisions

Source: Advertising Age.

“Capturing a Shopper’s Mind, Heart, and Wallet”

“Shopper Marketing is the employment of any marketing stimuli, developed based on a deep understanding of shopper behaviour [shopper

insight], designed to build brand equity, engage the shopper (i.e., an individual in “shopping mode”), and

lead him/her to make a purchase.”


What is Shopper Marketing?Like traditional marketing, Shopper Marketing is a practice, but in contrast to traditional marketing practice, it is a way of marketing directly to the shopper and not necessarily the consumer

There has been a great deal of industry discussion on the topic, but less so from an academic perspective

Traditionally adept at supporting short-term sales goals, the “grown-up” version of shopper marketing demands that manufacturer marketing and sales organizations work collaboratively, invest in the shopper, (as well as in retailer relationships) and be dedicated to innovate, activate, test, measure, learn and create success together

What is Shopper Marketing?Shopper marketing is marketing - better yet, shopper marketing is a consumer centric business philosophythat even some MBA students are starting to focus on -NYU and UTenn have already developed courses

The future talent base of most marketing organization may still be in school - but time flies, and soon today’s best shopper marketers will be CMOs or CEOs - and those savvy students exploring shopper marketing today may be the most exceptional brand stewards your company can recruit

Source: http://annehoweassociates.com/2010/11/report-rreview-shopper-marketin...


"Because the purpose of business is to create a customer, the business enterprise has two--and

only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the

distinguishing, unique function of the business."

Peter Drucker, a guru in the field of management research and business consulting, stated that;

What is Shopper Marketing?It has been around for years, the early emphasis was on in-store promotion and displays; only recently have “in-home” and “on-the-go” activities along the shopper’s journey (or path-to-purchase) been integrated into the playbook

Insights in shopper behaviour - signals that it’s time for practitioners to realize that shopper marketing is marketing

Shoppers and consumers are not always the same, but every consumer spends time in “shopper mode” as he/she fulfills the shopper journey – what is relevant is the content he/she experiences that shapes emotion, behaviour and perception in some manner

What is Shopper Marketing?Much of this effort is within stores – retailers are shifting billions of dollars within their marketing budget from traditional media to in-store initiatives

Key players include consumer goods companies, retailers, brokers, advertising agencies, data management companies, and consultants


Organizations such as the In-Store Marketing Institute(which focuses all of its attention on shopper marketing issues and publishes a monthly report, Shopper Marketing) and the Grocery Manufacturers Association, have been holding summits and publishing reports in collaboration with company consultants

Shopper marketing is hot, is in need of cross-functional and cross-organizational research and business attention, and has long-term implications.

History of Shopper Marketing

“Consumer Marketing tells consumerswhat to think (based on what they said

they would do); Shopper Marketing tells shoppers what to do (based on

what they’ve done in the past)


The pillars of Shopper Marketing Category Management

Shopper Understanding

Retailer Knowledge

Manufacturer/Retailer Collaboration

Case Study

339 stores

$ 9 billion in credit card sales

63 stores

468 stores

Retail Sales$9.8 billion

(Cdn $)

Gas bars - 260Car washes - 74Convenience - 251

Current Focus for Category Management

Case Study

Canadian Tire has Five Objectives for Category Management within their Shopper Marketing programs

Due to the alignment to a unique marketing strategy, approaches will be

very different across organizations

Due to the alignment to a unique marketing strategy, approaches will be

very different across organizations

Marketing Strategy

Category Strategies

1. Alignment of category strategies with the marketing strategy1. Alignment of category strategies with the marketing strategy

Case Study

Marketing Strategy

2. Enable the prioritization and allocation of resources2. Enable the prioritization and allocation of resources

Supply Chain

Advertising & Promotion

Pricing

Product Development

Merchandising

Examples

Category Strategy

Case Study

Inventory

Marketing Strategy

Category Strategies

3. Support the development of the financial plan3. Support the development of the financial plan

Supply Chain


Sales

Product Development

Merchandising

Examples

Margins

Financial Plan

Inputs

Outputs

=

=

Pricing

Case Study

4. Enable alignment across strategic partners4. Enable alignment across strategic partners

Inventory

Marketing Strategy

Category Strategies

Supply Chain


Sales

Product Development

Merchandising

Margins

Vendors

Corp.

Stores

Examples

Financial Plan

Inputs

Outputs

=

=

Pricing

Case Study

5. Capture the needs and wants of customers5. Capture the needs and wants of customers

Financial Plan

Inputs

Outputs

=

=Inventory

Marketing Strategy

Category Strategies

Supply Chain


Sales

Product Development

Merchandising

Margins

Vendors

Corp.

Stores

Examples

Customers

Pricing

Case Study

A Rigorous Annual Review of Each Category Enables the Determination of the Operational

Tactics and the Resource Requirements

1. Merchandise Hierarchy

2. Category “Roles”3. Environmental Analysis

4. Performance Measures5. Operational Tactics

Aligned to Marketing Strategy

6. Resource Requirements

Access to information is essentialAccess to information is essential

Case Study

Automotive

In Order to Successfully Plan and Investigate the Strategies, the Merchandise Hierarchy must be Aligned Internally and

Across Key Strategic Partners

In Order to Successfully Plan and Investigate the Strategies, the Merchandise Hierarchy must be Aligned Internally and

Across Key Strategic Partners

Parts, Tires, Service

Custom &Performance

Car Care &Accessories

Exhaust Steering & Suspension

Heating &Cooling

DriveTrain

BrakeParts

Division

Line of Business

CategoryExamples

Sub-Category

SKU

Provide each Category with “Roles”

• Consumer Role - Why do customers shop for this category? e.g. Complete a project

• Shopping Role - How do customers shop for this category? e.g. Convenience purchase

• Retail Role - How does the category contribute to financial success? e.g. Traffic driving

The definition of roles is critical for assigning operational tactics and resource requirements.The definition of roles is critical for assigning operational tactics and resource requirements.

Case Study

The Combination of Category Roles, Environmental Analysis and Performance Measures will Enable the Determination

of Operational Tactics and Resource Requirements.

The Combination of Category Roles, Environmental Analysis and Performance Measures will Enable the Determination

of Operational Tactics and Resource Requirements.

Resource Requirements

Category Roles EnvironmentalAnalysis

Performance Measures

OperationalTactics

• Consumer• Retail• Shopping

• Competition• Customer

• Retail Productivity• Advertising Productivity

• Pricing• Advertising• Merchandising

• Advertising $• Merchandising Resources

Once the Categories are Planned, a Roll-up of all of the Strategies is Evaluated and Appropriate

Trade-offs are Made

Once the Categories are Planned, a Roll-up of all of the Strategies is Evaluated and Appropriate

Trade-offs are Made• Fit with Marketing Strategy• Alignment of Growth with

Investment• Allocation of Resources• Assignment of the Financial Plan• Determination of Bonuses

Detailed analyses are completed to align to the Marketing Strategy and optimize the cost / benefit trade-offs.

Detailed analyses are completed to align to the Marketing Strategy and optimize the cost / benefit trade-offs.

Case Study

Examples of Analysis

Advertising Merchandising Inventory $ Available Requested

Available vs Requested Resources

High

XInvestment

Low

Low Growth Rate High

Profit Generating

X

RetailRole

TrafficDriving

ConveniencePurchase

Shopping Role

DestinationPurchase

?

Growth vs Investment Retail vs Shopping Roles

Example of a Product Developed with a Category Strategy

Category - Patio Furniture RoleConsumer Role - High TouchShopping Role - InspirationalRetail Role - Traffic DriverSales Growth - HighProfitability - Medium Product - Dining Sets,

Conversational Furniture

InvestmentAdvertising - TV Commercials

Flyer, Online Microsite

Merchandising - Inspirational Displays -

Development Innovation and Style and Design

Supply Chain - Offshore Sourced

Pricing - Competitive

Case Study

In-store Display and Signage

Inspirational Book

Microsite

How is This Program Working at Canadian Tire?Successful• Alignment with Marketing

Strategy

• Effective allocation of resourcesand resource productivity

• Improved financial planning

• Enhanced Category Manager Skills

• Improved retail execution

• Category sales and margin growth

Needs Improvement• Require more emphasis on

managing and measuring

• Must improve communication and information flow to Stores and Vendors

• More flexibility required for quick response to market risks / opportunities

Overall, customers are getting more of what they value and that is translating into more value for our shareholders.

Overall, customers are getting more of what they value and that is translating into more value for our shareholders.

Case Study


Source: http://www.ipsos.com/marketing-shopper/shopper-framework

What is a Consumer?

What is a Shopper?A shopper is the person who is doing the buying – they can also be the consumer if they are buying for themselves, but they may be shopping for another person (mother’s often act as both most of the time)

You have to know who you are talking to – are you talking to the shopper, the consumer or both?

The message you deliver must be directed at the right audience at the right time

What is a Shopper?Shoppers take very little time to make their decisions -on average they spend 2.5 seconds looking at each section, meaning they can at best only see half of what’s available on the self

Research tells us that 70% of shoppers decide what to purchase at retail – thus marketing to shoppers is critical

Marketing to shoppers means making their shopping experience more valuable - better in some way – easier, less expensive, less time consuming, more problem solving

What is a Shopper?

“We know this for a fact: Our parents have a supermarket route that can't be interrupted, come hail or hurricane - God forbid you forget to swoop something up after they've passed through”

Source: http://www.adrants.com

What is a Shopper?In-store decision making tools

What is the Function of Shopper Marketing?

Provide Shopper Solutions“Change” Shopper BehaviourRepeat BehaviourChange BehaviourGet shoppers to spend more time in the storeGet shoppers to visit the store more oftenSell more to the shopper when they are in the store

The Theory of Shopper Marketing

Peer Reviewed Journals – only 2 articles with “Shopper Marketing” in the title – (183 for industry publications)

32 references with “Shopper Marketing” somewhere in the article – (>1700 for industry publications)

Why??????

The Theory of Shopper MarketingMSI’s (Marketing Science Institute) conference, “Shopper Marketing,” held June 14-15, 2010, in New York, New YorkUniversity of Tennessee and the creation of a Shopper Marketing group, course curriculum, conferences and discussion groups


Research Topics in-store buyer behavior, decision-making, and experiences innovative shopper-focused value co-creation programs customer value dynamics and the impact on shopper experience innovations in retail technology-based self-services demand and supply chain integration related to shopper marketing initiatives;

The Theory of Shopper MarketingResearch Topics market sensing and data mining processes shopper advertising opportunities and effects ethical issues of in-store marketing supply chain relationship issues related to shopper marketing initiatives in-store branding opportunities international issues related to shopper marketing initiatives


Store atmosphere continues to plays a big part in the success of shopper marketing initiatives

Environmental stimuli and factors have been extensively studied and the insights gained offer support for shopper marketing initiatives (see Turley and Milliman 2000)

More recent studies, involved experimental tests on the emotional effects of aroma, music, in-store imagery and store layout on shopping motivations (see Morrison et al, 2011; Walsh et al, 2011).

Specific Findings


Research on unplanned purchasing behaviour and characteristics - Corsten & Knox (2011) explored the pre-shopping factors that effect point-of-purchase decision making using panel data - found that unplanned buying is strictly increasing the less defined the shopping trip

Inman, Russell & Ferraro (2009) examined the effects of category and customer characteristics along with customer activities on in-store decision making – they found that shoppers who did not use shopping lists, made infrequent shopping trips, visited all of the aisles, spent more time shopping or used a credit card to pay increased the likelihood of making unplanned purchases

Specific Findings


Research on shoppers’ mental budgets during in-store decision making by Stilley, Inman & Wakefield 2010 showed the dynamics of this thought process - each shopper had different mental budget ‘slack’

Consumers were asked to use a hand held scannerwhile they shopped to record the order of their purchases -the results showed that for the higher-income shopper, planned purchases increased before the slack was depleted but also increased unplanned purchases after the mental budget slack was used

Specific Findings


A challenge for shopper marketing research is that most studies are done in a experimental setting so generalizations are difficult - the ability to properly use shopper marketing tools can offer insights into answering this question

Limitations

The Practice of Shopper Marketing

Source: www.nielson.com

The In-Store Marketing Institute and The Nielsen Company Mark Key Milestones on

Path Towards a Global Ratings Metric on In-Store Marketing

“Data Will Make Stores a Measurable Medium Alongside TV, the Internet and Other Platforms, Revolutionizing How

the Retail Industry Serves Consumers Early Findings Show Heavy Traffic Does Not Equate to Highest Sales;

Shoppers who Bring the Kids to The Grocery Store Buy More, including Shampoo and Drinking Water”


Source: http://www.shoppermarketingmag.com/home/


Along with social media, shopper marketing is hot; it is one of the fastest growing segments of consumer goods marketing todayMajor consumer goods manufacturers such as PepsiCo and its Frito-Lay division, Nestle, Procter & Gamble, Kimberly-Clark, and Bush Bros. are all desperate for talent specifically trained in shopper marketingThe same goes for powerful brokers such as CROSSMARK; retailers such as Wal-Mart, Best Buy, Lowes and Home Depot; and agencies such as Mars Advertising,”

Specific Findings


Source: www.shop-incite.com


Source: http://www.explorergroup.ca

The Practice of Shopper MarketingJob Details:Super successful and one of the BIGGEST GROUPS in the WORLD of advertising is currently experiencing substantial growth due to the recent win of a large GLOBAL ACCOUNT. A smart and sharp STRATEGIC SHOPPER MARKETING PLANNER to be the lead across this GROUP of BRANDS in the UK. To really enjoy the role, you will need a comprehensive understanding of the link between brand and shopper behaviour as well as a proven track record in delivering SHOPPER MARKETING based strategic direction for blue chip clients - ideally FMCG. The kind of strategies that will be devised and implemented will most frequently be around instore brand identity, category and trade activations, promotional advertising, and incentivising schemes, competitor analyses and effective product differentiation, PLUS identifying new SHOPPER behaviours in a digisphere.If you’re an ‘ideas’ person, always looking to solve problems through clever ideas developed from your knowledge of brand/shopper/market, this could be the next challenge for you. Join us...and find out more. Salary: £45000 to £60000 Country: United KingdomRegion: London


A common limitation in research is that each shopper has a different preference, thus it is difficult to offer consistency among studiesCreating shopper marketing frameworks requires proper measurements and understanding of shoppers that shop for different brands, in different categories and in different domains (online or in-store)The result is there is a need for collaboration amongst manufactures and retailers, between competitors, and between intra-company departments such as sales and marketing to provide this information

Limitations

Challenges of Shopper Marketing

Research on shopper marketing metrics is limited

The Deherder and Blatt 2011 book entitled, “Shopper Intimacy”, provides an excellent foundation and offers various metrics for retail marketing, or in-store marketing

Framework called Retail Ecosystem Analytics Process (REAP) and provide advice on how to implement the strategy - REAP is used to “transform” data into valuable insights

Metrics, metrics, metrics…


In-store measuring metrics are; opportunity to see (OTS),exposure, audience, gross rating points (GRPs),target rating points (TRPs), in-store rating points (IRP), reach, frequency and cost per thousand (CPM),



Safeway in 2005 begun introducing “Lifestyle” stores – they now have more that 400 of these retail outlets

These stores feature warmer lighting, more readable product labels, and they focus on engaging the shopper’s purchase interest by delivering a consistent brand message through very available communications channel

Examples


Data can be obtained through technologies such as in-store kiosks, in-home scanners, intelligent shopping carts and analyzing the data using shopper segmentation tools

Standardized frameworks on the best ways to analyze and interpret these data pools is lacking in theacademic research - use of an ‘eye camera’ to collect data about what media the shopper sees and focuses on while shopping



Source: http://www.explorergroup.ca


Home Depot Shopping Carts Spout Text-Based Marketing Messages

Concept shopping carts are getting outfitted with a text messaging device, courtesy of Modstream - it's appearing at Home Depots in 8 statesThe idea is that shoppers, which haven't warmed much to video-outfitted shopping carts, will take advantage of coupons, or marketing messages, or whatever-else, at their fingertips.This would be a neat idea if the text function reflected deals in the aisle that shoppers were in - people don't like being pulled in disparate directions by marketing messages.

Source: http://www.adrants.com/2007/11/home-depot-shopping-carts-spout.p

Future trends?Fundamentals of shopper marketing are persistent across the world and therefore, “it is more important to understand shopper behaviour and how to affect it in general then to understand the cultural or traditional influences on the local shopper.” (Mala, 2012)

This means that shopper marketing data, tools, and insights used to create standardized theoretical frameworks can be applied everywhere and more quickly

Future trends?

Collaboration is a critical part of shopper marketing

Retailers must work together if they are ever going to fully understand the behaviour and dynamics of the shopper

The collecting and sharing of data between retailers will allow for a better understanding of shopper segments and the motivational triggers necessary to increase unplanned buying

Things to think about…

Finally…Marketers are paying more attention and carving out significantly more funds to their shopper marketing efforts

A number of questions remain - is this another trend or is this a real marketing strategy that can in fact generate a competitive advantage?

Marketers/Retailers – if you are not already on this train, you will have to run to catch it as it has already left the station

Source: Michael Palmer – “Shopper Marketing – What is it Anyway?

Thank youQuestions?

[email protected]

1-shopper marketing sser-prepared#47-50 - sse … · brent mckenzie, mba, phd shopper marketing...

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