ShoppersMarketing | Retail Sales Accelerator

Shopper Marketing

May 29, 2008

A new study commissioned by the Promotion Marketing Association’s newly formed Shopper Marketing Center of Excellence identified broad and growing acceptance of the practice of shopper marketing among both retailers and marketers, as well as a need for closer collaboration between them. The comprehensive online survey, fielded in March of this year in conjunction with Brandweek, Progressive Grocer and Convenience Store News, polled manufacturers and retailers as well as the agencies and marketing service organizations working with them.* The results provide a provocative glimpse into the current state of shopper marketing and vividly point out the gaps in achieving its promise.

            The timing for this seems perfect: more than 60% of those surveyed reported that they are currently practicing shopper marketing. A full 75% of retailers surveyed said that some of their competitors are already practicing shopper marketing; 19% say all of their competitors are.

            Desire for collaboration emerged as a key theme of the findings. In general, retailers and manufacturers say they want closer collaboration (aligned objectives, stronger shopper insights, joint planning, activation and measurement) to maximize its potential. But as Rob Holston, the practice leader in shopper marketing for Deloitte Consulting, put it: “collaboration is like a romance” and requires a lot of work from both parties to succeed.

            The benefits to collaboration are clear. Among retailers who responded that they were collaborating “very well” with their vendors around shopper marketing, two thirds have seen increases in sales and improvements in profitability. Even more impressive, among those manufacturers who indicated that they were collaborating very well with retailers, all reported increased sales, enhanced brand equity, stronger retailer relationships/greater cooperation and stronger consumer relationships. Two thirds of these manufacturers have also realized enhanced profitability.

            Jesse Spungin, vp of shopper marketing at ConAgra Foods, reinforced the logic behind collaboration. “Each stakeholder naturally has their own priorities. The new common ground is the shopper. Nobody has an 80% share of the shopper.”

            Retailers are hungry for programs-78% say they do not see enough and are looking for more, while none reported that they are being offered too much. Some 44% of retailers responded that they are more likely to support shopper marketing programs than standard initiatives, and none indicated that they receive a lesser level of support. Nearly 6 in 10 manufacturers report that retailers are giving more support to shopper marketing than they did just one year ago, although just one-third of retailers said they are seeing more support from manufacturers over this same period.

            Retailers and manufacturers appear to set out with different objectives for practicing shopper marketing. While both identified increased sales as their No. 1 objective, retailers are more focused on the consumer, manufacturers on their retail customers. Among retailers, 31% listed strengthening consumer relationships as their primary reason, while less than 10% of manufacturers had this same objective. Some 22% of manufacturers reported that their primary reason was to strengthen relationships or gain greater cooperation with their retailers, but none of the retailers surveyed felt this way about their vendors.

            However, the benefits that both manufacturers and retailers have realized from shopper marketing generally went well beyond their initial expectations. Among manufacturers who responded that they began implementing shopper marketing for the primary purpose of increasing sales, 69% achieved the sales growth they had hoped for. However, 58% also experienced stronger relationships with their retail customers, 33% felt they had gained greater cooperation, 31% achieved increases in brand equity and 28% attained profit growth.

            Similar success was discovered by those manufacturers who engaged in shopper marketing for reasons other than sales. Among those who began primarily for the purpose of improving profits, five out of six reported their mission was accomplished, while for those who primarily sought to strengthen retail relationships, 89% were successful. Manufacturers who were striving for greater retail cooperation were rewarded 78% of the time, and for those who primarily wanted stronger relationships with their consumers,88% felt that this was achieved.

            Retailers also reported a high success rate from taking up shopper marketing. When retailers were asked what benefits they had realized, they responded (in order of prevalence) increased sales, stronger consumer relationships, improved profitability, stronger vendor relationships and enhanced brand equity. Among those motivated by increased sales, seven in eight reported success; for retailers who sought stronger consumer relationships, 80% felt that this was achieved.

            When retailers were asked why they will continue to support shopper marketing, 31% wanted to increase consumer engagement, 19% liked how programs were tailored to their shoppers, and 25% aimed to increase sales. For this last group, they were divided equally between expecting category-wide impact and seeking growth specific to the brands promoted.
For more Shopper Marketing coverage:
Part I: Desperately Seeking Collaboration
Part II: Playing Catch-Up
Part III: Shopper Segmentation Not Well Known