Anticipating the Future of Shopper Marketing: A Guide to What's Next

On-line version of the paper; free pdf is also available

Prepared by Bill Bishop, Chief Architect of Brick Meets Click 

December 3, 2012

Executive Summary

Shopper marketing is evolving, driven by growing insight into shopper behavior and the relentless expansion of digital strategies, tools, and tactics. This paper presents survey findings that explore several forward-looking hypotheses about the future of shopper marketing. Then, it translates the insights and implications that arise from these findings into actions that will help retailers increase the effectiveness of their shopper marketing programs as the discipline evolves.

The Evolution of Shopper Marketing

The four findings discussed in this paper are:

  1. Digital platforms are expected to increase shopper marketing effectiveness over the next twelve to eighteen months.
  2. Shoppers are showing more willingness to share personal data to get the convenience of personalized offers.
  3. Ecommerce holds significant growth potential for Consumer Packaged Goods companies.
  4. The focus on “solutions” in shopper marketing is increasing.

A number of forward-looking hypotheses were surfaced in the 2011 Grocery Manufacturers of America (GMA) Sales Committee Report Shopper Marketing 5.0: Creating Value with Shopper Solutions[1] published in 2011. That report projected growing use of digital platforms and increasing importance for ecommerce for Consumer Packaged Goods (CPG) companies. It also stated that “the most recent evolutionary stage of shopper marketing involves the rising importance of shopper solutions” – meaning insight-driven events featuring two or more products that, when purchased together, deliver greater value and an improved shopper experience.

ABOUT THIS SURVEY

Brick Meets Click created and executed the survey in partnership with the LinkedIn Shopper Marketing/Insight Group. Responses were gathered during August and September 2012.  More than 330 group members responded. 

This survey was designed to

  • find out where shopper marketing practitioners are today in their use of digital platforms and shopper solutions. 
  • provide shopper marketing practitioners with an update on how these two dimensions of shopper marketing have evolved since 2011 when the GMA study was published. 

About 60% of those who responded were either consultants or affiliated with agencies, 15% were brand marketers, and 9% were retailers. The remaining responses were grouped as “other.”  Eighty-eight percent of those surveyed were actively involved in shopper marketing.

FINDING 1:  Digital platforms are expected to increase shopper marketing effectiveness over the next twelve to eighteen months. 

226 respondents


 

Seventy-five percent of those responding agreed that the growing use of digital platforms will increase the effectiveness of shopper marketing execution.

Most believe that the companies who are already leading the evolution of shopper marketing solutions will pioneer the move to more effective use of digital platforms in shopper marketing; 86% agreed with that assessment.

INSIGHT: Digital marketing holds more upside potential for food retailers than online sales.  Mark Hamstra, Retail/Financial Editor of Supermarket News put it this way in November 2012, “Online sales are growing fast, but digital marketing holds the more long-term promise for supermarkets.”[2]

IMPLICATION: There’s a need to make sure that new digital “promotion delivery” programs are available on the platforms shoppers are choosing to use – on mobile platforms, in other words, including both smartphones and tablets.

RECOMMENDED ACTION: Evaluate the effectiveness of delivering promotional offers on your different digital platforms, and consider aggregating at least some additional offers from other sources to increase the value for your shoppers. For instance, you could tap multiple resources for electronic coupons so your site becomes more of a one-stop source for value.

FINDING 2: Shoppers are showing more willingness to share personal data to get the convenience of personalized offers.

203 respondents


A majority of shopper marketing practitioners, 64%, agree that shoppers are showing greater willingness to engage in the quid pro quo of shopping. At least some personal data is shared in exchange for the benefits of more personalized offers.

INSIGHT: While shoppers overall are more willing to make this tradeoff, studies indicate that willingness is highest among younger shoppers. It’s important to be realistic about how quickly older shoppers will join in.

IMPLICATION: Since sharing of personal data establishes a relationship, there will be a limit to the number of these relationships shoppers will embrace. Retailers who arrive late with personal offers will find it more difficult to access this data and may need to displace another retailer to get it.

RECOMMENDED ACTION: Begin sooner rather than later to develop and validate an approach to leveraging the power of personal data, and work with your most important shoppers first.

 

FINDING 3:  Ecommerce holds significant growth potential for Consumer Packaged Goods companies.

227 respondents


Seventy-four percent, or nearly three-quarters of those surveyed, expect that ecommerce will be a significant area of growth for Consumer Packaged Goods companies.

The GMA report defined ecommerce broadly. It included not just online sales, but combined retailer/CPG efforts to engage consumers online prior to shopping trips to the store.

INSIGHT: CPGs have an opportunity to learn from categories like books and electronics that have moved further into ecommerce already.

IMPLICATION: From these more “experienced” categories, we see that ecommerce generates new opportunities for growth, but it also tends to compress margins and increase areas of conflict in the marketing channel.

RECOMMENDED ACTION: CPGs can use digital shopper marketing to strengthen connections with their best customers, both directly and working through retailers, and then use those connections to identify ways to lower the cost of getting their product into the hands of customers.

FINDING 4:  The focus on “solutions” in shopper marketing is increasing, and this is producing tangible results.

202 respondents

Shopper marketing practitioners are using solutions to enhance collaboration with retailers and drive incremental sales.

More than two-thirds (68%) agree that solutions are getting greater attention and that this strategy is producing tangible benefits. Most of those surveyed felt that shopper solutions produced tangible benefits for their brand in two ways, by

  • Strengthening their position with retail customers – 70% agreed that use of solutions enhanced their category leadership with customers.
  • Producing measurable sales increases – 69% agreed that solutions helped drive their sales faster than the competition.

INSIGHT: Shopper solutions typically take more effort to develop and execute than other marketing initiatives, so each company will want to incent development of shopper solutions or run the risk of falling behind competition.

IMPLICATION: Because shopper solutions create more value – for retailers and manufacturers as well as shoppers – it represents a good area of investment.

RECOMMENDED ACTION:  To capture the greatest benefit, focus more effort on solutions for problems that shoppers feel are important (like health, improving the environment, saving time when it’s important, etc.), than on bundling complimentary products just to sell more stuff.

Preparing for the future

It’s easier to visualize how shopper marketing is going to mature, now that some time has passed and we can confirm that it’s evolving in the way the GMA report anticipated. Keep an eye on the following as developments unfold

There will be greater use of digital platforms.

As digital marketing platforms continue to expand their presence in shopper marketing, more of these platforms are likely to strengthen their own identities in an effort to build relationships with shoppers. Retail Me Not and ShopKick are two examples. 

Product and service brands will want to think through how this development may influence their relationship with shoppers, and how to respond.


Personalization could “de-average” retailing.

 Unless major concerns about privacy emerge, personalization of promotions and offers will accelerate. This could significantly contribute to the “de-averaging”[3] of retail assortments, thereby improving the efficiency of some business models substantially.  The typical US household purchases only about 350 unique UPCs each year. If a retailer could toward designing their stores and/or inventories to serve just the known product demand for the households patronizing their stores, it would represent a dramatic increase in efficiency.  


The only way to move is forward.

Ecommerce, including both esales and emarketing, is already important for CPG companies.  “We do sense a sort of tipping point for CPGs online” said a spokesperson for Clorox a year ago, after looking at Soap.com’s success and Amazon’s aggressive push for “subscribe and save” programs.   

CPGs will increasingly tap into the power of digital shopper marketing on a number of fronts: by participating in online marketplaces, by creating online stores in some cases, and by finding ways to collaborate more effectively with retailers on digital shopper marketing even though this is not simple or easy.

Coordination on shopper solutions will be worth it.

The digital shopping environment makes it easier and cheaper to deliver impactful shopper solutions. In this setting, they can be explained more clearly and delivered more effectively. 

To fully capitalize on this potential, however, brand manufacturers and their retail partners will need to collaborate more seamlessly in the execution of these programs at both digital and store level in order to deliver the intended shopping experience.

CONCLUSION: It’s time to evolve shopping marketing plans in relation to the larger landscape. It will be important for any retailer to consider both the principles and recommended actions outlined above as they rebalance their shopper marketing approach, or risk being eclipsed by another retailer who is “dancing to the new beat” with your shopper.



[1] The GMA report was based on a study conducted by Booz and Co. and Shopper Science.

[2] Supermarket News, November 19, 2012

[3] The concept of  “deaveraging” – or moving away from stocking stores for the “average” customer – is surfaced in the CCRRC report Understanding Shopper Loyalty within Different Retail Formats.

© 2012 Brick Meets Click