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Shopper marketing is "understanding how one's target consumers behave as shoppers, in different channels and formats, and leveraging this intelligence to the benefit of all stakeholders, defined as brands, consumers, retailers and shoppers."
According to Chris Hoyt "Shopper marketing [is] brand marketing in retail environment." Since it includes category management, displays, sales, packaging, promotion, research and marketing "Shopper marketing is the elephant in the room that nobody sees the same way." ([Shopper Marketing book], Kogan Page 2009)
Shopper marketing is not limited to in-store marketing activities, a common and highly inaccurate assumption that impairs the spread of any industry definition. Shopper marketing must be part of an overall integrated marketing approach that considers the opportunities to drive consumption and identifies the shopper that would need to purchase a brand to enable that consumption. These shoppers need to be understood in terms of how well they interpret the needs of the consumer, what their own needs as a shopper are, where they are likely to shop, in which stores they can be influenced in, and what in-store activity influences them.
Unilever defines a shopper insight, an insight upon which shopper marketing is based - as a "focus on the process that takes place between that first thought the consumer has about purchasing an item, all the way through the selection of that item." -
Shopper marketing challenges the assumption that the shopper and the consumer are the same. Despite the fact that this is not always true (consider the consumer and shopper of pet food for a moment) it is clear that the industry still gets confused.
Shopper marketing is important for many reasons, but it is clearly of importance to manufacturers if for no other reason that they spend vast amounts of money on it, and that these amounts are increasing. Many organizations spend over 8% of total sales on in-store marketing; when total trade spend is added up it can often top 40% of total revenue.
In shopper marketing, manufacturers target portions of their marketing investment at specific retailers or retail environments. Such targeting is dependent on congruency of objectives, targets and strategies between the manufacturer and a given retailer or a given type of retail environment.
A significant factor in the rise of shopper marketing is the availability of high quality data from which insights may be gleaned to help shape strategic plans. According to recent industry studies, manufacturer investment in shopper marketing is growing more than 21% annually.
Procter & Gamble's Walmart/Sam's Club Customer Team and Sam's Club, are considered by many as the original pioneers in true Shopper Marketing in the US. Rhonda Harper, the top marketing officer for Sam's Club at the time, is credited with launching shopper marketing during a 2-day Bentonville strategic planning offsite in May 2001, attended by more than 300 vendor marketing and sales executives. Shopper marketing is also practiced by the leading European companies such as Unilever and Beiersdorf and the discipline is developed further by the likes of Phenomena Group, Europe's first shopper marketing agency.
The following statistics have caused the reapportionment of marketing investment from consumer marketing to shopper marketing. What follows is ultimately very misleading; each brand performs differently based on shopper need states, shopper trip types, retailer formats, brand importance, brand relevance and a host of other factors:
- 70% of brand selections are made at stores
- 68% of buying decisions are unplanned
- 5% are loyal to the brand of one product group
- Practitioners believe that effective shopper marketing is increasingly important to achieve success in the marketplace
For almost 50 years, large scale consumer packaged goods manufacturers had many possibilities available to spark continued business growth. The 1970s were about product commoditization; the 1980s brought channel consolidation; the 1990s increased consumerism, and in the 2000s, growth came from globalization.(12)
The organization itself was accordingly structured to maximize these growth agents through efficiencies of mass production, distribution and sales. Marketers were organized into silos depending on which function they served. Product marketers developed and positioned goods for retailers to sell; distribution marketers took several brands of products and managed lifecycle and supply chain issues by channel; and consumer-driven marketers who were in the field among the channel(s) trying to increase share or penetration.
The three silo’d groups were a bit like an assembly line where the first marketer would throw it over the wall to the second marketer and so on. In fact, the marketing organization structure was originally built around the big news at the time, the four P's of marketing: product, price, placement and promotion. Other hot news as the time was that Elvis Presley was serving in the Army in Germany, Kruschev became the Soviet Premier of the USSR, Alaska became an official state of the USA and Bridge Over the River Kwai earned the Academy Award for Best Motion Picture of the Year. That’s right, the four P's of Marketing were also a product of the 1950s. (9)
By 2005 there was no new growth models on the radar for the Fortune 500 CPG companies. Much of the conversation behind closed doors sounded like this, “….But we’ve really improved our marketing and promotion capabilities; we have all the latest technologies, we have the best people from the top schools – why isn’t our business growing the way we think it should?”
The reason? All of these previous growth mechanisms were driven by manufacturing technology and the knowledge transfer of this technology across the organization. Companies essentially were finding various new ways to squeeze their supply chain to remove costs or add in “value.” By 2005, getting even better by doing the same old thing generating additional growth in the marketplace. It had become radically different. Marketing wasn’t in charge of the success of consumer products anymore, there was a new boss in town who was calling the shots – the consumer.
The 50-year run of marketing-centric, inward facing organizational structure was over. Gone were the days of making a product, with businesses telling consumers only the information they wanted them to know in order to create awareness and drive them into the store, and then making sure the retailer got his product order. Fueled by consumers empowered by globalization and technology, marketing-centric has replaced with consumer-centric, an outward facing organization structure that’s concerned with being there for the consumer wherever, whenever, and with whatever they want to know at any point in their journey to purchase. (10)
THE RETAIL SHOPPING ENVIRONMENT TRANSFORMATION
A. FOR CONSUMERS
While communicating with consumers may sound simple enough at first glance, it definitely is not. Connecting with shoppers and consumers and creating loyalty has proved to be much more challenging than ever before. The traditional media channels for reaching them have fragmented exponentially. Consider the following points of proof:
• In 1973, the number one rated television show was “All In the Family” with approximately 51 million viewers. In 2005, the number one rated television show was “American Idol” with only approximately 14 million viewers.
• The number of retail channels that are available for Mom to shop in have drastically increased. Those local stores from the last century are largely gone and have been replaced by dollar stores, mass merchandisers, grocery chains and on-line companies.
• Moms today shop at least 10 retailers on average each month yet 70% of their total monthly purchases are spent in only two of those channels.
• Across all categories, 75% of final purchase decisions are made in-store.
• Among consumer shoppers, 68% are brand switchers, 26% are loyal to one retailer and only 5% are loyal to one brand.(10)
B. FOR RETAIL STORES
The business environment for retailers has also changed dramatically with the advent of technology and the empowered consumer shopper. Before the change, retailers only had to worry about competitors within the local area and knew that once shoppers came into their store, they were there to stay and shop. Now, retailers not only have to compete with the local stores down the street but also the millions of stores on-line, home delivery services, stay on top of what their customers are saying about them on social media, and worry that a consumer will use a phone app to scan the bar code of a product to find it’s less expensive elsewhere and leave if it is.
C. FOR PRODUCT MANUFACTURERS. Boiled it down, with all factors being equal, the question that Mr. Retailer began asking its product manufacturer suppliers, "What can I do to compel Mom to want to buy the exact same X brand milk and Y brand paper towels from my store instead of the Mr. Retailer Competitor with exactly the same products and price?" This question was followed closely by "Why should I bother to run your national promotion, Product Manufacturer X, when shoppers will see the exact same promotion at all of my competitors? What's in it for me?"
EVOLUTIONARY THINKING GIVES RISE TO SHOPPER MARKETING
Marketplace power today rests squarely the hands of the consumer. In order to win, manufacturers have to redesign their organizational structure to change from a supply-chain approach to a demand-chain management approach so that:
• Instead of pushing products through the supply system, manufacturers must generate and manage demand
• Instead of creating short-term sales, they must create consumer / corporate value and build long-term business relationships with retailers and consumers.
This is not a revolutionary concept but an evolutionary progression dictated by seismic changes in consumer behavior, mass communications, the retail landscape and technical innovation.
By late 2004, a new model for growth emerged as product manufacturers and retailers alike identified the need to uniquely influence the shopping experience. It was called Shopper Marketing (SM(. It wasn’t until 2010 that it was formally defined by the Retail Commission on Shopper Marketing in as follows:
“Shopper Marketing is the use of insights-driven marketing and merchandising initiatives to satisfy the needs of targeted shoppers, enhance the shopping experience and improve business results and brand equity for retailers and manufacturers.” (11)
The informal interpretation summarizes shopper marketing as "bringing shoppers into the marketing plan and the marketing plan into the stores". The Shopper Marketing proposition holds that product manufacturers should put as much if not more emphasis on marketing through retail as they do on conventional mass media campaigns. This initially shocked to many in the industry and was incomprehensible to others for whom mass media served as the cornerstone of their marketing communications plan for most of their career.
Shopper marketing integrates all marketing elements and stimuli into a single holistic story that can be used to guide the targeted shopper through their entire journey to purchase no matter where they’re searching, shopping, or tweeting. While still relatively new, industry experts believe it will become the predominant concept for in-store selling replacing category management. It’s potential to be transformative in shaping marketing strategy and improving business performance will require a significant realignment of corporate structure and resource allocation.
The premise behind successful shopper marketing is that by working together, manufacturers and retailers can create a differentiating and engaging shopper experience that will provide that last bit of influence at the point of purchase, which is where most final buying decisions still occur. Shopper Marketing is about targeting that particular retailer’s core shopper and using insights from both consumer and shopper research to deliver the right products, in the right packaging, at the right price, with the right amount of communication, in the right environment, in the right combination to delightfully satisfy the shopper in ways that traditionally were never possible before. If done well, the shopper will feel like the store was designed just for him/her and will visit more frequently, dwell longer and make better product choices. This in turn leads to sales growth and heightened loyalty for both the brand and the retailer.
Shopper marketing is rooted in consumer marketing and the principles of consumer marketing often apply to shopper marketing. For instance, shopper marketing refers to the marketing stimulus reaching the shopper, which is based on an understanding of the shopper’s buying behavior. Like the traditional marketing mix, shopper marketing can be divided into four P's: product; price; place; and promotion.
- Product: size, shape, color, material, packing, packing messages, and graphics.
- Price: discounts, bundled offers, price communication, and coupons.
- Place: store concept, lighting, shelves, and placing of special presentations.
- Promotion: packing promotions, store promotions, promotion communications, special presentations, in-store TV, floor stickers, as well as advertising on shopping carts and baskets.
However, the difference between traditional marketing and shopper marketing is that the product manufacturer has his/her own 4Ps that are perfect for selling products in retail and the retailer has his / her own set of 4P's known to advance sales with his customers—and the two sets are rarely the same. This is where the manufacturer and retailer must work to find the common areas within their 4P's and devise marketing and promotional plans based on this common area. What results from this collaboration is true shopper marketing win-win. The manufacturer's products differentiated from other manufactuer's products in the retail store AND the retailer is able to use the manufacturer's products to differentiate his retail store from all the other stores competitng for his shoppers.
Buying behavior data
Several different data collection methods provide information on the shopper’s buying behavior of a given brand: observations, intercepts, focus groups, diaries, point-of-sale and other data.
Observations made before entering a store, in the store, and after exiting a store clarify when, what, where, why, who and how shopper behavior occurs.
Issues to be noted consist of, for example: the length of the buying process, the items the shopper noticed, touched, studied, the items the shopper bought, as well as the purchase methods influencing the process. Interviews help uncover motives guiding the buying behaviors. The matters commonly clarified are: the likelihood of product substitution and the identification of substitutes; values and attitudes; desires and motivational factors; as well as lifestyle and life situation. Point-of-sale data provide information on which products were bought, when and for how much (and sometimes by whom when a frequent shopper card can be used).
How other shoppers in a store can influence the shoppers in a target market are also of interest. For example, research by Martin (2012) in a retailing context found that male and female shoppers who were accidentally touched from behind by other shoppers left a store earlier than people who had not been touched and evaluated brands more negatively, resulting in the Accidental Interpersonal Touch effect 
When conducting shopper segmenting, the market is divided into essential and measurable groups, that is, segments on the basis of the buying behaviour data. Shopper segmenting makes it easier to answer the requirements of individual segments. For example, price-sensitive and traditional shoppers clearly differ from one another as far as their buying behaviour is concerned. Segmenting makes it possible to target marketing measures at the most profitable shoppers.
- Martin, Brett A. S. (2012), "A Stranger’s Touch: Effects of Accidental Interpersonal Touch on Consumer Evaluations and Shopping Time", Journal of Consumer Research, 39 (June), 174-184.