In their efforts to capture consumer spending in the store, where most of the purchasing decisions are made, manufacturers view account/retailer-specific programs as the most effective promotion, a new Supermarket News study finds.
In response to the question "Which of the following types of consumer promotions are you focusing more on now than in the past?", more than half (58%) said account-retailer specific, according to SN's 2006 Survey of Manufacturer Promotional Practices.
Likewise, of all the media that support their consumer promotion, 70% said in-store media (electronic and non-electronic) is the most effective.
Media fragmentation has propelled more and more marketers to focus their promotional efforts at the store, where about 70% of purchase decisions are made.
The focus on account-specific promotions comes at a time when there's a new level of cooperation between manufacturers and retailers, said Ken Harris, managing director, Cannondale Associates, Wilton, Conn., a sales and marketing firm.
"The days of manufacturers and retailers just sitting across a desk staring at each other are pretty much over," he said.
Collaboration enables retailers and manufacturers to address their common business issues more effectively than either could have done on their own, according to Cannondale's 2005 PoweRanking survey, a benchmarking study that analyzes manufacturer best practices. The end result: enhanced shopper loyalty.
"Mass-marketing to a public that wants things tailored to their own needs is a thing of the past," Harris said.
While much of this involves promotions, other business tactics are involved as well, including merchandising and product assortment.
So while behemoth promotions, such as manufacturer sponsorships of a big-name theatrical release, are still alive and well, customized offerings are more important than ever.
In many cases, this is translating into localized versions of national promotions, said Caroline Cotten Nakken, president and chief executive officer, Mass Connections, Cerritos, Calif., a retail marketing services firm.
Along with collaborating with retailers, manufacturers are also working more with each other. When asked which consumer promotions they are focusing more on now than in the past, 46% said joint promotions with noncompeting brands from other companies, and 25% said joint promotions with sister brands.
There are several benefits to this. First, one of the partner brands may have an advantage in a certain channel, while another is dominant in a different retail outlet. When paired, they can benefit from the other's strength.
Cotten Nakken agreed, saying joint promotions are particularly valuable if they offer a solution for the consumer.
"If the two products complement each other, joint promotions can expose shoppers to products that they may not normally approach," she said.
Financial considerations are another plus for manu-facturers, because joint efforts enable manufacturers to split the cost of a promotion.
Despite the continued slide in redemption, manu-facturers continue to support couponing, as 71% said it is still valuable. They said it increases brand awareness, encourages product trial and boosts retailer support.
However, the majority (58%) said they're using more targeted forms of couponing, such as tapping into retail loyalty data to target specific offers to specific consumers and handing out coupons at targeted events, such as ethnic festivals and baby expos.
"We have a new targeted-marketing program that involves bar-coding the coupons with the direct-mail name and address, so we know exactly who is redeeming the coupons," one respondent wrote.
While 43% said retailers are more likely to share frequent shopper information with manufacturers than in the past, 65% said the biggest hurdle to using the data is the amount that retailers charge for it. And just 17% said obtaining frequent shopper data is worth the cost that retailers charge because of the effectiveness of communicating one-on-one.
Part of the problem with frequent shopper data is that few retailers or manufactures know what to do with it, said Spencer Hapoienu, president of Insight Out of Chaos, a New York-based marketing management firm.
Because manufacturers are spending less on mass media, they have more money to spend on local marketing, he said. But, for the most part, they haven't found a way to make that money work for them in terms of development programs to analyze a category and/or shopper purchasing decisions.
"A lot of manufacturers will come into the retailer with money to spend, but without a plan," Hapoienu said.
This is Part I of SN's three-part 2006 Survey of Manufacturer Promotional Practices. Forty brand managers, marketing directors and other representatives from consumer goods companies responded to the survey, posted online last month at www.supermarketnews.com.
Nearly all (92%) of the participating companies market food products. Respondents also sell beverages (30%), beer/wine/spirits (15%), general merchandise (15%) , beauty care (11%), household goods (7%) and other products. More than three-quarters (81%) of the participants said their responses apply to their entire company rather than a specific division.
The second part of the study, which will be published in the Oct. 2 issue of SN, will highlight findings of a survey about retailer promotional practices. Part III is scheduled for the Nov. 6 issue, and will reveal how consumers respond to manufacturer promotions.
For the 2007 fiscal year, do you expect your annual brand-marketing budget to increase, decrease or remain the same for the following:
Which of the following statements describe your company or division's experiences with retailer frequent shopper data?*