Shopper Marketing Programs Fall Short: Study

JULIE GALLAGHER

ST. PETERSBURG, Fla. — Half of all shopper marketing programs reach a quarter of their value potential, while best-in-class models realize just 60% of the benefits they could, according to a new Deloitte study.

Despite the programs' shortcomings, the majority of retailers (86%) and manufacturers (73%) rank them among the top four activities that deliver meaningful return on investment.

“Companies who are embracing shopper marketing and executing against a core set of principles are growing 50% faster in the categories in which they participate,” said Rob Holston, Deloitte's shopper marketing practice leader, as he presented the findings of “Delivering the Promise of Shopper Marketing: Mastering Execution for Competitive Advantage” at last week's Grocery Manufacturers Association's Merchandising, Sales and Marketing conference.

The GMA-commissioned study defines shopper marketing as the employment of any marketing stimuli developed based on a deep understanding of shopper behavior and designed to build brand equity, engage the shopper and lead her to make a purchase.

Holston said that work done in silos, lack of skilled talent and sub-par trading partner collaboration lead to inconsistencies.

Although 69% of respondents said they're now infusing shopper insights into their overall planning process, 75% of the activities are ad hoc and reactive.

Successful programs evolve through a three-stage life cycle, Holston said.

About 45% of the industry programs are in the initial incubation phase and generating only about 5% of their value potential, he said.

“Most companies pull a couple of people in from sales, marketing and maybe a research function. They've got minimal metrics in place and they just want to get on with it and get through some pilots.”

About 50% of the companies are in phase two and scaling up their efforts.

“During this phase, the metrics become more embedded in the business, you've got stronger relations with your trading partners and the biggest objective is expansion,” Holston said. Companies engaged in this phase capture about 25% of the value that's available to them.

Five percent of the industry falls into the third phase, which involves culturally embedding shopper marketing functions.

“There are the few and the proud who've been widely acknowledged for their shopper marketing efforts and take pride in what they do, and they're also [accepting] the fact that they're a long way from where they need to get to in terms of value,” said Holston. The group reaches about 60% of its potential.

To advance to the next phase of the cycle and beyond, retailers should ask themselves what they'd like to be famous for, then work toward owning that space, advised Holston. Unilever, for instance, owns trip management, he said.

It also pays to drill down to the consumers who'll be most loyal, and understand their shopping mission, he said

“Marketing initiatives tailored to a more precise level get better returns.”

Aligning an organization, asking what needs to change from the sales and marketing perspectives, and creating a plan for insights are very important, he said. Measurement is also key.

“You need to look at the organization's ability to deliver this on a sustainable basis and at the performance of your marketing activities.”

Six in 10 retailers cited insufficient technology as their biggest challenge to measurement, while 70% of manufacturers said it was the cost of data collection and analysis.

Deloitte conducted a quantitative poll of more than 100 retailers and manufacturers, and interviewed 40 industry members.

75%
of shopper marketing activities are ad hoc and reactive
Source: Deloitte