EXTENDING THE BANNER

JAMES TENSER

The notion of the store as a brand has arrived, and the concept is being driven by marketers at many retail companies.

But what are retail marketers up to? Trade observers and industry talk suggest today they are focused on frequent shopper card programs, co-marketing with manufacturers and micromarketing.

Results of a benchmark survey of retail marketing executives conducted by SN and the Market Research Department of Fairchild Publications indicate that the state of marketing among grocery retailers today is considerably less advanced than the popular rhetoric would indicate.

The survey findings suggest that supermarket commitment to retail marketing activities is moderate to high. However, self-rating of their priorities indicates that many chains remain mired in outdated perceptions about marketing's strategic role.

SN queried executives from the nation's top supermarket chains in a fax survey, conducted this summer. A total of 61 retail marketing executives responded, representing a total of 9,761 supermarkets, or nearly 33% of the industry.

A most striking finding ensued when these executives were asked how their companies rate the importance of a dozen retail marketing activities. At the top of their collective list, with a mean rating of 4.4 on a scale of 1 to 5, was obtaining manufacturer allowances. Micromarketing and frequent shopper card programs tied at the bottom, with mean ratings of 2.9.

In between are a host of marketing-related activities that are controlled to varying degrees by grocery marketing executives. Media advertising took a 4.3 rating, while store-brand programs and store circulars were tied at 4.1 (see accompanying chart).

Overall, the survey results suggest that while supermarket operators are beginning to forge more sophisticated marketing capabilities, the industry has a way to go before it attains parity with leading packaged goods suppliers in this area.

On another level, supermarkets seem to understand the strategic importance of a well-developed marketing capability. The indication is that they accord the marketing function high organizational status, with three in four marketing executives reporting directly to uppermost management.

More than half of the respondents, 53%, said they report to the president or chief executive officer. Another 21% report directly to the board of directors. The balance report to either a senior vice president of merchandising (11%), chief operating officer (5%) or other (21%).

Nevertheless, the survey results paint a picture of a marketing function at most supermarket chains that is only moderately dynamic.

Tenures among marketing executives tend to be fairly long. Nearly half the respondents (48%) said they had been in their jobs for five years or more. Another 19% have put in three to five years in their current posts.

Their positions have been in existence even longer. Two-thirds (68%) of the marketing jobs have been in existence five years or more.

Supermarkets also tend to home-grow their marketing functions without much cross-pollination from other industries. Nearly two-thirds of respondents (64%) said they were promoted from within. The remainder (36%) arrived in their present positions from other companies -- primarily other retailers.

Retail marketing executives arrived at their present responsibilities from three main areas: other advertising/marketing jobs (27%), buying/merchandising functions (37%) and general management/store operations (36%).

Most retail marketing executives control budgets in several areas for their companies, the survey shows. Advertising and promotion topped the list, cited by 92% and 90% respectively.

More than two-thirds (69%) said they also control budgets for market research, while half (51%) cite developmental budgets as under their control. Spending for management training and data acquisition fell farther down the list, under the purview of 25% and 28% of respondents, respectively.

When asked to indicate their areas of responsibility, 82% of retail marketing executives cited in-store advertising media, leading the list. In a sign of progressive thinking, 81% said they are charged with building sales volume growth, 81% handle co-op advertising and 79% handle co-marketing.

Most retail marketing executives said they are also responsible for competitive analysis (77%) and strategic planning (74%). Only 61% cited frequent shopper programs, and store-brand programs were the responsibility of just 60% of respondents.

Conversely, that last figure also suggests that at 40% of supermarket companies, the marketing department is not centrally involved in the store-brand programs.

Asked to rate the importance of seven challenges facing retail marketers today (on a 1 to 5 scale where 5 is very important and 1 is not important), executives put execution of marketing and promotion programs at the top of the list, with a mean rating of 4.3.

The need for a better marketing planning process and improvement in analyzing sales/promotions data and turning it into action each drew ratings of 3.8. Retraining buyers as category managers was rated at

3.4 on the scale.

Farther down the list were convincing management to invest more in marketing activities (3.2) and managing and evaluating in-store media (3.1). Respondents were relatively unconcerned about any shortage of in-house marketing expertise, giving that challenge a bottom-of-the-list rating of 2.9.

To support their marketing decision-making, retail marketers say they have access to a variety of information tools. Most available are warehouse withdrawal data, cited by 82% of respondents. Store point-of-sale data and chain POS data were cited by 78% and 62%, respectively.

Also widely used are A.C. Nielsen panel data (61%) and Information Resources Inc. panel data (39%). Somewhat fewer said they get all-store or census data: 23% from IRI and 39% from Nielsen.

A surprising 52% of respondents said they have access to geodemographic information, either from Spectra/Market Metrics, Chicago, or other resources. And nearly half (48%) of retail marketing executives responding said they get competitive sales data.

At least some marketing responsibilities are delegated among the buyers or category managers at nearly all supermarkets responding to the survey. The lion's share of this responsibility falls on the buyer's shoulders at more than half of the retailers responding.

Buyers carry all the marketing weight at 7% of supermarkets, the survey shows. One in four (25%) carries 80% of the load, and an equal proportion bears 60% of the marketing responsibility, respondents said. Only 8% of respondents said their buyers had no marketing roles.

Short on Change

The concept of the store as a brand is a hot button these days, but an SN survey indicates many retail marketing executives haven't changed their priorities. Here's how respondents rated the following retail marketing activities. (1 = not important, 5 = very important)

Highest Priority

4.4 Obtaining Manufacturer Allowances

4.3 Media Advertising

Lowest Priority

2.9 Micromarketing

2.9 Frequent Shopper Card Program

Assessing the Priorities

An SN survey indicates many retail marketing executives haven't changed their priorities, despite the increased emphasis on the store as a brand. Here's how respondents rated the following retail marketing activities. (1 = not important, 5 = very important)

Rank rating

Obtaining Manufacturer Allowances 1. 4.4

Media Advertising 2. 4.3

Store Brand Program 3. 4.1

Store Circular 3. 4.1

In-Store Promotions 5. 3.9

Co-Marketing Programs With Manufacturers 6. 3.6

Sponsoring Community Events 7. 3.5

In-Store Advertising Media 8. 3.4

Consumer Market Research 9. 3.3

Promotion Evaluation/Follow Up 10. 3.2

Micromarketing 11. 2.9

Frequent Shopper Card Program 11. 2.9

What Retail Marketers Do Most

More retail marketing executives focus on in-store media and sales volume than on store-brand programs. Here's how respondents listed which functions they are responsible for (multiple responses allowed).

In-Store Advertising Media 82%

Sales Volume Growth 81%

Co-op Advertising 81%

Co-marketing programs 79%

Competitive Analysis 77%

Strategic Plan 74%

Frequent Shopper Card Program 61%

Store Brand Programs 60%

Where Retail Marketers Come From

Two in three retail marketing executives responding (64%) said they were promoted from within. Virtually all the rest came from other retail or wholesale companies. Overall, 73% of respondents came from nonmarketing backgrounds.

Store Management/Operations 36%

Advertising/Marketing 27%

Buying/Merchandising 38%

Source: SN 1995 Retail Marketing Survey, Fairchild Publications Market Research Department