Shopper Marketers - well-trained!


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Shopper marketers are well-trained, experienced and ready for senior management roles going forward... here's why!

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Shopper Marketers - well-trained!

  1. 1. INTERNAL MEMO TO THE CEO DATE: APRIL 15, 2011 SubjEcT: YOuR FuTuRE Is YOuR sHOPPER MARkETINg ORgANIzATIONYou know that business is getting more complex. Competition is growing,and the stakes are getting higher. CEOs like you need the marketing staff tostep up. But how? And more importantly: Who?Eighty percent of CEOs says growth is the No. 1 priority, but fewer than20% of you are satisfied with their organization’s marketing efforts. CMOlife spans are short, and structure is ever-shifting: 70% of marketingorganizations reorganized within the past three years. How long has yourCMO been in place? When did you reorganize last? And when is the nextreorg planned?For your marketing department, it’s tough to know what you want. Fewerthan 25% of marketers say that information flows freely within theirorganization, and over 75% of decisions, once made, are second- (andthird-) guessed. Only about one-third of marketers believe that strategicdecisions are quickly translated to action in their organization.Where is your company’s new “center of gravity”? Customer service?Resource allocation? Brand-building?As you navigate the shifting landscape, one constant remains: Success isultimately measured by sales results. The transaction is still the linchpin. Forbrands that do business at retail, Ground Zero is the cash register . . . andthe cash register should inform the corner office.The most direct impact on sales comes through Shopper Marketing: 73% ofCPG manufacturers and 86% of retailers rank shopper marketing as the No. 1activity that delivers meaningful return on investment. (1)Shopper Marketing is the only discipline where it all comes together –advertising, promotion, customer service, consumer insights, R&D, traderelations – all focused relentlessly on driving sales. 1
  2. 2. RECOMMENdATIONIt’s time to promote your best shopper marketers into seniormanagement roles, asap!Who better than Shopper Marketers to understand the growingcomplexity of business and navigate it successfully, in a collaborativeway? Who better to bring the cash register into the Corner Office? Whobetter to help the CEO and the CMO do better marketing?“Results are only in the marketplace.” – Sam WaltonLike a jack of all trades, Shopper Marketers are the only ones in theorganization to touch all aspects of marketing and coordinate with allstakeholders – brand management, sales, retailers, shoppers. ShopperMarketers work closest to consumers, with a unique vantage point andauthentic insight that comes from working in the trenches.The expertise of Shopper Marketers matches the current – and coming– needs of general management as businesses adapt to changes inconsumer habits and attitudes; heightened expectations for brands; andincreased competition from all sides, in every avenue of communication.EvoluTion of MArkETing DynAMicS AnD EMErgEncEof ThE ShoppEr MArkETErMarketing has evolved, and with it come new goals and strategies. The locus of marketing has spent Art + science science + Art the last 15 years shifting from Awareness Activation the TV screen to the store aisle. Products Experiences Business structure and culture are Brands Consumers still catching up. (Maybe that’s why so many marketing orgs get Activities Accountability restructured every three years.) Mass Targeted/Tailored Incremental Breakthrough The biggest growth has been in Processes Best Practices Shopper Marketing, and for good reason: It suits the way consumers Buying Building shop now, and the way business is Few Tools Many Choices done now. Volume ROI 2
  3. 3. ShoppEr TrEnDS GMA and Booz & Co. “The Purchase Funnel has been replaced by the decision Ecosystem, a cloud of information from all sources, available say the rapid growth anytime” (2) of Shopper Marketing 83% of shoppers make purchase decisions before entering the store – up from 60% four years ago (3) has been “fueled 81% of shoppers conduct research before they shop, by the need to shift typically for an hour or more (4) Online search for deals is up 288% (5) spending further down 62% of shoppers engage in at least one digital deal activity the purchase funnel, for half or more of their shopping trips (6) get beyond price and 73% of shoppers make a rough/mental shopping list (7) 24% of purchases are unplanned … and 75% of shoppers inject more equity into plan to make unplanned purchases (8) in-store marketing, 66% of smartphone owners use them in the grocery store and develop greater By 2014, 53% of all u.s. retail sales will be influenced by e-commerce retail intimacy.” (12) 40% of u.s. shoppers are ‘trading down’ in household goods to save money (9) 67% of retailers say shopper loyalty to a specific store is waning (10) Two-ThirDS of touchpoints during active consideration are consumer initiated (11)MArkETEr TrEnDS in SpEnDing• CPG companies spent about $38 billion on Shopper Marketing in 2010 (13)• Between 15% and 20% of CPG marketing dollars are earmarked for Shopper Marketing• 83% of CPG companies will increase shopper marketing budgets (14)• 55% will boost spending 15% or more by 2013 (15) 3
  4. 4. MArkETEr TrEnDS in SpEnDing conT. Expected growth in cpg Manufacturers’ Advertising & promotions Mix (Average Annual Increase or Decrease over the Next 3 Years) Social Media 41% 52% internet brand Advertising 45% 41% Shopper Marketing 28% 55% ShoppEr MArkETing Mobile Marketing -3% 45% 38% iS ExpEcTED owned Media -3% 34% 24% To hAvE ThE highEST paid Search -10% 34% 24% AnnuAl consumer promotions -3% -10% 28% 3% growTh other paid Media -7% -17% 24% 7% Increase >5% Television -14% -14% 17% 7% Increase 0-5% print Media -17% -24% 7% 14% Decrease 0-5% Trade promotions -7% -24% 10% Decrease>5% Note: Neutral data was excluded source: gMA/Booz & Company survey of CPg Manufactureres and Retailers, summer 2010 (manufacturer responses only) The growth in Shopper Marketing spending outpaces ADvErTiSing: ExpEnSivE, AnD ignorED Ad spending growth, and with TurnED up good reason: You’d have to double your ad spend to get It takes a 100% increase in ad spend to add 1%-2% in sales (16) a 1% to 2% bump in sales. The Only 18% of TV ad campaigns generate positive ROI average return on $1 spent on advertising? Fifty-four cents. 54 cents: the average return in sales for every $1 spent on (That’s a ‘loss’ of forty-six advertising cents!) TV ad costs (CPM) jumped 256% in the past decade “We are convinced that shopper It took 117 prime-time spots in 2002 to reach 80% of adults Marketing is the way in which we . . . in 1965, it took just 3 will achieve our growth objectives TunED ouT in a depressed market. We are equally convinced that we will Consumers are exposed to 3,000 ad messages a day have to dramatically overhaul Only 14% of people trust advertising information our business model to activate shopper marketing.” 90% of people who can skip TV ads . . . do 56% of people avoid buying products from companies that they – CEO of a Fortune 500 consumer think advertise too much goods company (17) 65% of people believe they are “constantly bombarded” with advertising 4
  5. 5. DEMAnD: Do bETTEr MArkETing – ToDAy AnD ToMorrowA holiSTicpErSpEcTivE The expertise of Shopper Marketers matches the current – and coming – needs of the CEO as businesses adapt to changes in consumer habitsMuch work has been and attitudes; heightened expectations for brands; and increaseddone to streamline and competition from all sides, in every avenue of communication.integrate the supplychain: procurement of raw Former CEO of P&G A.G. Lafley said, “Effective marketing is thematerials, manufacturing, key driver of future cash and shareholder value.” In the emerginginventory-keeping, marketplace, Shopper Marketers are the orchestra conductor ofshipping, order fulfillment, effective marketing. Shopper Marketers are the key drivers of futureinventory cycling, cash and shareholder value.warehouse expensereduction, IT upgrades, Shopper Marketers are closest to consumers and best-positioned tomake to order, lean talk, listen, and observe shoppers . . . then build that insight for the CEO,practices, R&d to design, the CMO and the full organization to do better marketing.forecasting and more. Peter Drucker said, “The final question needed in order to come to gripsThe next opportunity is with the business purpose and business mission is: ‘What is value toto calibrate the demand the customer?’ It may be the most important question. Yet it is the oneside – all the elements that least often asked. . . What a company’s different customers considerstoke Consumer demand: value is so complicated that it can be answered only by the customers themselves. Management should not even try to guess atthe answers; it• Customer service should always go to the customers in a systematic quest for them.”• Pricing• R&D As Shopper Marketing expands beyond the aisle, past the First Moment• New-product of Truth, to embrace the Shopper Mindset whenever and wherever it happens – the Shopper Marketer will continue to be the vanguard of development consumer insight and retail relations, integrating all marketing elements• Market research to crystallize the moment of transaction. That, in the end, is the best• Retailer relations way to do marketing.• Ad strategy and schedules I welcome your thoughts and ideas and questions, anytime, in any of• Promotional calendars the multiplicity of communications vehicles!• Account-specific Jim Holbrook marketing• Package design• Sales• Development of new distribution channels twitter: @jimholbrook linkedin: Jim HolbrookBusinesses that refine their slideshare: jimholbrook facebook: Jim Holbrookdemand components willbe in the best positionto compete as marketingdynamics continueto shift. 5
  6. 6. dECAdEs OF CHANgE CREATE THE HIgHLY EVOLVEd sHOPPER MARkETER 1962: The first Wal-Mart, Kmart and Target stores open 1970s 1970s: MASS MArkETErS rulE rElATionShip: Brand g Consumer: Dictation. “The consumer isn’t a moron. She is your wife” – David Ogilvy DATA: GRPs; shipment data by geography EnAbling TEchnology: TV, print, radio – mass media Brands control the message; retailers are passive. Consumers are the Captive Audience. Few brands, national scope. Many retailers, local/regional scope. MArkETErS MASTEr: The dispersion of brand messages MAnAgEMEnT bEnEfiTS: Clear brand messaging, mass reach 1972: Wal-Mart goes public (with 15 stores) 1977: Kresge becomes Kmart Corp. 1980S: TrADE MArkETErS EvolvE rElATionShip: Retailers g Brands: Pay for access DATA: Warehouse withdrawals, chain-level sales data EnAbling TEchnology: Scanners at checkout proliferation of Stores: as Retailers build out, their clout grows. proliferation of Skus: Brands flood the market with unprecedented level of new products, spurred by Howard Moskowitz, whose 1986 research on Prego spaghetti sauce quantified consumer preferences for choice. As Brands fight for shelf space, Retailers leverage new-found clout (and shift financial risk to Brands). “Promotion” = trade allowances, case discounts, slotting fees Brands begin to evolve “Account-Specific Marketing” (mostly promotion menus) to direct at least some trade dollars towards consumer marketing MArkETErS MASTEr: The balance of Retail demands and Brand needs MAnAgEMEnT bEnEfiTS: Marketing addresses two audiences at once 1980: Wal-Mart sales hit $1 billion. CPGs label the chain “Non-Grocery” or “Alternative Channel” 1983: Sam’s Club launches 6
  7. 7. 1989: Wal-Mart is national, with 1,402 Walmart stores, 123 Sam’s Clubs – and $26 billion in sales1990s 1990s: cATEgory MAnAgErS gET ShArpEr ToolS rElATionShip: Brands court Retailers with promise of Efficiency DATA: Store-level sales data; primarily used for stock-keeping EnAbling TEchnology: Hand-held scanners, store-level data, UPCs Brands, Retailers strike Partnerships Just-in-Time Replenishment ECR (Efficient Consumer Response): Retailers and Brands streamline inventory, then rethink product assortment, pricing, merchandising, balance of trade/consumer promotion SKU Rationalization favors the No. 1 and 2 brands – and Private Label Private Label explodes with premium Store Brands: President’s Choice EDLP vs. promotional: Retailers with “Every Day Low Pricing” hobble Brands’ sales-price tactics and discount-based displays Brands embrace Category Management to keep a seat at Retailers’ table Category Captains leverage their Brands’ research to keep shelf space MArkETErS MASTEr: Management of the category, not just the Brand. Evaluate, prioritize, justify SKUs. Drive traffic MAnAgEMEnT bEnEfiTS: Supply-side efficiency; fewer, stronger SKUs; promotion strategy replaces widespread discounting. Strategic insights improve competitive stance 1995: launches 1997: 18.6% of U.S. homes have Internet (Dept. of Commerce) 2000: Broadband launches 7
  8. 8. 2000s 2000s – in-STorE MArkETErS bring cATEgory MAnAgEMEnT To lifE rElATionShip: “Consumers” become “Shoppers.” Retailer fg Shopper DATA: Household, then individual purchase history; shopper data; loyalty EnAbling TEchnology: Shopping basket analysis, shopper segmentation, RFID tags, reward cards – and also YouTube, Facebook, cell phones, SMS CRM (Customer Relationship Management) – the “Customer” is really the Shopper … not the Retailer Frequent-shopper programs proliferate Rewards cards gain a foothold with shoppers, then morph from general discount cards to data-based club cards a la Tesco (Kroger taps dunnhumby in 2004-05 to test cards with demographic and purchase data) Shoppers defined by type – and later, by individual – via store-level demographics and household purchase history Marketing activity revolves around the Store: “The Last Ten Feet” Retail = Community: “The Third Place” Mass Customization (design your own Nikes) Social Conscience emerges: Consumers want to make the world better. They think brands should make the world better, too. Consumers = Active Community (not Passive Audience) Consumer-Generated Content: Brands initiate CGC to engage Consumers in conversation. 1) Consumers like being creators of content (YouTube uploads, 2009: 20 hours of video per minute), want the stage that brands offer (backed by media budgets and grants) for their own voice and ideas: Pepsi Refresh; AmEx Members’ Project 2) Brands increasingly take their cue from consumers, adopt more of consumers’ values … and cede the floor to Consumers. MArkETErS MASTEr: Reading consumer cues; granular shopper research; engaging Shoppers based on their interests/needs; refining in- store elements; providing resources for Retailers that benefit the Brand MAnAgEMEnT bEnEfiTS: Closer, authentic connection to Shoppers. Collaborative strategy with Retailers. Research/insight/trend analysis chops. Speed and decisiveness 2001: U.S. online sales hit $65 billion 8
  9. 9. 2004: Facebook launches 2005: YouTube launches; 8 million views/day 2009: 68.7% of U.S. homes have Internet – 63.5% have broadband (Dept. of Commerce)now now: ShoppEr MArkETErS rElATionShip: Shopper g Retailers and Brands: Give me what I want, when I want it. DATA: Individual purchase and browsing data; on-demand shopper research (price, ingredients, reviews, availability) EnAbling TEchnology: Wireless, smart phones, social networks, GPS, QR codes, 2D codes, Google Maps, “ recommends” Digital freedom: Shoppers are no longer tied to the store. Retailers and Brands have to work harder Instant research = Retail-agnostic Shoppers Brands walk the full Path to Purchase “First Moment of Truth” = the Holy Grail Great Recession: Shoppers re-focus on price, plan ahead, do more research, search out bargains, wait out Retailers (holiday sales became a game of chicken) Digital accelerates Participation: “Perhaps the coolest thing about the web, social media and the multi billion-dollar infrastructure … is that we can actually do things of value. We can effect positive social change … by uniting like-minded people, inviting participation, understanding the appeal of extrinsic rewards and leveraging the communities we join and build.” -- Edward Boches MArkETErS MASTEr: the building of community; evaluation of new digital tools; value-add strategy to ameliorate price-shopping; nimble adaptation to Shopper cues MAnAgEMEnT bEnEfiTS: Channel-agnostic equity; self-determination; responsive demeanor; stronger customer service 2010: YouTube exceeds 2 billion views per day; 24 hours of video uploaded per minute 2011: Wal-Mart has 4,400 U.S. stores including Wal-Mart supercenters, discount stores, Neighborhood Markets and Sam’s Club warehouses 9
  10. 10. 2011: Facebook = 500 million users2014: U.S. online sales = $249 billion (Forrester) 53% of all U.S. retail sales will be influenced by e-commerceTbD: shopper marketers move into senior level positions atmanufacturers and retailers, based on their real-world training andholistic view of demand creationfooTnoTES1 - Industry Week, “Shopper Marketing is a Supply Chain Partner’s Next Frontier,” 1/18/2010 - McKinsey, “The Consumer Decision Journey,” 20093 - IRI, “CPG Purchase Decisions,” 20094 - GMA, Booz & Co., and SheSpeaks, “Shopper Marketing 3.0 Survey”Google, “Path to Purchase” presentation5 - Google, “Path to Purchase” presentation6 - GMA/Booz & Co., “Shopper Marketing 4.0,” 20107 - GMA/ Booz & Co., “Shopper Marketing 3.0,” 20098 - Journal of Consumer Research, “Planning to Make Unplanned Purchases?” 20109 - Booz & Co., “Forever Frugal,” 201010 - Food Marketing Institute11 - McKinsey12 - GMA/Booz & Co., “Shopper Marketing 4.0,” 201013 - In-Store Marketing Institute14 - Booz & Co.15 - Booz & Co.16 - Advertising Research Foundation17 - Industry Week, “Shopper Marketing is a Supply Chain Partner’s Next Frontier,” 1/18/201018 - Industry Week, “Shopper Marketing is a Supply Chain Partner’s Next Frontier,” 1/18/2010 10