Decoding The Path To Purchase


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Slides taken from Toby Desforges "Decoding The Path To Purchase" workshop at the Path To Purchase Summit in Sydney, February 24th 2012

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  • Decoding The Path To Purchase

    1. 1. De-coding the path-to-purchase Sydney 24th February!/ShopperExperts
    2. 2. Consumers, shoppers and (trade) customers (Trade) customers Consumers are the Shoppers are the make a product or end users of a shoppers of a service available for product or service product or service!/ShopperExperts
    3. 3. Original sources of competitive advantage Developing Drive depth powerful of brands!/ShopperExperts
    4. 4. Retail is the biggest business on the planet Top 10 retailers sales WalMarts sales 1100 450 Billions Billions 1050 400 1000 350 950 300 900 250 850 200 800 150 750 700 100 650 50 600 0 2000 2000 2010 2010 31% of consumer goods firms report that price pressure from retailers remains their greatest sales issue*Source: Deloittes Global retail report/Wal-Mart annual reports/press reports/& and Iholdign sreports/Trade Insight Trade global spend survey 2010!/ShopperExperts
    5. 5. And retail continues to internationalize NO.of NO. of % countries countries Increase 2002 2009 Wal-Mart 10 16 60% Carrefour 24 36 50% Many of these organizations Metro 22 33 50% have yet to leave home Tesco 10 13 30% Over 50% of top retailers are Schwartz 13 25 92% present in Europe, Asia and Kroger 1 1 0 America Costco 7 9 28% Over 40% of new openings were outside home markets Aldi 11 18 63% Home 5 9 80% Depot Target 1 1 0Source: Deloittes Global retail report/CBRE survey of 25o top retailers!/ShopperExperts
    6. 6. The consumer communication world is fragmented; and is fragmenting further at unprecedented rates Global advertising spend by category CAGR 450 (2006-2010) Mobile advertising 41 400 Global internet 20 New ad 350 formats 22.4% Interactive TV promotions 19 In-game advertising 19 300 U.S. product placement 20 250 Global cable/multichannel 5 5 Global broadcast 200 5 Traditional ad U.S.MSO advertising formats 77.6% 5 150 Global radio and outdoor 4 Global magazine 100 2 Global newspaper 2 50 U.S.local station 0 As media continues to fragment, reaching consumers is increasingly more expensive www.engageconsultants.comSource: Morgan Stanley!/ShopperExperts
    7. 7. More and more marketing funds are pouring into stores Trade spend in the UK in 1980 was 8% of net sales. By 2005 it was 25% - a 300% increase 42% of CPG companies are planning to increase their trade spend this year Trade spend varies between 10% and 30% - the single biggest cost after cost of goodsSource: CAS GMBH Analysis/Trade Insight Trade global spend survey2010/Donnelly Marketing and Accenture Analysis!/ShopperExperts
    8. 8. This has pushed expenditure in-store Expenditure as a proportion of budget Trade Promotion Consumer Promotion Advertising & Media 1978 1998 2005 Source: Donnelly Marketing and Accenture Analysis!/ShopperExperts
    9. 9. 70% of promotions lose money – US$ 224 billion could be wasted every year Manufacturer : Lose Manufacturer : Win Retailer: Win Retailer: Win 60% Manufacturer : Lose Manufacturer : Win 15% Retailer: Lose Retailer: Lose 10% 15% 31% of CPG companies cite poor compliance as a key issue*Source: Manufacturer data & analysis, Nielsen Data, (CAS GMBH)/ Analysis/Trade Insight Trade global spend survey/ Deloites!/ShopperExperts
    10. 10. The consumer goods industry could double its profits by investing effectively in-store The industry earns as much money in profit as it wastes in retail 250 Billions 200 150 224 billion 100 50 0 -50 Industry profit Wasted in-store -100 expenditure -150 (224 billion) -200 -250 * engage analysis based on Deloittes – “Global Powers Of The Consumer Products Industry 2010”!/ShopperExperts
    11. 11. The shopper is central to all successful consumer goods brands Create Motivate Motivate consumer retailers to shoppers to demand for support the buy the brand the brand!/ShopperExperts
    12. 12. Shoppers are retailers’ lifeblood, and have more choice than ever More often More Spending shoppers more Better!/ShopperExperts
    13. 13. Today and in the future there is a need to influence shopper behavior more effectively Changing shopper behavior requires changes in ―store‖ Retailers want support in reducing costs or driving sales – Manufacturers and manufacturers want to focus on retailers have a common sales, and that means shoppers need to influence Retailers themselves recognize that shoppers shoppers have more choice than ever before. The shopper/retailer relationship is weak. Retailers need to understand shoppers to drive!/ShopperExperts
    14. 14. Shopper marketing is set to be the next revolutionary step in the world of marketing Post-war scarcity 1950’s Power in the Mass media ―Consumer hands of Creation of manufacturers Marketing‖ consumer brands 1980-90’s Retail consolidation ―Trade Marketing Power moves Brand proliferation /Category towards retailers Media fragmentation Management‖ Personal media 2010 Channel Power in the hands ―Shopper proliferation of shoppers Marketing‖!/ShopperExperts
    15. 15. De-coding the path-to-purchase What shopper marketing is and is!/ShopperExperts
    16. 16. This not shopper marketing!!/ShopperExperts
    17. 17. Integrated shopper marketing makes in-store investment work “The systematic application of elements of the marketing mix to affect positive change in shopper behavior in order to drive consumption of a brand”!/ShopperExperts
    18. 18. De-coding the path-to-purchase The five step integrated shopper marketing!/ShopperExperts
    19. 19. True, integrated, shopper marketing creates coherent links between the end consumer and the in-store environment Consumer Shopper Channel In–store Investment priorities behavior priorities marketing in!/ShopperExperts
    20. 20. Define and quantify clear consumption opportunities Needs and Why Who desires Occasions Where Why NOT? Opportunity Experience What When Availability to!/ShopperExperts
    21. 21. Understand the differences between your consumers and your!/ShopperExperts
    22. 22. Understand how shoppers really behave Shopper’s interpretation Shopper’s needs Outlet selection Solution location Product Selection!/ShopperExperts
    23. 23. Prioritize the right channels Shopper’s Focus investment on interpretation the stores where you can influence shopper behavior Shopper’s needs Outlet selection Solution location Product Selection!/ShopperExperts
    24. 24. Find the activities that count Shopper’s interpretation Shopper’s needs Outlet selection Solution location Focus investment on Product activities that Selection influence shopper behavior!/ShopperExperts
    25. 25. Invest in an integrated in-store marketing mix Availability Changing shopper behavior Communication!/ShopperExperts
    26. 26. Five questions that guarantee improvements in RoI Which Where What shoppers can you What is What consumption will influence required investment opportunities support these in-store? is needed? exist? these? shoppers?!/ShopperExperts
    27. 27. De-coding the path-to-purchase Understanding the drivers of!/ShopperExperts
    28. 28. Needs and occasions help define the macro opportunity Needs and desires Experience Occasions Availability to!/ShopperExperts
    29. 29. Experience and availability to consume define the limitations on that opportunity Needs and desires Experience Occasions Availability to!/ShopperExperts
    30. 30. De-coding the path-to-purchase Understanding the shopper’s role in driving consumption – the path to!/ShopperExperts
    31. 31. The drivers of shopper behavior are very different from those of consumer behavior Shopper’s interpretation Shopper’s needs Outlet selection Solution location Product Selection!/ShopperExperts
    32. 32. De-coding the path-to-purchase The only three ways to drive!/ShopperExperts
    33. 33. All business exist to make profit Higher profits Better Reduced sales!/ShopperExperts
    34. 34. There are only three ways to grow sales More often More Spending shoppers more Better!/ShopperExperts
    35. 35. De-coding the path-to-purchase Creating powerful shopper!/ShopperExperts
    36. 36. Segmentation is the sub-division of a population into groups with similar characteristics Population Segment Segment Sub Sub Sub Sub Sub Sub segment segment segment segment segment!/ShopperExperts
    37. 37. Any segmentation, with a clear rationale, may be viable Demographic Shopper Geographic mission Brand Potential Psychographic repertoire segmentation Purchase Income intent!/ShopperExperts
    38. 38. Definitions of segments must be Valuable – reflect an distinct opportunity Measurable – we must be able to quantify the dynamics of the segment easily Manageable – we must be able to target the shoppers efficiently Clearly understood by!/ShopperExperts
    39. 39. De-coding the path-to-purchase Influencing shopper behavior!/ShopperExperts
    40. 40. Understanding shoppers’ behavior allows us to develop the optimum in-store marketing mix Consumer Shopper Channel In–store Investment priorities behavior priorities marketing in!/ShopperExperts
    41. 41. Shopper insight enables us to understand what activities will influence shopper behavior Consumer’s demand Shopper’s interpretation Shopper’s needs Outlet selection Solution Target investment on location activities that change Product behavior selection!/ShopperExperts
    42. 42. What behavior is it that we need to create? Penetration Shopper behavior Weight of Frequency of purchase!/ShopperExperts
    43. 43. The in-store marketing mix Availability Shopper behavior Communication!/ShopperExperts
    44. 44. The in-store marketing mix Availability The range of products available to buy within a channel or outlet. The range of products maintained in-stock within a channel or outlet. The minimum inventory of products within a channel or outlet. The delivery lead-times of products ordered by Shopper a shopper within an outlet or channel. behavior Communication!/ShopperExperts
    45. 45. The in-store marketing mix Availability Communication The messages conveyed to a shopper within a channel or outlet. Shopper The materials used to convey messages to shoppers behavior within a channel or outlet. The conduct and presentation of brand representatives within a channel or outlet and the messages they convey to shoppers. The location of communication materials, brand Offer representatives and product displays within the outlet. The merchandising of products within the!/ShopperExperts
    46. 46. The in-store marketing mix Availability Offer The average retail price of products within Shopper a channel or outlet. behavior The depth of promotions within a channel or outlet. The promotion mechanics used within a channel or outlet. Communication extent of after-sales or added value service The offered to shoppers in a channel or!/ShopperExperts
    47. 47. De-coding the path-to-purchase Channels in a digital!/ShopperExperts
    48. 48. Let’s be clear about outlets, and routes to market Manufacturer Distributor Wholesaler Outlet Outlet Outlet Outlet Outlet Channels are groups of outlets, not routes to!/ShopperExperts
    49. 49. Internet everywhere Global internet users 5.00 Billions 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2001 2011 2020 (est) Source: Google inc.!/ShopperExperts
    50. 50. All the time! Global penetration of mobile phones 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% Today by 2020Source: Google inc.!/ShopperExperts
    51. 51. Really all the time! Percentage of phone owners 34% 66% % of people who sleep with their phone beside them % of people who do not sleep with their phone beside themSource: Google inc.!/ShopperExperts
    52. 52. 84% of people now use the internet for information about a product Source used by media type 84% 83% 82% 81% 80% 79% 78% 77% 76% 75% 74% Traditional media Internet sources In-store marketingSource: Google inc.!/ShopperExperts
    53. 53. Its importance for younger generation is highest Internet use when seeking product information 92% 90% 88% 86% 84% 82% 80% 78% 76% 74% 18-34 35-49 50+Source: Google inc.!/ShopperExperts
    54. 54. Digital is a!/ShopperExperts
    55. 55. In the US 60% of online business in 2010 was retail sales US Online sales 2010 $91 bn $136 bn Non-retail sales Retail salesSource: comScore ―The 2010 US Digital Year in Review‖!/ShopperExperts
    56. 56. Digital applications are now used extensively by shopper to understand products Consumer’s demand Search, ratings, revie Shopper’s ws, friends and interpretation family opinion, offers and coupons. Shopper’s needs Outlet selection Solution location Product selection!/ShopperExperts
    57. 57. Digital enables shoppers to meet their needs better Consumer’s demand Store locations, price Shopper’s points, product interpretation availability – buy now or buy later Shopper’s needs Outlet selection Solution location Product selection!/ShopperExperts
    58. 58. Digital has the power to influence shopper’s behavior in-store Consumer’s demand Shopper’s interpretation Shopper’s needs Outlet selection Find products, check Solution recipes, review price location points, seek alternatives, download Product coupons, PAY, and selection exchange loyalty data!/ShopperExperts
    59. 59. De-coding the path-to-purchase Channel!/ShopperExperts
    60. 60. Do each of these represent an equal opportunity? Consumer & shopper insight Brand Brand Brand Brand priority priority priority priority 1 2 3 4 Required Required Required Required shopper shopper shopper shopper behavior behavior behavior behavior Customer plan Channel Channel ? ? ? ? plan Channel understanding Investment framework Customer plan Channel Channel ? ? ? ? plan Customer plan Channel Channel ? ? ? ? plan Distributor plan Channel Channel ? ? ? ? plan Distributor!/ShopperExperts
    61. 61. This approach allows suppliers to allocate resources across channels Hypers and CVS GT supers Share of 35% 40% 25% sales Total $ 35% 40% 25% spend Sales time 25% 50% 25% allocation But it doesn’t optimize resources because there is no recognition of the potential contribution the channel can make against known growth!/ShopperExperts
    62. 62. This approach is more likely to lead to an escalation in trade spend There is no clear input relating to the value the channel can Trade-spend contribute to known growth growth opportunities. Spend is directed to large Value (powerful) customers/channels Optimization gap rather than where opportunities are found. There is no correlation between investment and Manufacturer growth potential returns. Time This approach may miss much of the growth!/ShopperExperts
    63. 63. The goal is to drive faster growth by spending in the right areas Trade-spend growth Value Manufacturer growth Time The goal also is to match investment!/ShopperExperts
    64. 64. The more relevant a channel is to our targeted shoppers, the more likely it is to be a priority High targeted-shopper relevance Attracts large Large share of Large opportunity numbers of existing sales for to influence targeted the category shoppers shoppers Attracts small Large share of Small opportunity numbers of existing sales for to influence targeted the category shoppers shoppers Low targeted-shopper!/ShopperExperts
    65. 65. The easier it is to exert influence in a channel, the more likely it is to be a priority High barriers to implementation Low barriers to implementation Channel customers Channel customers are unwilling to are willing to affect affect change change Channel customers Channel customers are unable to affect are able to affect change change Channel customers Channel customers are difficult to are easy to manage!/ShopperExperts
    66. 66. Channel prioritization High target shopper relevance Low opportunity to influence High opportunity to influence Low target shopper!/ShopperExperts
    67. 67. De-coding the path-to-purchase Continuing your!/ShopperExperts
    68. 68. Continuing your development Shopper Customer Field Sales Marketing Management!/ShopperExperts
    69. 69. Our ―Development Academies‖ equip managers at every stage in their career Foundation Bachelor’s Master’s programs: programs: programs: Provide entry-level Deliver advanced- education to Configured to level individuals who are build on a management new to a function or foundation education. role. within the topic. Empower emerging Equips participants Enable managers leaders to develop with the essential to create and into more senior competence to execute plans at roles and create deliver the daily a high-level. effective strategies requirements of their and plans. role quickly and!/ShopperExperts
    70. 70. Shopper Marketing Academy Bachelor’s Master’s programs: programs: An Introduction to Strategic shopper Shopper Marketing and channel insight Developing successful Channel strategy in-store standards Building brands for Range and shoppers merchandising Defining trade management investment Efficient promotions frameworks management Successful new product Creating channel introductions activity plans Essential in-store!/ShopperExperts
    71. 71. Bachelor’s program delivers Understand how Build effective in-store marketing in-store activities works Create profitable Discover how different activities that achieve activities change shopper strategic and tactical behavior objectives Create real change Get better results Secure great in-store Increase return on execution!/ShopperExperts
    72. 72. Bachelor’s program are designed for Trade Trade Heads of Category marketing marketing trade managers executives managers marketing Brand Key account Heads of Heads of key managers managers field sales!/ShopperExperts
    73. 73. Shopper Marketing Academy—Bachelors Program Modules Key content An Introduction Understand what shopper marketing is and why it is so important to Shopper Learn how trade marketing roles must adapt to meet a new world-class standard Understand how working processes for trade marketing will develop Marketing Developing Learn what influences shopper behaviour and how this affects sales performance Discover how to build clear in-store standards that guide execution successful in- Determine how in-store standards will be developed in the organisation store standards Learn how in-store standards can be used to evaluate performance Range and Appreciate the importance of in-store availability and visibility Understand strategies that drive availability and visibility merchandising Learn the key principles of range and layout management management Master the essential steps in conducting a range and layout review Understand the costs and benefits of promotions Efficient Explore the techniques and processes used in developing effective promotion plans that promotions drive specific outcomes Learn how to analyze the effectiveness of all promotions management Discover approaches that optimize the promotions mix and increase return on investment Successful new Learn how to apply a checklist tool for developing successful NPI Gain insight on managing NPI projects product Appreciate the importance of a new product launch network introductions Execute effective forecasting by using engage’s NPI Planner™ tools Understand the critical success factors that optimize the chances of effective, efficient Essential in- execution store execution Learn what drives retailers’ decisions and how to influence them Identify opportunities to improve execution!/ShopperExperts
    74. 74. Master’s program delivers Gather shopper Configure trade insight investment for long- Conduct shopper term profitable growth research and develop shopper segmentations Drive long-term Create clear plans profitable growth Define channel priorities Define channel activity and set trade plans, budgets and investment strategies!/ShopperExperts
    75. 75. Master’s program is designed for Trade Heads of Category Brand marketing trade managers managers managers marketing Key account Heads of Heads of key Sales Marketing managers field sales accounts directors!/ShopperExperts
    76. 76. Shopper Marketing Academy—Masters program Modules Key Contents Understand principles of strategic shopper and channel insight Strategic shopper Learn techniques for shopper and channel segmentation and channel insight Understand how to conduct high-value shopper research Learn the practical steps that create insight from data Understand the principles of channel management and channel strategy Define channels using physical and commercial characteristics Channel strategy Learn how to prioritise channels to enhance ROI Discover how to create channel strategies Understand the importance of marketing brands in-store Building brands for Develop long-term shopper objectives and define in-store strategies for shoppers the category and your brands Configure brands to meet the needs of consumers, shoppers and retailers Learn the principles of trade investment Defining trade Understand how to prioritize and configure trade investment to each investment brand in each channel frameworks Develop brand and channel investment rules Gain insight in how investment rules are applied to customer clusters. Gain an in-depth understanding of the importance of effective channel activity planning Creating channel Learn a coherent process for channel activity planning that: Assesses opportunities and prioritizes the big wins activity plans Turns shopper data into insight for planning Applies value-planning tools to efficiently plan activities and resources, and quantify!/ShopperExperts