What are the current trends in shopper marketing? What elements can be isolated to define best practice? As many readers know, The Hub Magazine has regularly surveyed the industry with the objective of answering these questions since 2006 and just completed the latest survey on shopper marketing at the end of April, creatively entitled “Shopper Marketing 2011.”
This year’s survey generated 243 responses — over 50 percent more than The Hub’s first survey on this subject in March, 2006. Respondents include representatives from 131 companies, 20 countries and six continents. While the majority is from packaged goods (65 percent), other verticals are retail, automotive, apparel, computers/software, healthcare/pharmaceutical and media and entertainment.
In this regard, we especially want to thank Jason Buschlen and all of those from the Shopper Insights and Marketing group on LinkedIn for taking the time to participate. We know the survey was long and are, therefore, all the more appreciative.
More than 45 percent of respondents to this year’s survey work for companies or clients who have been “officially” involved in shopper marketing for five years or longer. On the other hand, only 24 percent are relatively new — defined as having a shopper-marketing function for two years or fewer. This is the second consecutive survey in which those with five years or more experience outnumber those with one-to-two years.
Once again, more than 50 percent of respondents are experienced marketers with 15-plus years in the business. This enables us to benefit from a senior-level perspective, which we believe is especially important with a discipline as fast moving and frequently misunderstood as shopper marketing. Our overall findings are as follows:
Success and satisfaction with shopper marketing grow with experience. A high correlation exists between companies that rate their current shopper-marketing performance as “excellent” and those with five or more years of experience. Seventy-three percent of respondents who rate their success with shopper marketing as “excellent” have five or more years of experience, while only 1.8 percent of shopper-marketing long-timers rate their success as “not so good.”
Conversely, of those who have been in shopper marketing for two years or less, only 16.2 percent rate their performance as “excellent,” while 41.2 percent rate their performance as “not so good.”
Best practice is now being defined by behavior, no longer by theory. We are defining shopper marketing by our actions. Practitioners are answering the hotly debated questions about what shopper marketing is and is not by what they are doing. Is shopper marketing a fundamentally tactical proposition that begins and ends in the store, or is it strategy that “touches’ the target all along a virtual path-to-purchase until one finally “wins” at the shelf?
Seventy percent of respondents are planning and implementing “pre-store” (read: “path-to-purchase”) initiatives to maintain top-of-mind awareness with their target consumers all the way from couch to shelf. Digital — especially mobile — is empowering this. In fact, 56.8 percent say they expect the bulk of their digital shopper spending over the next five years to go to the “mobile” segment of the path — as opposed to the “at home” or “in-store” segments.
Is shopper marketing a cross-functional corporate strategy or an extension of category management? Fifty-nine percent now position shopper marketing as a cross-functional corporate strategy — up from 50.4 percent in 2009. Conversely, only 41.5 percent position it as an extension of category management — down from 49.4 percent in 2009.
More telling is the indication of a completely new and revitalized focus on brand building. In 2011, 18.4 percent report that the “dominant” focus of their shopper-marketing work is “solo brand/shopper initiatives” — up from 8.0 percent in 2009. Similarly, another 17.1 percent report that “multi-brand shopper programs” is now their dominant focus — up from 10.6 percent. Additionally, 57.5 percent note that they have separate and discrete budgets specifically earmarked for shopper-based research.
Key impediments remain, but all are addressable. The most frequently-cited impediment to the successful integration of shopper marketing within one’s organization is “conflicting objectives between marketing, sales and retailers” — cited by 54.5 percent of respondents — followed by “lack of communications or relationships between departments” — cited by 48.5 percent. Sample comments on key impediments:
• “Lack of understanding of what shopper marketing can do.”
• “Lack of cohesive joined-up planning process.”
• “The two greatest impediments are quality data availability (trade data) and an integrated approach to planning across category, channel and customer.”
• “Lack of clear understanding of what shopper marketing is and lack of case studies to prove it works.”
• “Lack of broad understanding within the consumer marketing group; they don’t see the value; they believe that we still go to market with brands; and because consumers buy brands they don’t need to focus so much on the customer.”
These comments highlight the importance of top-down commitment. Trying to develop a best-practice, shopper-marketing function without c-suite support is, frankly, impossible. Too much integration is required — and there is often too much parochial resistance to that integration. Corporate leadership must be on board to resolve conflicting objectives, integrate responsibilities and timelines, and generally encourage all parties to play nicely together. The first objective of any fledgling shopper-marketing effort is to secure that support. There is now no lack of experience for modeling or benchmarking or published reports to enable this. An excellent starting point is the series of reports that the Grocery Manufacturers Association has published on this subject since 2007.
Even after five years, the outlook for shopper marketing’s continued growth remains remarkably strong and upbeat. Seventy-three percent of respondents expect their shopper-marketing budgets to increase over the next three years, while 24.9 percent expect them to stay the same. Only 1.7 percent expect a decrease.
Funding stability has also improved: Those companies operating on ad hoc funding now represent only 20.5 percent of respondents — down from 28.6 percent in the 2009 survey and 31.4 percent in the 2008 survey — a very positive trend. In addition, shopper-marketing budget allocations are growing progressively larger: Twenty-three percent of respondents now allocate 10 percent or more of their total marketing budgets to shopper marketing — up from 18.6 percent in 2009 (+22.0 percent) and 17.2 percent in 2008 (+8.1 percent). All in all, all is still very much up.
Shopper marketing is becoming global. We had respondents to this survey from 20 different countries on six continents. North America was represented by the United States, Canada and Mexico; South America by Argentina and Brazil. France, Italy, Belgium, Spain, Croatia/HRV and the United Kingdom represented Europe. India, China, Thailand, Indonesia, Malaysia and Vietnam represented Asia, while respondents from South Africa and Australia rounded out the globe. Thanks so much to all who participated! If the non-US sample continues to grow at this pace, we’ll begin to write special articles.
Shopper Marketing Best Practices
To determine the elements that comprise best practice, we compared the responses of those who rate their success with shopper marketing as “excellent” against the averages for all respondents and against those who rate their success as “not so good” (see chart).
The differences between the “excellents” and “not so goods” are significant in that they depict a very clear picture of what constitutes best practice. Because many of these elements are self explanatory, we’ll confine the balance of this discussion to those that normally require clarification.
Headcount. Seventy-two percent of “excellents” have 20-plus people in their shopper-marketing departments. While this is partly a function of experience, it is primarily the result of commitment. These companies understand the multi-faceted scope and responsibilities associated with running a best-practice shopper-marketing program.
For example, 66.3 percent of these companies have deployed shopper-marketing people both at headquarters (to staff shopper-marketing departments) and in the field — assigned to customer teams to provide marketing-based insights. It is in this context that one must evaluate this level of commitment.
Funding. With respect to funding, there are “excellents” at all levels, but the largest number — 33.3 percent — have shopper-marketing funding at 10-plus percent of their marketing budgets (defined as consumer advertising + consumer promotion + shopper marketing + trade promotion). The “not so goods” only have 12.5 percent at that level — and 75 percent of the “not so goods” have funding at three percent or below.
We asked respondents into which single budget they would put a hypothetical extra 20 percent of marketing funds — consumer advertising, digital, national consumer promotion, shopper marketing or trade promotion. Despite their current heavier-than-average funding of shopper marketing, almost half (48.6 percent) of the “excellents” opted to put extra into shopper marketing, followed by digital and then consumer advertising. The “not so goods” most often opted for putting extra funds into trade promotion (43.8 percent), while only 12.5 percent opted for adding to shopper funding. The lesson on funding is that those who invest more appear to get more out of their shopper-marketing efforts. Additionally, these same people see even more opportunity for growth.
Reporting structure and positioning. Fifty-three percent of “excellents” report to marketing (83.4 percent to marketing or general management) while 56.3 percent of the “not so goods” report to sales. Reporting structure seems to be less important in the absolute and more important in how it impacts the way the company positions shopper marketing within the organization.
Companies position shopper marketing in two ways: 1) as a corporate cross-functional strategy that includes proactive marketing department participation; or 2) as a function of category management or sales to increase category “shoppability” or achieve a competitive advantage with retailers. This is an important distinction: Seventy-three percent of “excellents” position shopper marketing as a cross-functional corporate strategy; only 12.5 percent of “not so goods” view shopper marketing this way.
Research. Eighty-six percent of “excellents” have a dedicated shopper-marketing research budget; eighty-one percent of “not so goods” do not. The response to this question is telling in that it indicates how a company defines shopper marketing — as marketing to shoppers or as marketing in stores. If shopper marketing is marketing to shoppers, it is insight-based and the research capability is core. Companies who budget for this capability will always have a significant proprietary competitive advantage.
Retailer contact points. Another key differentiator appears to be a company’s primary contact at the retailer. For 54.7 percent of respondents, the primary contact at the retailer is the retailer’s merchandising group. The only group of respondents for which this is different is the “excellents.” The “excellents” name the retailer’s marketing department as their primary contact — by a fairly substantial margin — 57.1 percent. In comments, they acknowledge that this preference holds true more in large retailers than smaller ones and that, no matter the size, one still needs to get final approval from the merchandising department.
So why call on the retailer’s marketing department at all? Because most of the “excellents” view shopper marketing as marketing to shoppers and marketing to shoppers is the purview of the retailer’s marketing department. They are the ones responsible at the retailer for understanding the shopper, for developing shopper-based platforms and strategies, and for the positioning and communications that drive total store growth. This is very fertile ground for opportunities to collaborate and to move the needle for both retailer and brand.
Measurement. Overall, the most prevalent shopper-marketing measures are short-term metrics — lift and short-term return-on-investment in a virtual tie. “Excellents” stand out in measurement in what they also measure versus others. Best practice, as defined by “excellents,” is more likely to include a longer-term view with long-term return-on-investment (such as lifetime value of a customer), cited by 51.4 percent of the “excellents” versus 17.6 percent of the “not so goods.”
“Excellents” are more likely to make sure an initiative is good for the retailer as well as themselves by measuring market basket growth (45.9 percent) and incremental retailer volume and margin (64.9 percent). Finally, “excellents” capture the soft benefits of shopper marketing, such as retailer penetration and support — things that may be harder to quantify but which can be apparent when launching a new product or amicably resolving an issue.
The most important takeaway from this survey, in our opinion, is that shopper marketing appears to be jelling. The basic structure — the skeleton — is in place. The discipline appears to have acquired definition and solidified. The key elements that currently constitute best practice are not substantively different from our survey results 16 months ago.
More and more newbies are doing their homework and are coming into the discipline with practices that, in the early days, companies would “grow into,” like research departments and established funding. This is not to say that every practitioner views shopper marketing the same way — nor that there is one way to do it. What this does suggest is that ideas are being tested in the marketplace every day by different suppliers and different retailers and that shopper marketing will ultimately be defined by what works. For those who would like to analyze this survey’s results for themselves, a copy may be found at: hubmagazine.com/survey/shopper_2011. 
