The Digital Signage Insider

Retailers Should Use Shopper Marketing to Fight the Recession, Research Suggests

Published on: 0000-00-00

If the latest survey results from The HUB are any indication, 2009 will be the year of the shopper marketing program. Just a few short years ago, hardly anybody had even heard of the practice. But today, we're seeing the biggest of the big retailers (like Walmart and Target) employing shopper marketing techniques to boost their bottom lines and build customer loyalty -- even as the recession curtails virtually every type of consumer spending. From the smallest mom-and-pop to the largest mega chain, The HUB's latest shopper marketing study indicates that more retailers are already pumping money into shopper marketing. There's even a line item in many budgets specifically for that purpose, as opposed to past years when shopper marketing programs had to siphon what little they could out of existing sales and marketing budgets. But while shopper marketing has made some significant gains in a short time, the survey results indicate that there's still plenty of room for improvement in how companies communicate with shoppers inside the store.

What is shopper marketing?

We first asked this question back in 2006 while investigating how to use shopper marketing to improve the store experience. At the time, we looked at a survey released by Reveries (publishers of The HUB Magazine). As I pointed out then, "Oddly enough, the Reveries survey doesn't actually define the term 'shopper marketing,' instead preferring to let the respondents decide if it's something they engage in, and if so, how important it really is." A Google search hardly turned up any useful results, and the few agencies and marketing firms that actually advertised shopper marketing services had some very different ideas about what the practice entailed. My own uneducated guess at the time was that it included "anything that eschews broadcasting ads to the masses in favor of systems that narrowcast relevant, targeted ideas and messages to the individuals who will value them most, thereby improving the overall shopping 'experience.'" While it's not totally incorrect, the definition of shopper marketing has evolved over the past few years into something both better-defined and more all-encompassing.

As Deloitte tells us (PDF), shopper marketing is "understanding how one's target consumers behave as shoppers, in different channels and formats, and leveraging this intelligence to the benefit of all stakeholders, defined as brands, consumers, retailers and shoppers." Consequently, shopper marketing practices extend well outside of the store, to the place and time when a consumer first thinks about purchasing a product. That might be on a treadmill at the gym, at home reading a magazine, or in the car while driving to work. That means that shopper marketing is by necessity a multi-channel practice that makes use of traditional media, new media, direct marketing, loyalty, trade promotion and innumerable other marketing techniques.

What do the survey results say?

This year's HUB survey brings a host of new insights for those interested in shopper marketing. Most importantly, of the roughly 250 respondents, nearly half (45.3%) said that they or their clients had bona fide processes in place for handling shopper marketing initiatives, and 64.9% had established budgets specifically for the cause. (That's a massive improvement from just a few years ago, when many people answered "Huh? What's shopper marketing?") Practices in place included collaboration with retailers on shopper understanding (69.9%), participation in retailer-developed shopper programs (69.1%), solo-branded shopper programs (54.5%), cross-company or multi-manufacturer shopper programs (57.7%), custom packaging (42.3%), environmental design/fixturing (33.7%) and a whole host of other things on the fringes. Not surprisingly, collaboration with retailers on shopper understanding was not only the most popular practice, but it was cited as the most effective as well, with 28.9% of respondents indicating that it was the dominant form of shopper marketing in place today, based on marketing mix analysis, straight ROI calculation, share gain and retailer category growth analysis.

The respondents also indicated a major focus on shopper insights, further highlighting retailer and manufacturer desires to really understand why shoppers behave the way they do -- not just while watching an ad on TV or navigating store aisles, but through the entire purchase decision-making process, from beginning to end. If you take only one thing away from this survey, it's that shopper marketing is definitely not limited to marketing at retail, so approaching it as anything other than a full-cycle marketing program is not going to be productive.

How can shopper marketing programs be improved?

For all of the progress we've seen in the past few years, it's clear that there's still a lot of room for improvement. For example, if the return on investment for shopper marketing programs is so great, why do two-thirds of respondents indicate that less than 10% of their overall marketing budgets go towards it? I'd expect to see this number increase as marketers, manufacturers and retailers alike feel the economic pain and are forced to ditch hifalutin advertising in favor of approaches that are proven to work. Additionally, only about half of respondents said that they had experienced "very good" or "excellent" results so far, which means that the other half must figure out what's going wrong with their programs. Considering that common obstacles include everything from inadequate sales force training to ad hoc budgeting to lack of cross-functional integration with other parts of the organization, there are still plenty of places for a well-planned shopper marketing programs to take a wrong turn.

Still, to understand consumers as they make shopping decisions and optimize experiences around that process is too big of an opportunity for manufacturers and retailers to pass up. As the practice expands to include interactive shopper marketing programs that can provide real-time feedback on what consumers think of a given offer, the quality of shopper marketing campaigns is bound to increase. Shopper marketing is here to stay, and once agencies start putting together turnkey packages to integrate all of the various touch-points and marketing media that go into such a program (no small feat, I'm sure), I expect to see more case studies and ROI analyses turn up to support all of the claims. Who knows, we might even get a more satisfying definition of the term. And if you don't think these survey results are worth paying attention to, keep in mind that over half of the respondents came from big companies (having more than $500M in annual sales), and the vast majority of them have spent 10 or more years in marketing. So we're not talking about a bunch of neophytes from startup companies hoping to jump on the bandwagon. We're talking about the bandwagon itself.

By the way, if you're curious about how digital signage might fit into your shopper marketing strategy, check out our introduction to digital signage.

Now that you've read through this article and some of the related stories, do you feel like you understand what shopper marketing is all about? If not, what kind of information would you find most helpful? Leave a comment below to let us know!

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